• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » The New World of Profitability: Everybody Wins

The New World of Profitability: Everybody Wins

August 22, 2013
SupplyChainBrain

There's a new focus on profitability in sales and operations planning. Approximately 20 percent of companies today are entering this third of the four stages that make up the S&OP maturity model, says Schlegel. (Stage One is accepting and developing a plan, Two is accelerating the balance of demand and supply, and Four is extending collaboration with customers and suppliers to include "what-if" analyses and risk assessment.)

The focus on profitability requires a shift in metrics and technique alike, says Schlegel. He says that only about 10 percent of companies that practice S&OP are engaging in regular SKU management of their product portfolios. They are good at getting product out the door, but not in dealing properly with individual items. "It just doesn't seem to be in our supply-chain DNA."

Only 2 to 5 percent of manufacturers segment their customers, says Schlegel. "In S&OP, they tend to treat all customers the same, even though 20 percent generate 80 percent of profit."

Companies also tend to be lured by the "false goal" of having one demand-forecasting number that can be shared throughout the organization. In the process, they fail to address product segmentation.

Improvements happen over time. In a complex supply chain, the first maturity stage can take up to two years to complete. The trick is to develop a process for balancing supply and demand on a repeatable basis.

Once companies get to Stage Three, they have "enough firepower [in the form of] tools, street cred, methodology and professionals working in the process to address the issue of product portfolio management and customer segmentation." They can then begin to deploy the metric of gross margin return on investment, based on their margin and inventory turnover ratio.

To view the video in its entirety, click here


Keywords: supply chain, supply chain management, S&OP, sales and operations planning, supply management, demand management, inventory management, inventory control, supply chain planning, retail supply chain, sourcing solutions

RELATED CONTENT

RELATED VIDEOS

Transportation & Distribution Product Lifecycle Management Sales & Operations Planning Forecasting & Demand Planning Supply Chain Finance & Revenue Management Supply Chain Planning & Optimization Supply Chain Visibility Business Strategy Alignment Global Supply Chain Management Consumer Packaged Goods Food & Beverage Retail
KEYWORDS Business Strategy Alignment consumer packaged goods Demand Management Food and Beverage Forecasting & Demand Planning Global Supply Chain Management Gregory Schlegel inventory control Inventory Management Lehigh University Product Lifecycle Management Retail retail supply chain S&OP Sales & Operations Planning Sales And Operations Planning SC Finance & Revenue Management SC Planning & Optimization Sourcing Solutions supply chain Supply Chain Analysis & Consulting Supply Chain Management Supply Chain Management: Sales & Operations Planning Supply Chain Planning Supply Chain Visibility supply management Transportation & Distribution
  • Related Articles

    The New World of Profitability: Everybody Wins

    The Brave New World of SKU Proliferation

    The Brave New World of SKU Proliferation

SupplyChainBrain

Boeing Plans To Cut 2,000 Office Jobs This Year

More from this author

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A COMPLEX SERIES OF ROADWAYS AND RAMPS, SEEN FROM HIGH ABOVE, IS PARTLY SHROUDED BY CLOUD

    Supply Chain Visibility Isn’t Just a Catchphrase; It’s an Imperative

    Logistics
  • A TRUCK LEAVES A PORT DOCK LOADED WITH A CONTAINER

    C.H. Robinson Digs in Against Activist Investor Ancora

    Freight Forwarding/Customs Brokerage
  • A CONTAINER SHIP PLIES A SILVERY OCEAN

    CVC Nears Deal to Acquire Logistics Firm Scan Global

    Logistics
  • A WOMAN IN HER LIVING ROOM GESTURES IN DISMAY ON THE PHONE OVER AN OPEN SHIPPING BOX

    Retailers – Quit Bellyaching and Differentiate Yourself on Returns

    Reverse Logistics
  • MANY COGS INTERACT TOGETHER, ONE PAINTED WITH THE FLAG OF MEXICOStock-natatravel-1261506189.jpg

    Mexico’s Industrial Hubs Grow as Part of Shift Toward Nearshoring

    Logistics

Digital Edition

Scb q1 2023 cover

2023 Supply Chain Management Resource Guide: Packing for a Difficult Year

VIEW THE LATEST ISSUE

Case Studies

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

  • Expanding Apparel Brand Scales Seamlessly with E-Commerce Technology

  • How a Global LSP Scaled its Security Program and Won More Business

Visit Our Sponsors

Orderful Yang Ming Alithya
Barcoding Blue Yonder BNSF Logistics
CoEnterprise Data Capture Deposco
E2open GAINSystems Generix
Geodis GEP GreyOrange
Here Honeywell Intelligrated IFM
Infor Inmar Keelvar
Kinaxis Korber Lean Solutions Group 2H
Liberty SBF Locus Robotics Logility
LogistiVIEW Lucas Systems MCA Connect
MPO Nvidia Old Dominion
OpenText ORTEC Overhaul
Parsyl PMMI QIMA
Redwood Logistics Ryder E-commerce by Whiplash Saddle Creek Logistics
Schneider Dedicated Setlog Holding AG Ship4WD
Shipwell Tecsys TGW Systems
Thomson Reuters Tive Trailer Bridge
Vecna Robotics Verity
Verusen
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing