As a formal discipline, sales and operations planning has been around for 30 years, but it's only really come into the limelight in the last 10, says Tavella. The uncertain economy has made companies realize that "just doing what feels right doesn't cut it. You need everyone talking the same language."
S&OP isn't about accountability, Tavella says. "It's about defining together what your plan is, celebrating your wins and figuring out why you had losses." Modern S&OP is all about achieving that comprehensive view.
The globalization of supply chains has made it tougher to manage businesses across borders and trading partners. Companies today are dealing with challenges that they couldn't foresee. A flood in Thailand, for example, could wipe away a significant portion of a manufacturer's supply base. S&OP helps companies to see how they can steer and shift demand, deal with constraints and seek out alternative suppliers.
"Big data" is both a challenge and a solution to the problem. Businesses today are dealing with "billions of details," says Tavella. They need to get a handle on point-of-sale, inventory, market insight and customer relationship management, both actual and historical. "We've seen the amount of data we're managing exponentially grow in last 10 years," he says.
The standard 30-day planning cadence might be appropriate for all businesses. Adjustments need to be made in line with the needs of individual companies and industries. They need to know how well they're conforming to the plan, and should be able to conduct real-time analyses of various scenarios.
An effective S&OP process, with its emphasis on long-term strategy, should drive decisions at the tactical level as well. "There's a fine line that connects those dots," says Tavella.
