Sales and operations planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is being made slowly. Process maturity matters. In our research, we find that companies with S&OP maturity have 2X the level of agility and alignment. As we enter into 2014, S&OP will grow in importance with more and more solutions emerging to support the evolving processes.
Sales and operations planning aligns and connects the functions of the company. It is one of four horizontal processes that are essential to becoming market driven and building effective value networks. The other, complementary processes are revenue management, supplier development and corporate social responsibility. In mature organizations, these four processes form the fabric for decision making for the end-to-end supply chain.
Unfortunately, in many organizations, the term supply chain is a "politically-charged word." When supply chain is defined as a function versus an end-to-end process, there is an endless debate on the role of supply chain in driving S&OP excellence. S&OP helps guide organizations in an uncertain world. It enables the visualization of risk and yields a cross-functional understanding of opportunities. When respondents were asked about their individual "pain" in the management of S&OP processes, demand and supply volatility tops the list. Globally, organizations are struggling with how to align to improve reliability of business results in the face of increased market volatility in both channels and supply. S&OP helps.
To drive maturity, the process must be carefully architected with the goal in mind. Most organizations are not conscious of the choices and the nuances of the process evolution.
The maturity of an S&OP Process can easily be easily determined by answering five questions:
• What is the S&OP goal?
• How is balance achieved between demand and supply?
• How are decisions made?
• How does the organization measure success?
• How is S&OP planning tied to execution?
In the evolution of S&OP technologies we see three trends emerging:
• Cloud-based Technologies: Line of business users favors cloud-based solutions to visualize the output of the multiple S&OP processes. This is a trend that we expect to continue.
• Advanced forms of Analytics: The solutions to use deeper analytics to understand the probability of demand and supply. It is about much more than tight integration of a set of numbers.
• Collaborative Workflows: Social technologies are being adopted into enterprise solutions. One of the first places for adoption is in S&OP processes.
Today, we do not have your father's S&OP processes. It has changed. The processes have risen in importance with new forms of analytics emerging to support growing complexity. This is a good thing that should be embraced by organizations. It is worth wading through the myriad of technology options to drive differentiation.
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