Supply chain planners will continue to face turbulence and disruptions, but S&OP is evolving to meet the challenges, says Micheal Youssef, vice president team manager at Gartner.

The recent pandemic years compelled supply chain planning leaders to rethink their traditional planning tools, Youssef says. “So a key differentiator has been how to connect sales and operation execution to sales and operation planning to financial planning processes.”

Companies before the pandemic had different processes that weren’t always connected to each other. “They suddenly realized they have to make these connections and make this differentiation at the same time, so that the short-term process crisis is managed in a certain way within the sales and operation execution process.”

Customer and supplier collaboration has been another important lesson, Youssef says. Companies realize they can’t do it alone. End-to-end visibility within the organization is not sufficient.

“Forty percent of our clients tell us customer collaboration is hard, although it's one of the top three challenges for them to meet their supply chain metrics,” Youssef says. He adds that companies have been trying to connect with their customers and tier-one and tier-two suppliers as well. Unfortunately, that effort to establish long-term connection between different companies often came without enough supporting technology.

Companies also realized that S&OP doesn’t fit the requirements of today’s turbulent environment. “Leading companies have been talking about how they adapt their scenario planning capability so they can respond to different business scenarios in hours, not in a month, not in weeks,” Youssef says. “They need to really respond in hours in terms of how much that scenario would cost in terms of inventory, cost and potential service impact on other customers. Leading companies have been doing that through what they call concurrent planning or continuous planning.”