Expert Insight: The S&OP Report
  By Tom Wallace  
  Oct. 18 , 2007  

Sales and Operations Planning: Going Global?


Inter-Entity Planning Brings New Challenges, but Benefits of Global Coordination are Huge

Wallace Says:
Based on first-hand experience, I can tell you that S&OP is alive and well in both Australia and Europe.

What do you say? Send us your comments here

Let’s talk about Global Sales & Operations Planning. This phrase here has a double meaning:

  • The extent to which companies around the world are using Executive S&OP (the top management component of Sales & Operations Planning), and
  • How global enterprises use Executive S&OP to help run their world-wide business better.

Let’s take a look at the first one.

How Widespread is S&OP?

Is S&OP used primarily in North America, where it was invented, or has it spread around the world? Well, I don’t know about the entire world but, based on first-hand experience, I can tell you that S&OP is alive and well in both Australia and Europe.

Last year in Australia, I was impressed by the interest and understanding of Sales & Operations Planning. They’re using S&OP very effectively down under, and they’re being innovative – using S&OP not only in manufacturing companies but also in retailers and in banks. Good, good things are happening.

Prior to that, I spent three weeks in Europe. I spoke to surprisingly large groups in London, Paris, and in Belgium near Brussels. The size and composition of the groups sent a clear message to me that the interest in Sales & Operations Planning over there is both widespread and intense.

How is S&OP Used in a Global Enterprise?

In my book Sales & Operations Planning; The How-To Handbook, 2nd Edition, I addressed this issue when I wrote about the Goliath Widget Corporation, a fictitious composite of a number of real multi-national corporations. Goliath is doing a good job in using Executive S&OP to achieve a high degree of global coordination. They believe that S&OP provides the means to globalize where necessary and appropriate, without centralizing everything, taking away local initiative, ownership, and energy. Here’s how Goliath does it:

  • The world is broken up into sections, called entities.  An entity is defined as a geographical area (region) where demand and supply principally align – specifically 80% or more of the demand is satisfied by supply sources within the entity.  North America, Europe, Latin America, and Asia/Pacific are entities.
  • The function of entities is to ‘localize’ the Executive S&OP process to the issues and problems unique to the area.  It also helps deal with the cultural differences of how they handle problems and conflict, not to mention minimizing the issues of time differences and geographical separation.  In other words, it gives ‘local ownership’ to the process, and it provides a defined and disciplined process to deal with global issues as they arise, through coordination among entities.
  • There can be no entity if there is not both demand and supply present within the entity.  For example: Australia has demand but no supply, and thus they are not an entity; their demand is supplied primarily by Asia/Pacific . Thus Australia has a role in the Demand Planning phase for that entity.
  • Every month, each of the entities does the standard Executive S&OP process up through its Executive meeting, (see Figure below, steps 1 through 5) led by a local process owner who knows the people, the culture, and the demand and supply issues.

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