The following article was adapted from our SCDigest Letter on Sales and Operations Planning. To download an electronic copy of the full hardcopy newsletter, and access other S&OP resources, visit our S&OP resources page.
S&OP is one of those interesting supply chain areas in which many companies are just starting with the basics, using principles developed many years ago, while S&OP leaders are starting to push traditional S&OP processes to new levels.
The SCDigest Letter is seeing a number of S&OP trends among S&OP leaders, including the following:
• Process Ownership: While often initiated within the company by an executive within the supply chain organization who acutely perceives the pain and opportunity, an increasing number of companies are turning ownership of the process over to an executive in sales, marketing, or business unit management.
• Inventory Management Perspective: There is a growing interest in what is sometimes called Sales, Inventory and Operation Planning (SIOP). While some argue that inventory inherently should have been part of the S&OP process all along, the reality is that in many companies using S&OP, specific decisions about target inventory levels have not been included in the decision framework and plans.
An increasing number of companies, such as Honeywell and Bell Helicopter Textron, are formally using the SIOP term, and many are including so called “Inventory Optimization” software to support the process.
• Focus on Shareholder Value: Companies are also using analytic tools not just to rally around a consensus demand and supply plan, but to determine which strategies will maximize profitability and shareholder value. This is actually an entirely different lens. This approach, for example, might mean adjusting sales and marketing incentives to ensure the success of a strategic new product in the market, or developing supply and demand strategies that will maximize margin, not just revenue.
Demand Management: Relatedly, companies are increasingly adopting the concept of demand management, which means moving beyond just demand planning and forecasting to more proactively working to shape and influence customer demand in a way that meets supply realities and company objectives.
(Supply Chain Trends and Issues Article - Continued Below)