Twenty plus years ago, one of the hot topics in manufacturing was Sales and Operations Planning (S&OP). Word got out into the market that a few of the larger manufacturers were implementing this new process. What is S&OP, you ask? In short, APICS defines it as:
“A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain.”
That’s a mouthful, right? This concept took the industry by storm and many manufacturers followed suit because their competitors were doing it. The mentality became, “If it’s good for them, then it has to be good for us.” As with any new trend, the full scope and potential of S&OP was not really understood. What companies heard most was that if you had an accurate demand plan, then you could implement an S&OP process. At the time, many companies did not have a sophisticated process or tools for product forecasting, so the initial focus was on the demand plan.
S&OP Is Back In The Spotlight
Over the years, the buzz of S&OP faded slightly, but companies were still having issues managing their supply chains. The industry then realized that many more functions needed to be involved in this process. Demand Planning, although critically important to the S&OP, is just a piece of the full S&OP puzzle. If you can’t make what the forecast says or ship what you made, what does a great forecast really do for you? These other processes and functions have now been recognized as integral parts of the S&OP process. S&OP is now back in the spotlight as synchronizing the supply chain enables manufacturers to strive for maximum profitability and become an Effective Enterprise.
S&OP Is Not A Process
Yes, I said it. S&OP is not a “process” at all. In my opinion, S&OP is a mindset, a philosophy on how to operate your business on a day-to-day basis. In today’s manufacturing world, with the supply chain being very complex with so many variables, you need a new philosophy to succeed. Sales and Operations Planning is the philosophy that manufacturers use to tie together multiple processes into a business strategy. The only way to succeed in today’s complex and competitive manufacturing world is to integrate all these functions to meet the end customer’s expectations and to help them to become a more effective enterprise.
Is Your Company Delivering?
In the Consumer Products industry, it’s important to ask yourself the following questions — is your company delivering:
- the right product?
- in the right quantity?
- to the right location?
- at the right time?
Check out this infographic to see if you are delivering all four out of four questions. When manufacturing goods for your customers, three out of four is not good enough!