An effective sales and operations planning (S&OP) function is essential to thrive in today’s operating environment.

Though S&OP originally aspired to bring business functions together for a more collaborative approach to business planning, today’s S&OP is most often used to address gaps between supply and demand. It can, and should do much more.

In an era where e-commerce and omnichannel fulfilment are pushing companies across many industries to develop logistics and supply chain management processes that move at ‘digital speeds,’ the globalisation of the business world introduces a new set of problems such as higher risk, longer lead times, and less inventory.

As more companies get involved with these global networks, the more complex they become. Increasing disruption in the business environment has created an urgent opportunity for S&OP to expand its role. Uncertainty makes high functioning agility and integrated business planning essential to success.

Supply chain issues have a direct effect on business performance. Forced to deal with the day-to-day demands of fulfilling orders and maintaining good customer service levels, too many organisations wind up with disconnected supply chains that lead to expensive delays and poor visibility.

These issues cause inventory shortages, delivery delays, financial losses, and substandard customer service. When the supply chain suffers, the bottom line suffers. It’s a straight and solid connection from supply chain issues to fundamental business issues. The modern consumer expects speedy, on time delivery, easy omnichannel fulfilment, and a smooth return process. The company that fulfils those desires is likely to earn repeat business, with more loyal customers leading to better business performance.

It’s time to upgrade your technology to support efficient S&OP

A few years ago, the slow, spreadsheet-driven way of S&OP may have sufficed, but today, it’s utterly inadequate. A disconnected process can’t keep pace with a dynamic market. Disruption can be a forceful motivator, but being prepared for the next business disruption is far from the only reason to evolve your S&OP processes.

Existing planning capabilities won’t be sufficient for organisations to keep pace over the coming decade. Technologies such as analytics and machine learning will be a major component, but to be truly effective, they must be supported by new processes, talent and governance.

S&OP must be a medium-term process. Short-term S&OP drives more tactical discussions and decisions but fails to enable leaders to look beyond a 12-month horizon. However, many decisions need to be made well in advance, such as negotiating contracts with suppliers, or increasing manufacturing or even warehouse capacity.

Next generation S&OP holds tremendous promise for improving overall business performance and achieving integrated business planning that drives results.

For further information, including practical tips for empowering the next generation of S&OP, download our S&OP guide.

Our next blog will list the six phases of S&OP, keep an eye on our social channels where we’ll be publishing details.