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In my recent Mea Culpa post, I mentioned my prior work on Sales and Operations Planning (S&OP), and the importance of leadership. Leadership and S&OP? How aligned do you believe your organization is to drive these metrics? My observation was that Mondelez’s processes were worse than Kraft’s.
Sales & Operations Planning (S&OP) as a process has been around since the 1980’s. While the terminology evolved, the underlying thesis of S&OP has stayed the same, i.e., bridge the divide between sales forecasts and operational plans while respecting the budget.
Sales & Operations Planning (S&OP) is an established industry process that aims at finding a balance between demand and supply and streamlining cross-functional collaboration. Procurement People should learn the Sales & Operations Planning (S&OP) Process. Click here to learn more and register today!
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. The average company has seven S&OP processes, but a global chemical company averages over 30. Metrics Definition. Businesses are different.
To align S&OP. As companies transitioned from regional to multi-national organizations, Sales and Operations Planning (S&OP) processes proliferated. Today, the average company has seven S&OP processes, but a global chemical company averages over 30. Each defining S&OP differently.
But by monetizing Sales & Operations Planning (S&OP), supply chain planners can speak the language of finance while developing S&OP into a more mature process. This isn’t just aligning financial planning with S&OP. Value-driven S&OP is about “what’s important”.
We consistently see that companies focused on functional excellence–a focus within a functional silo like manufacturing, transportation or distribution– or singular metrics– like inventory or costs– underperform against their peer groups. Let me give you example. This is the goal of this post.
Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric. One example that I’ve seen several times is around inventory targets.
I wrote my first report on Sales and Operations Planning (S&OP) while sitting on the floor in the Atlanta airport in 2005 when I was an AMR Research analyst. The model in Figure 1 became the foundational model for the Gartner S&OP model. Sales and Operations Maturity Model from 2005-2008. Figures 2 and 3.
Use of Supply Chain Descriptors Most organizations are locked into functional silos driven by functional metrics. Stuck in a rut, supply chain leaders try to punch their way through a set of conflicting metrics and priorities each day. The metrics defining success in manufacturing and procurement do not align.
Unfortunately, the definitions of S&OP and IBP are often confusing as they seem to be both distinct and overlapping processes. Other activities, such as S&OP, still take place but as a second level of the overall process.
This turbulence sends ripples through their sales and operations planning (S&OP) process, adding complex layers and challenging the essence of effective decision-making. As these factors become increasingly prevalent, S&OP — the vital nerve center of an organization’s supply chain strategy — is being stretched thin.
by Alexa Cheater As Gartner Research Director Matthew Spooner noted in his recent presentation at the Gartner Supply Chain Executive Conference, advanced sales and operations planning (S&OP) is like a hotel. In fact, Spooner says S&OP isn’t a supply chain process at all. What exactly does that mean?
Take the General Mills and Kellogg example in figure 1. Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. The executive focus should be on the output of strategic planning into the tactical process of S&OP. Metrics Alignment. They lack cohesion.
Puricelli A few weeks ago, I launched a new blog series on sales and operations planning (S&OP ). To make sure everyone is on the same page, I want to review the basics, the foundation, which is… what exactly is S&OP? S&OP is so much more than a process or a meeting.
Let us explore how one can go about making the business case for a proposed S&OP project. Building the Business Case for Sales and Operations Planning (S&OP) was first posted on February 22, 2021 at 8:05 am.
KPIs are essential in S&OP as they provide a quantitative framework for gaining visibility, aligning efforts, supporting decision-making, and driving continuous improvement across the business. Ideally, your S&OP KPIs should consist of a mix of strategic, tactical, and operational metrics.
To understand supply chain excellence, Abby and I have been studying pattern recognition for industry peer groups at the intersection of the metrics in the Supply Chain Effective Frontier of growth, profitability, cycles and complexity. The links are listed below: S&OP: A State of the Union. Does S&OP improve agility?
The companies with the strongest year-over-year performance (placing in the winner’s circle for six more times in ten years) are Apple, L’Oreal, Nike, Paccar, TJX, and TSMC. For example, in Figure A, we share on orbit chart on how Sanofi is underperforming the industry. How Do You Define Excellence? The group is pragmatic.
One of my stark realizations this year is that smaller companies are beating larger and often more established companies on growth metrics, inventory turns, operating margin, and Return on Invested Capital (ROIC). (In The metrics selection resulted from work with Arizona State University in 2013.) Look for the full report next week.).
Let’s look at some of the best ways to make your supply chain more efficient. Here’s 10 things you should focus on to improve supply chain efficiency and performance: 1. It’s not enough to just categorise by product groups; you’ve got to dig deeper into line item analysis. What is Supply Chain Efficiency?
Puricelli Last month, I launched a new blog series on sales and operations planning (S&OP). Building upon the last post about foundational elements behind S&OP, I want to consider a question I get all the time from executives: “who really owns, or should own S&OP”? Team Composition.
Fine paper is an example of an industry whose total addressable market has been shrinking for decades and looks set to continue (see figure). In the first phase Mohawk overhauled its own internal operations, implementing a centralized Sales and Operations Planning (S&OP) process to manage its business in a more demand-driven way.
Having a strong Sales & Operations Planning (S&OP) strategy ensures that your forecasts, raw materials availability and production capacity all match up and that the factory floor can meet its defined deadlines. But simply putting an S&OP strategy in place isn’t enough. logistics firms).
In the last 30 years S&OP improved performance in many businesses. However, S&OP has not yet substantially delivered on its ultimate promise of enterprise wide resource management, rolling financial forecasting and strategy deployment. Worse, overall S&OP development and progress seems to have stalled.
Is it identical to sales and operations Planning (S&OP), an extension of it, or something altogether separate? Call it what you want, IBP is probably best thought of as mature S&OP. Lora Cecere reminds us that IBP is actually the third step of maturity in an S&OP implementation.
In today’s uncertain times, a clear vision and strategy of where you need to be is the key to rally the company and propel your business forward; forward into new markets, new geographies and ahead of your competition. One of the key challenges to a successful global S&OP process is the language barrier. ” *.
In Part 1: An S&OP Q&A with SCM World’s Kevin O’Marah we discussed the drivers impacting S&OP, the value of the process and the changing rhythm of S&OP meetings. What is in your conversations with them that is different from those who are just starting and S&OP process?
Next year’s conference will be on September 8th-11th in Franklin, TN, south of Nashville, TN. Here are nine considerations: #1 S&OP Budget Constraints. Sales and operations planning (S&OP) is a horizontal process to drive organizational plan alignment. The Role of the Budget in S&OP.
This example illustrates why supply chain visibility isn’t enough. And the linked nature of supply chains mean that collaboration is necessary to ensure that a solution to a problem doesn’t meet the metrics for one link but negatively impact another. Why transparency is better than visibility. Sightlines for success.
Companies with strong horizontal processes of revenue management, new product launch, Sales and Operations Planning (S&OP), Supplier Development and Corporate Social Responsibility have higher performance. It will be nice to be home and to have time to write on this second book, Metrics that Matter. 5) Alignment.
Integrated business planning ( IBP ) is gaining a lot of traction as more companies seek to advance their sales and operations planning (S&OP) process. For example: Verify your strategy. Cash-Cash Cycle Time; Return on SC Fixed Assets; Return on Working Capital ASCM SCOR Metrics, Supply Chain Council.
Today, I am again teaching an open class on outside-in planning concept s. In today’s training class, we focused on determining the balanced scorecard. Based on the work with Georgia Tech, we are getting clear on which metrics matter by industry. If not, let’s pack more hamburger. The reason?
In addition, Lora and Mac emphasize the importance of the following: Driving market value through S&OP. How balanced are you across the S and the OP ? Example: despite plentiful data and modern tools, everyone says they want more supply chain visibility. Start with assessment. Never waste a crisis.
While MRP and S&OP were defined as early as the 1980s, these provided rough cut analysis at the aggregate level, nowhere near the level of detail that is possible today. Now they want to deploy an S&OP process. Their words. And the benefits we have realized so far are enough to justify continued investment.
Sales and Operations Planning (S&OP) is a continuous business process that enables firms from hospitals to chemicals to respond to emerging situations intelligently. Our focus today is to discuss the relevance of buzz words such as Analytics, Predictive Analytics, Data Science, and Machine Learning, for S&OP.
For example, if you consistently backorder items or deliver them late, customers will eventually become angry. Inventory accuracy and minimizing stockouts are very important to customer satisfaction, but a few other metrics also impact the ability to meet customer expectations. Choosing Metrics. Meeting Customer Expectations.
You’ve likely already recognized the limits of deterministic planning if your company has recently launched (or relaunched) an S&OP initiative, or you’ve started to migrate from traditional platforms like SAP APO to advanced demand analytics tools, or trained your planners on supply chain performance trade-off competencies.
Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Le t’s look at a quick example. Reason #7 Making decisions based on bad data (supply chain data accuracy). Reason #8 Keeping supply chain information in silos. Reason #10: Failure to adequately train your supply chain planning staff.
I have taken myself off the road to write the book Metrics That Matter. Companies say that they want to build the end-to-end supply chain from the customer’s customer to the supplier’s supplier, but the investment is primarily in enterprise systems. Figures 2 and 3 are some examples. It is a slow week.
The evolution of S&OP to IBP increased process latency in 70% of companies. For example, in my qualitative research studies, I find few can answer the questions of what defines a feasible plan, how to measure inventory effectiveness, or how to tune and refine models. Lack of aligned metrics. Lack of executive buy-in.
Q: Is it only inventory disrupting the agility resulting from inaccurate forecasts by S&OP? Is it S&OP? Also, invest time in improving the cross-functional processes of revenue management, Sales and Operations Planning (S&OP) and Supplier Development. The same principles apply.
In other cases, information is limited because of interdepartmental rivalries, for example, “I don’t want demand planning to see my supply planning information. In today’s competitive manufacturing environment, the only metrics that count are how a change impacts the company’s goals. I’ll tell them what they are getting.”This
In earlier posts I’ve explained why existing enterprise management solutions are limited ( hint: it’s stale data ), and why I believe that the new generation of cloud platforms will enable a new kind of ‘social’ supply chain that looks and operates very differently from what we are used to today.
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