Originally published in Consulting US
Steven Bowen, founder and CEO of supply chain and operations consultancy Maine Pointe, recently examined how sales and operations planning (S&OP) helps drive success and business integration in an article at Forbes.com.
Sales and operations planning (S&OP) allows executives to achieve focus and alignment across all business functions, utilizing strong communication and collaboration across functional teams, customers, and suppliers. An important part of S&OP is matching demand information to supply capability and financial objectives to drive top-level strategy – integrating marketing and sales, financial, and supply operations into a unified whole.
Since firms want to match supply commitments with demand as accurately possible, S&OP implementation is often a top priority. However, the process often burns out when it’s implemented with a tactical focus on cost-savings. Situating S&OP as an integral part of strategic management across functions is a more sustainable proposition, according to supply chain expert Steven Bowen.
In his article for Forbes, Bowen points to five ways that effective S&OP implementations can drive more value-oriented results.
First, firms can better leverage purchase orders to drive the right product, place, time, quantity, cost, and business performance. Next, S&OP can be used to enable demand-fulfillment responsiveness, better anticipating disruptions and changes.
Third, S&OP allows executives to see the bigger picture, from suppliers’ suppliers to customers’ customers. Fourth, S&OP is the prime integration layer of Total Value Optimization (TVO), Maine Pointe’s methodology which synchronizes the buy-make-move-fulfill supply chain to deliver the greatest value to customers and other stakeholders at the lowest cost.
Last, S&OP moves companies towards single-number business planning and sustainable competitive advantage.
According to Bowen, successful S&OP implementation is driven by a number of actionable principles for effective integration.
Identifying demand signals is one area, wherein advanced operations and finding accurate demand signals enables anticipatory decisions that can prevent financial disruption. Another important principle is the removal of silos and synchronizing of S&OP across operations, procurement, and logistics – affording a big-picture view and cross-functional collaboration.
Creating a perpetual learning function is also critical, so that companies can correct failures from previous periods of operations. Advanced analytics and big data can also help drive the right answers by leveraging large volumes of company data.
Bowen also advises “unbending dedication” to TVO, which helps optimize the full supply chain with its end-to-end approach, instead of using individual, tactical engagements more prone to failure.
Finally, S&OP should be built into the company culture, and as such, firmly ingrained into company leadership. According to Bowen, making S&OP a strategic core of the business will help lead to the project’s sustainability, while setting the stage for lasting, improved business performance.
Bowen has penned a number of other articles on Forbes related to supply chain excellence.
Bowen's first column, "How CEOs Can Create Value with Supply Chain Optimization," was published on the Forbes.com site in April. In this column, he discussed new challenges faced by corporations, including unpredictable tariff and trade scenarios, which have caused business leaders to take a fresh look at optimizing their supply chains. In his second column, "Six Ways to Optimize Your Supply Chain to Generate Profit," Bowen offers specific and proven strategies for leveraging the supply chain to generate economic profit.
Also, in the first of a series of Forbes podcasts, Bowen interviews Dr. Paul Dittmann from University of Tennessee's Haslam College of Business to cover "Redefining Supply Chain Excellence" and discuss the critical role of the supply chain in managing working capital and enabling growth.