S&OP: What You Can Learn from the Top Performers

The benefits of effective Sales & Operations Planning are compelling — lower operating costs, reduced inventory requirements, and top-line growth. The top-performing S&OP companies are realizing these benefits and in the process gaining competitive advantage. This article details the traits of the top performers and gives a practical approach to help others enhance their own S&OP performance level.

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Long advocated in the pages of Supply Chain Management Review and by expert observers of the supply chain scene, the Sales and Operations Planning process (S&OP) has reached a point of broad adoption. A recent study performed by The Hackett Group indicates that almost 70 percent of study participants have implemented an S&OP process.  However, the study also reveals a wide gulf between S&OP top performers and those that merely practice S&OP. Not only do top performers apply S&OP best practices to a far greater extent, they also have begun to take the next step of integrating their S&OP and financial planning processes to drive true integrated business planning. As a result, top performing organizations find that S&OP is 68 percent more effective at driving benefits than it is for other organizations.

This article outlines study findings, provides key insights on challenges and opportunities, and offers a path forward for those seeking to join the ranks of S&OP top performers.

Let’s begin with a definition. We define Sales & Operations Planning as a collaborative decision-making process used to develop and align time-phased demand, supply, and financial plans in support of the overall business plan. S&OP is, by its nature, a cross-functional process that involves individuals from sales and marketing, supply chain, finance, procurement, logistics, and even R&D and capital projects.

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