What Makes a Winning S&OP Program?

Although sales and operations planning (S&OP) has been practiced for several decades now, many companies still struggle to succeed with their programs. A big part of the problem is that the requisite building blocks to success are either faulty or lacking. The five success principles described here can get an S&OP program on the right track and delivering the kind of results expected.

By ·
Download Article PDF

There is simply no other word for it. The success rate for Sales & Operations Planning (S&OP) programs has been dismal. A third of all S&OP programs fail or produce unclear results.

That is one of the most worrying findings for a survey SCMR ran last year to better understand the impact of the recession from the viewpoints of supply chain executives.  The survey, conducted on behalf of IBM and Oracle, showed that about 40 percent of businesses don’t even have a formal S&OP program in place.  And it revealed some staggering gaps in the participation of different stakeholders where S&OP processes do exist.  Nearly half of the supply chain managers polled conceded that they run their S&OP meetings without regular participation form their companies’ manufacturing and finance departments. More than 50 percent do not involve anyone from marketing.

What’s going on? After all, the S&OP process was designed around close collaboration between such stakeholders. The concept is simple: By regularly getting those who have the most visibility of demand at the same table with those who have the best insights into constraints on the supply side, companies are supposed to be able to build better supply chain plans and to collaborate more effectively to implement those plans.

The idea is not new. It has been around since the 1980s. If done right, S&OP has the potential to significantly improve some key operational metrics. According to the research firm the Aberdeen Group, companies that demonstrate best-in-class S&OP have 91 percent complete order fill rates and logistics costs of as little as 6 percent of sales. And their gross margins average 43 percent.

So the basic question is this: Why don’t companies adopt this apparently simple concept?

SUBSCRIBERS: Click here to download PDF of the full article.

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Article Topics

· All Topics
Latest Whitepaper
Top 20 industrial lift truck suppliers, 2017
The top lift truck suppliers list is changing with industry acquisitions causing a dramatic departure from the norm.
Download Today!
From the August 2017 Modern Materials Handling Issue
For all the advances in lift truck technology and fleet management, operators will always be the heart and soul of a fleet. As manufacturers and equipment purchasers place more value on that piece, the role of the operator extends from design to daily use.
Reader survey: Lift trucks keep on truckin’
Top 20 industrial lift truck suppliers, 2017
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Warehouse Execution Systems (WES): The Pathway to Same-Day Fulfillment
This webinar explores the processes and technologies enabling same-day, same-hour order fulfillment using intelligent supply chain software.
Register Today!
EDITORS' PICKS
Lift truck operators: Drivers of change
For all the advances in lift truck technology and fleet management, operators will always be the...
Top 20 industrial lift truck suppliers, 2017
The top lift truck suppliers list is changing with industry acquisitions causing a dramatic...

Southern Glazer’s Wine & Spirits: Designed to Last
On Long Island, the country’s premier distributor of wine and spirits turned to shuttle and case...
GE Healthcare System Report: Lean repairs
Self-driving mobile robots improve cycle times and reduce floor space at GE Healthcare’s new...