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
Is Your DC Ready for E-commerce Growth? Here’s How to Handle More SKUs and Inventory Turns
The rise of e-commerce and multi-channel fulfillment has caused distribution centers (DCs) to experience ever-growing numbers of stock-keeping units (SKUs) and more inventory turns, up to an average of nine in 2015.
Download Today!
From the August 2016 Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
5 Emerging Technologies Enabling Competitive Advantage for Distribution
Come hear about the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids that are enabling competitive advantage for distribution.
Register Today!
EDITORS' PICKS
The data-driven lift truck
Now that manufacturers and distributors are using the data from their automated systems to drive...
Destination Maternity: Destination Automation
Running short of space in its old facility, Destination Maternity Corp. built a new, highly...

Hibbett Sports: Faster, Flexible and Efficient
A high-speed conveyor and sortation system at Hibbett Sports’ Alabama distribution center speeds...
Necessity is the mother of invention at Quiet Logistics
Faced with the loss of a robotic pick solution, Quiet Logistics invented its own robots. Are they...