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

This is an excerpt of the original article. It was written for the May-June 2012 edition of Supply Chain Management Review. The full article is available to current subscribers.

May-June 2012

Supply management can be a powerful competitive weapon—if the strategy driving that activity is closely aligned with the business strategy. Yet new research suggests that the necessary alignment is often lacking. CAPS Research experts offer a process for identifying and implementing the supply management strategies that hold maximum potential for competitive advantage.

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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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