Although this process has been around for more than 30 years, S&OP or “Sales and Operations Planning” is a subject that has become a “must-have”. As a result, more and more companies are implementing it. Why this craze? What are the advantages of S&OP? How does this process impact the company’s performance? Answers.
S&OP process: definition and issues
S&OP is a structured business process that aligns all business functions around unified assumptions and strategies, allowing for coordinated decision-making. French is known as the Plan Industriel et commercial (PIC). This monthly process impacts the company’s functions well beyond the supply chain. S&OP aims to provide the means to collectively deploy and adopt a strategy, which can be measured using indicators.
The plan resulting from the S&OP process is a unique vision of the future shared by all the company’s functions. Thus, S&OP responds to current challenges:
- Ever-expanding product ranges with ever-shortening life spans.
- The emergence of new competitors, new business models and new regulations.
- The need to manage an agile product strategy (acceleration, substitution, rationalisation, etc.).
- Adapting to a fluctuating market.
- The anticipation of a new industrial strategy for resource allocation.
- Sharing and implementation of strategies between the executive and operational levels.
S&OP process: what are the benefits for a company’s performance?
S&OP will enable coordinated and digital agility of the entire team in the face of variability in the environment or strategy. S&OP, therefore, has a positive impact on the performance of the company, as it enables :
- Controlling the planning load: S&OP manages the sales and operations strategy over 12 to 24 months, allowing you to anticipate the management in the correct order of magnitude. As a result, your planners and shop floor managers are much less confronted with conflict management and problem-solving. The planning workload and capacity are thus adapted and controlled.
- Reduce cycles: better control means fewer emergencies, fewer last-minute operations, fewer alternative flows, and order splitting. Thus, the flow is much faster and less disrupted, not reducing the time required for operations but significantly reducing the total time needed to make products available to the customer.
- Improving the reliability of forecasts: a better vision of the future allows for a more efficient strategy and, by extension, better control of service rates, stock levels, workloads, capacities, and supply flows. This is the source of S&OP performance.
- Inventory management: Thanks to a global and shared vision, S&OP allows for more relevant inventory management and reduces overstocking while avoiding stock-outs.
- Reduce late deliveries and backorders: It is not uncommon for a company to have 10% back orders and 10% out of stock. This leads to significant disorganisation and rushing work. One of the functions of S&OP is to avoid this type of situation through better anticipation. It has a strong impact on customer confidence and the serenity of the internal organisation.
- Steering turnover and margins: Thanks to S&OP, we can pilot better. Therefore, prioritising products more effectively according to their strategic position in the value chain is possible.
- Improve team synergy and stability: Insofar as it makes it possible to rationalise processes in the company’s overall strategy, S&OP makes it possible to ask the right questions and set the appropriate management rules. Teams then spend much less time resolving conflicts. This impacts the teams’ well-being, and serene teams are sustainable and productive. The impact on performance is strong!
S&OP process: how to set it up?
Once a company implements an S&OP process, there are different maturity levels. To start with, the company can focus on its data and forecasting. The first level consists of having its data and collaboratively making sales forecasts. To go further, there are generic non-specialist tools, such as Excel, but also new generation native cloud tools, affordable and quick to set up, which guide you in implementing the process.
You need to ask yourself the right questions to find your way around. What is the level of maturity of your process and your teams? How quickly do you want to make this project operational? What is the order of magnitude of the total budget you can allocate? What is the expected return on investment?
The choice of your supply chain planning tool should be based on the triptych: budget, team maturity, and deadline. The maturity of the processes and the teams are key elements to guide your choice: it is better to take the steps one by one and start simply.
Associated with the right tool, an S&OP process will allow all teams to gain serenity while facilitating and objectifying strategic decision-making. In a changing world, such agility represents a significant competitive advantage.
As an S&OP tool, COLIBRI allows you to manage your Sales and Operations Planning from A to Z, to simulate, compare and make the right decisions according to your objectives. In just a few years, COLIBRI has become the leading S&OP solution for the SME sector. Deployed in 3 months with 90% of its customers, COLIBRI is simple and quick to implement. It allows you to perform real-time simulations to make the company’s best strategic decisions. This way, you fully embrace the benefits of S&OP! Got a project? Do you have a question? Please contact us!