SALES & OPERATIONS PLANNING
Lessons Learned to Get Supply Chains
Back in Balance in 2010
The recent economic turmoil has pulled into sharp focus the issue of how to manage increas-
ingly volatile supply chains. Through late 2008 and 2009, many companies simply panicked and
aggressively cut both production and productive assets. These companies are beginning to pay
for those aggressive cuts as demand is now starting to increase—straining diminished capabil-
ities. For 2010, we offer guidance on how companies can get supply chains back in balance and
get sales and operations planning right.
—Dave Sievers and Bob Allen, principals, Archstone Consulting, a division of The Hackett Group
articularly in volatile economic times, many
companies fail at sales and operations planning
(S&OP). Under stress, the process degrades to
the level of a “blame game,” with company staff
P
analytics behind it. But sales, merchandising and marketing
are critical. They are equal players in terms of their effect on
what happens.
Observation 3: Capabilities of key network partners (
sup-working at cross-purposes internally.
pliers as well as distributors) are often incorrectly assessed or
In 2010, companies have an opportunity to get S&OP right, not considered in the S&OP process. Many companies fail to
to move towards an integrated and agile demand and supply involve key trading partners in the planning process.
planning capability that creates sustainable competitive advantage. Here are some critical lessons learned—guidelines and
The Outlook
observations culled from Archstone’s experiences across mul- Today many indicators, including the latest ISM index, are begin-tiple industries.
ning to show clear, global signs of economic growth. Regardless
Observation 1: Goal alignment on the purpose of S&OP of the mistakes of the past, 2010 represents an ideal opportunity
and its scope is critical. To truly improve the linkage between for companies to get S&OP under control. As companies start
supply and demand functions, companies require a cross- undoing the cuts they made through the downturn and begin to
functional, monthly process of evaluating and revising time- try and repair what may be weakened relationships with suppli-phased projections for supply, demand and the resulting ers, S&OP becomes more important than ever. Companies that
financials. Collaborative decision-making is the key here.
focus their efforts in developing more mature S&OP capabilities
Observation 2: Often, S&OP programs are missing the “S” in will benefit as they rebuild, and find themselves in a better posi-S&OP, focusing exclusively on operations planning. Opera- tion to weather the next surprise that the economy, competition
tions gets what it can muster from sales—generally without or world markets may have in store.
