SALES & OPERATIONS PLANNING
The Evolution of S&OP
S&OP can provide a powerful way to drive better functional coordination and synchronization,
particularly in the current uncertain business climate. Yet, it is a process that has had a hard
time withstanding the test of time and is subject to repeated re-designs and re-imagining.
—Simon Ellis, practice director, Supply Chain Strategies, IDC Manufacturing Insights
ompanies run different flavors of S&OP
processes, although we tend to lump them into
one of three categories based on maturity: basic,
integrated or collaborative. Progressing through
ates one play-book for the entire business. S&OP frequency is
weekly (sometimes less than that if gap-closing measures are
required), yet the process does not lose sight of longer-term
planning horizons. What sets the collaborative S&OP apart
the maturity levels to a collaborative S&OP process will drive most distinctly from its less mature stages, is the ability to look
forward as well as back, and to perform both what-if evalua-Basic S&OP process tends to be informal, will maintain a tions for business trade-offs and risk-reward analysis to
functional perspective and will likely not have broad busi- achieve business objectives.
ness representation. It is not unusual to see just Sales, Mar-
The last 18 months have put enormous pressure on man-
keting and Finance involved, with multiple plans in place. ufacturing companies. The product mix effect has created
Frequency will be quarterly, perhaps monthly. Basic S&OP high levels of margin volatility and a renewed focus on cost
also tends to be more rear-mirror-driven rather than proac- efficiency. In this context, S&OP is critical. In a recent IDC
tive. Companies at this stage may not have a centralized survey, manufacturing respondents ranked the applications
scorecard with joint KPI review.
in which they most expected to invest in 2010. Unsurpris-An integrated S&OP tends to be a more established, for- ingly, S&OP was in the top 3 with over 45 percent expecting
mal process with a cross-functional consensus focus to get to to invest in S&OP tools.
one plan. Functional representation will expand to include
Supply Chain and perhaps R&D. Frequency will be monthly,
perhaps even weekly, although the process does tend to still Implementing a S&OP process—or improving an existing
process through better integration or the use of an application
A collaborative S&OP is an established process, often with from a reputable software vendor—will improve the business's
software tool facilitation. Full cross-functional consensus cre- ability to get to a single consensus plan.