A posting in Supply Chain Digest from a while back poses a question as to where Sales and Operations Planning (S&OP) might be going and do we need to move on to a more comprehensive concept called Integrated Business Planning (IBP)? The article references a diagram from Gartner and is shown below.
What I find most interesting in the Next Generation S&OP is implied, but not stated explicitly. That is that Integrated scenario analysis, Supply “what-if” and Base supply plan (in nine-step S&OP) are replaced with Supply “what-If”, Financial “what-if”, base supply plan and base financial plans. What I believe is implied is that:
- Integrated scenario analysis, which was looking at just the supply plan, is extended to include a financial plan.
- The next generation approach will be much more interactive and integrated so that the financial and operational impacts from alternative demand or supply plans can all be considered (easily) in the S&OP process.
The diagram below is an attempt to show the evolution of the development of an integrated consensus plan which addresses and balances the interests of demand, supply, and finance. In the “new world”, managers can see supply, demand and financial projections based on the current or potential supply and demand plans. By seeing the impact of change, they can develop a new “consensus plan” which represents the best balance between competing objectives. My colleague Trevor Miles wrote a very interesting piece a while back called “ IBP or S&OP: What’s in a name?” Check it out and provide feedback below.