S&OP - capitalizing on events while others lose

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IndustryWeek

had an interesting article this morning; “Five things Manufacturers should be able to do with S&OP data”.  I don’t necessarily agree with the focus on data. Companies that have a robust S&OP process have a number of factors that make them successful;

  • Excellent data (I agree this is critical, but doesn’t provide for successful S&OP on its own);
  • Excellent, repeatable processes;
  • Executive commitment and buy-in;
  • Communication of the plan to those that must execute.

Now that I have that off my chest, I do agree with the core part of the article which basically outlines the benefits of a successful S&OP process (see the article for an explanation of these points);

  • Minimize surprises
  • Optimally manage inventories
  • Improve margins
  • Improve customer satisfaction
  • Better resource  utilization

In addition to these benefits, a robust S&OP process will also allow you to respond quicker to the macro events that impact your business.  Worldwide material shortages, changing demand trends (who would have predicted the success of the iPad  besides Apple? ), major world events all can be detected and responded to faster with S&OP.  Those companies that recognize the event first and respond fastest often end up benefiting from the event while their competitors lose business. What benefits have you seen from S&OP?  Respond back and let us know!

Discussions

Flavio
- August 16, 2010 at 10:56am
With the S&OP process not only inventories come down automatically but also obsolescence cost. We experienced a double digits (%) reduction. Most important, it stays there. Further, inventories are no longer strategic.

PS The header says clear "S&OP Data" but probably it should be "S&OP process" instead. Is the remark not hairs splitting?!

PPS I loved the essay anyway!
John Westerveld
- August 18, 2010 at 8:45am
Thanks for the comment Flavio.

Great point about the impact of S&OP on inventories. I've seen similar effects in past projects.

I admit that I've been known to split a few hairs in the past. I suspect that the writer of the original article really was talking about an S&OP process, however, I thought it was important to note that even with great, clean, error free data, we can still have a failed S&OP process, especially if the executive team doesn't buy in.

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