SITUATION OVERVIEW : Today, survival of the fittest is not linked to size or strength but to the ability to change — to move quickly, adapt, seize opportunities, and act. This is particularly true within manufacturing, as the pace of change in the manufacturing industry is accelerating faster than ever before. Becoming more agile is a challenging task, but an essential component is being able to predict demand. Manufacturers must improve forecast accuracy to better plan across operations and increase overall profits. Sales and operations planning (S&OP) is essentially a cross-functional, consensus planning process that turns business/market demand opportunities into a single, actionable operating plan for manufacturers. It is both critical to the achievement of business objectives and poorly understood. Manufacturers that have committed time and resources to developing an integrated process see significantly improved performance overall. Particularly in today’s rapidly changing business environment, S&OP can provide a critical avenue to drive better functional coordination and synchronization. Yet S&OP is a process that has had a hard time withstanding the pace of change and is subject to repeated redesigns and reimagining.
Most companies have some form of S&OP process in place, but there is much progress that can be made. Companies have different approaches toward their S&OP processes, although we tend to lump them into one of three categories based on maturity: basic, integrated, or collaborative. Although we will steer clear of a detailed maturity assessment in this document, it is useful to at least touch on some of the different levels of sophistication we see across manufacturing:
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