Still a dream: mature S&OP processes yet to solidify for European manufacturers

While 92 percent of manufacturers have a formal sales and operations planning (S&OP) process in place, 62 percent of those haven't gained any quantifiable benefit from doing so.

That, startlingly, is one of the findings from a global survey carried out by Boston-based Aberdeen Group on behalf of Atos Consulting, a unit of Paris-based IT services provider Atos Origin.

But it doesn't have to be that way, says Nigel Issa, a Leeds, U.K.-based Atos associate partner and supply chain team leader for the private sector. As a number of best-in-class manufacturers in the survey clearly demonstrated, an investment in S&OP can deliver verifiable benefits.

“Best-in-class businesses have a clear performance advantage right across a range of key supply chain metrics, and also are more likely to be able to use their S&OP processes to link their demand and supply plans with profitability,” says Issa. “The conclusion is clear: Organizations that proactively invest in S&OP are more likely to be using best practices to deliver competitive advantage.”

Conventionally enough, Atos Consulting recognizes several distinct stages of S&OP “maturity,” explains Issa. “S&OP Innocence,” for example, embraces an ad hoc and event-driven approach to demand and supply problem-solving, coupled to S&OP technology characterized by spreadsheets and simple data feeds.

“Tactical S&OP” and “Integrated S&OP” represent two phases that build on this, both in terms of the technology used and the integration with business processes and the business itself. In particular, says Issa, a sure sign of growing maturity is when businesses are seen to be reconciling demand and supply plans with their financial and performance objectives.

As best-in-class manufacturers responding to an Aberdeen Group survey clearly demonstrate, investment in sales & operations planning (S&OP) solutions and usage can deliver verifiable benefits.

But various difficulties, adds Issa, conspire to limit the extent to which businesses can raise their S&OP maturity level.

Lack of executive and other key stakeholder participation in the S&OP process, for example, can undermine the importance that ought to be attached to it.

“If S&OP is only viewed as a tactical planning tool, senior management can start to disengage from the process,” Issa notes. “Without an understanding of the impact of operational plans on profitability, it's all too easy for S&OP to become a planning tool used predominately by the supply side of the business,” says Issa. “S&OP must include financial and performance data, and be formatted so as to enable business leaders to highlight how demand and supply planning decisions impact profitability, business, and performance objectives.”