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(This is an ongoing column in The Journal, which is intended to give a brief view on a potential topic of interest to practitioners of business forecasting. Suggestions on topics that you would like to see covered should be sent via email to [email protected]).
In the spirit of this special issue on the Sales and Operations Planning (S&OP) process this column represents a recap of the three-part series I ran in the Journal of Business Forecasting starting with the Fall 2004 issue. The column highlights and focuses on the technology needed to support the S&OP process.
The Sales and Operations Planning (S&OP) process has been around for decades. I have discussed it in most of my presentations on demand planning and forecasting since the mid-1990s and have been polling audiences along the way. One-third of the early audiences were comprised of individuals from companies that had implemented S&OP, while for recent audiences the number has been hovering over 80%. Clearly the S&OP process became more prevalent over the last decade or so, with a crescendo of interest in the last few years.
An indicator of the interest in the S&OP process is the fact that (according to AMR Research) companies have spent around $12 billion in supply chain planning application software over the last 6 years. Yet while spending significant sums of money on S&OP-related software, they were not seeing the benefits they expected because many did not change the process to fully leverage the enabling technology. So many companies have been adjusting their S&OP processes and enabling technologies to do this.
This article provides a blueprint for helping companies improve their S&OP processes. It covers the 'ideal' process to evolve towards, the enabling technologies needed, and a four-stage maturity model developed to help companies diagnose their 'as-is' S&OP processes, as well as to help them develop a roadmap for achieving their 'to-be' processes and technologies.
THE IDEAL PROCESS
There are a dozen aspects of an 'ideal' S&OP process. While they can never all be executed to the fullest extent, they represent an ideal process towards which companies should evolve, yielding and improving supply chain performance. These aspects are summarized below (with more detail to be found in an article I wrote -...