A solid S&OP process is the key instrument for the CEO to navigate the business towards its strategic objectives. It facilitates better decision-making on a tactical planning horizon and balances service, cost and inventory for an improved Return On Capital Employed (ROCE).
The S&OP process revolves around a series of steps that lead to an Executive S&OP meeting. Each step, starting with solid segmentation and a product management, followed by the demand, inventory and supply review, needs thorough preparation, supported by the right processes and tools. During the Executive S&OP meeting, different scenarios to tackle the challenges ahead are discussed and agreed on.
In an increasingly complex and volatile world, decisions need to be made on the spot, based on real-time data and insights. Therefore, every step prior to the pre-S&OP meeting is equally important. First, the product management review should offer insights in the profitability and life cycle of your portfolio. To improve the outcome of the demand review, a baseline forecast needs to be enriched by sales input about the expected impact of events such as promotions or tenders. Next, this data should be validated on an aggregated level, in both volume and value, to ensure that Finance receives its required input as well. This financial integration is a major step towards mature S&OP.
Inventory management is a key aspect of S&OP. After having defined your stock and non-stock items based on their impact on the ROCE, you need to calculate your inventory parameters (unfortunately, there is no such thing as one inventory rule that fits all) and install proper reporting and follow-up. These steps are key in keeping inventory in balance and identifying the root cause of deviations. Last but not least, the supply review should be supported by a robust planning tool that takes into account multiple planning levels and offers scenario management and simulation capabilities. Planning has become too complex to be left only to the planners, and the outcome of your final plan will have a major impact on the balance between service, cost and inventory.
At Solventure, we can help you take your S&OP process to the next level of maturity. We combine in-depth knowledge in designing S&OP processes with powerful tooling. Arkieva has been recognized by Gartner as a challenger in the S&OP software landscape. Once the processes and the tools are in place, we add an advanced analytics layer that boosts the performance of the process even further. However, no tool or process will deliver the expected results without a broad support base within your organization. That is why our consultants will always stay alert to change management issues and tackle them proactively.
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Want to be informed about the next webinar on Executive S&OP?
In this webinar Prof. Dr. Bram Desmet, Managing Director of Solventure will talk about “How to set up Executive Meetings that steer your S&OP process’.