S&OP as a Strategy for Today’s Industry

S&OP, in general, is a model that associates a set of information processes and technologies that give the company the ability to respond effectively to demand, by synchronizing all areas of the business. For some years, companies have been adopting this practice to be more competitive in the face of new demands and market changes.

Although today we often hear the term “S&OP 2.0” in seminars, congresses and specialized logistics events, the reality is that there have been no major changes on the side of the process, we can only speak of a notable improvement in the ability to analyze solutions technological Therefore, we should continue to focus on the essence of S&OP.

To start, the main objective of the S&OP is to balance demand and supply, this process is carried out in a cycle composed of 4 calendar weeks, with the following weekly meetings:

Step 1: Product management (obsolete, new products)

Step 2: Demand planning (forecast, compliance indicators, external and internal adjustments)

Step 3: Supply planning (analysis of suppliers and their performance, times, internal and external factors)

Step 4: Integration of the plans (scaling of capacity issues, conversion of the plans into associated financial costs, preparation of the executive summary)

Step 5: Executive Committee (business review, solution review, reconciled plan generation)

During this process, benefits are obtained such as the identification of the products that generate greater profitability, and the most strategic customers for the company, thus supporting the decision making of the business.

To achieve a successful implementation, three enablers must be considered: technological tools, processes and people, which have an equal impact on the result, but vary in the effort required to achieve them. For example, the appropriate choice of a technological tool usually occupies 10% of the relative effort, the design of robust processes usually requires 30%, while the remaining 60% usually corresponds to the appropriate involvement of the work team and the timely and assertive change management.

Taking into account the above, if your company is in the process of reengineering or implementing the model, we suggest you focus very early on the communication activities, strategic alignment of the areas, identification of the appropriate profiles, and achieve the provision and commitment of the whole team.

Related readings if you wish to deepen:

  • Michael Gilliland – The Business Forecasting Deal
  • Charles Chase – Demand-Driven Forecasting
  • Daniel Kahneman – Heuristics and Biases: The Psychology of Intuitive Decision-Making


Author: Aimara Fagúndez, Manager of Professional Services SOLA en Cerca Technology