Integrating from demand to fulfillment gives companies the competitive advantage they need. Integration allows optimised decision making, and lets companies manage constraints in line with business priorities.
What can businesses do to proactively achieve the strategic agenda while mastering the external environment? Many companies are trying to deal with this challenging question by means of their yearly planning cycle as part of the budgeting process. They are then confronted with the reality half-way through the year as they have not mastered the external environment, e.g. loss of profitability through weakening currencies, constrained supply as competitors have increased their negotiation power, and product costs rising rapidly due to increased energy and raw material costs.
Supply Chain Planning, and more specifically Sales and Operations Planning (S&OP) is part of the solution. S&OP is the cross functional decision making process designed to reach a consensus that allocates scarce resources (capacity, materials, people, time and money) most effectively to meet demand in a profitable way. S&OP closes the gap between the annual budget round and the reality that companies face during the year.
An efficient S&OP process helps companies achieve the strategic goal of revenue growth, while improving operating margin by maintaining control over the supply chain.
Once companies have an S&OP process in place, many recognise that further steps need to be taken in the context of supply chain planning and optimisation. Next steps often include optimising the supply chain operating model and reducing its complexity within its specific characteristics and extend the collaborative supply chain to key customers and suppliers.