What is S&OP Software and What Can it Do?
If you are a modern age advocate of supply chain management, you probably are not a stranger to the term Sales & Operations Planning, or S&OP. The integrated business management process has now made its presence known to empower leadership and allow companies to focus on key supply chain drivers in coordination with sales, marketing, demand management, production, inventory management, and new product introduction.
So, what benefits can a properly functional S&OP software really bring to your company? There are a lot, but here are the most important ones:
1. Provide a complete overview of financial data
The demand to have lean supply chain processes that can minimize cost and maximize service delivery are heaping pressure on companies, now more than ever. While this remains desirable, it is not easy to achieve due to the inherent uncertainty set up by the supply chain’s complexity. S&OP processes, fortunately and necessarily, shore up companies by letting them streamline their data and leverage their financial forecasting. For example, with the support of resource-planning tools, companies can pool data from any available sources—sales report, supply chain partners, ERP systems, IoT sensors, and vendor platforms—and then set them up for in-depth analytic reviews.
2. Bolster growth with demand prediction
One of the biggest cost generators in any supply chain is poor demand sensing. For example, unjustified orders force companies to spend expensive expedites to cover the excess cost (in case of over-order) or to meet unexpected demand (which under-order causes). An effective S&OP process helps restrict the chances of those interruptions by providing a well-crafted system for demand sensing based on specific business goals. Of course, this cannot and will not happen in the blink of an eye. The company will need to work this into its supply chain resource-planning system, but with the right demand planning software, the tangible benefits are substantial:
- Optimize inventory levels
- Expedite shipments
- Eliminate stock-outs
- Increase fill rates
- Better customer service
And many more
3. Optimize transportation management at lower cost
The 2018 CSCMP State of Logistics Report recapped the eCommerce growing trend in S&OP. It showed that new technologies drove a 7% increase in parcel shipment volume during the four-quarter period from 2017 to 2018. Now that technologies have grown further, plus the impact of the COVID-19 disruption, the number is indubitably pushing through the roof, nearly sevenfold that of 2018.
As the shipments spike, it’s vital for companies to make sure that their S&OP processes are able to catch up with this demand through transportation management. With the backing from the right visibility platform, companies can determine which transportation channels are most efficient, from OEM part delivery to warehousing, warehousing to last-mile distribution, and utilizing them properly.
4. Ace inventory planning
Inventory levels and supply shaping are extremely decisive in supply chain profitability. Mature S&OP processes can help businesses understand inventory optimization by setting up a framework that companies can use to optimize their shipments and combine several goods orders, thus reducing import/export fees; shift transportation modal to the most cost-effective vendors, and generally maintain the lowest, yet most sustainable inventory levels possible.
5. Enhance touchpoint visibility
S&OP also opens the gate to even a broader opportunity in supply chain management: Process visibility. Although S&OP usually relates to processes alignment and overall strategy, it’s imperative to get a clear grasp on the chain and how powerful can various processes manipulate overall performances. Improving visibility is an obvious benefit of S&OP, but this is only the first step towards total supply chain visibility. Suppose companies want to successfully apply the “control tower” approach that enables effective supply chain optimization. In that case, they will need a platform that has the capability to outline the supply chain from end-to-end and provides performance insights on every touchpoint.
6. So, what now?
Effective S&OP strategies will undoubtedly help companies pivot their operations and allocate resources better, with a chance to top off with more proactively management of supply and demand, but this is only the beginning.
However, to maximize the efficiency of S&OP processes, businesses will need to take their current S&OP framework to the next level. Simply speaking, all you need is an Integrated Business Planning (IBP) platform capable of providing an inclusive system that allows you to orchestrate the comprehensive, integrated S&OP processes instead of wading through countless spreadsheets.
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