Integrated business planning (IBM) and Sales & Operational Planning(S&OP) is the process to align organizational silos to an organizational goal in order to improve revenue, mitigate costs, inventory optimization and enhancing service levels.
Leading companies that experience measurable improvements in revenue and cost control are champion in aligning different teams like marketing, sales, production, inventory, logistics, distribution and finance to achieve overall organizational goal. They are master to take right decision at right time and their decisions are always supported by factual and real time statistics.
Most of the organizations do short term planning just to maintain the balance between demand and supply. This short term focus leads to an ad hoc processes with a range of operational issues like shortages, late deliveries and wastage. These issues will have a direct impact on turnovers and margins in the long runs, at the same time hampering the brand image in the market.
For manufacturing industry, supply chain is business. Organizations are becoming more global and face rising complexity, volatility, uncertainty and margin pressure, hence the importance of Sales and Operations Planning is increasing.
Supply chain challenges of the organization
- Demand volatility
- Need to improve profit margin
- Increasing prices of raw materials
- More market penetration
- Change in global economy
- Growth in global presence
- Arrival of new entrants
- Increasing product mix
To counter all these challenges organization need plan of plans or Sales and Operations planning. Organizational agility is the capability of supply chain partners to adjust plans to changing market demand and deliver goods to customers at reasonable costs, quality and service levels. To meet this capability, a company must align different departments of the organization against corporate strategies. S&OP enables the environment with shared visibility for all partners, allowing a collaborative approach of planning.
Sales and Operations Planning benefits:
- Improve cross functional communication
- Improved order fill rates
- Fewer supply disruptions
- Improved forecast accuracy
- Manage demand volatility
- Enhance top line revenue
- Reduce supply chain costs and risk
- Improve management visibility
- Improve utilization of resources or assets
- Integrate customers and suppliers
S&OP is an enabler of business strategy. It aligns functions against a common goal and helps companies to facilitate trade-offs.