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S&OP Process – Do whatever suits you best!!!

S&OP has been talked about a lot almost everywhere and anywhere. The point of view that I am going to share through this blog is that there is no defined and one-single way to manage S&OP process. At least, this is what I have seen across various organizations in multiple industry segments. We have read about S&OP processes in books and various public domains, and almost everywhere the approach has been fairly generic, standard and uniform, but when it comes to real-world scenario, each organization takes a unique approach towards S&OP. I will share my opinion on critical success factors for an effective S&OP process and how organizations have been doing it differently. Read on….

As we all know that S&OP process is an integral component of an organization’s supply chain planning process, I believe an ideal S&OP needs the right mix of factors across Process, Technology and Organization dimensions. Due to its multi-faceted nature where it touches various stakeholders within the organization’s boundary, it throws up its own set of challenges, and in my opinion, these challenges are around how to ‘make it implementable’. I have laid out a small set of critical success factors that I feel are relevant for an ideal S&OP process – and I would welcome your thoughts and opinions around this too…


S&OP Process


Having said that, my observation is that each organization defines and manages S&OP in a different manner, and they have been successful in adopting it in the way that suits them best. I can share my own experience and what organizations do in the name of “S&OP”.

- I have always understood that S&OP process has to involve stakeholders from various functions such as Planning, Manufacturing, Finance, Sales & Marketing and may be R&D/Product development. But, this may be far from reality in organizations, where probably a couple of functions sit together in multiple forums and build consensus on final plans and this is what they call as S&OP. We may disagree saying that it is not the right way to run S&OP but it works and it works effectively within the organizational ecosystem…

- Very recently, in one of my client engagements in supply planning domain, I realized that the demand and supply planning functions worked in silos but still S&OP existed in the organization. I was surprised to see such form of S&OP where just Sales and Demand planning finalize the demand plan and push it to Supply side, and they were surprised too, to listen to our opinion of an ideal S&OP process. It has been working for them for quite some time and they don’t seem to change it at least for the next few years. For them, it is not practically feasible to include people from finance or product development at this stage. Marrying the big divide between Supply & Demand within supply chain is a very big organizational challenge…

- In another few instances, I have observed people working in supply chain functions meeting for a quick monthly meeting that might last for 3-4 hours. They discuss respective sales plans, review last month’s performance, and prioritize commitments from manufacturing and list down the action items in the end. When you ask them about if they follow S&OP in their organization, you can expect a very positive and convincing answer. They call these set of activities as S&OP process and why not, they can show you graphs that reflect improvements in forecast accuracy and inventory turns as a result of all this effort….

- Using technology as part of S&OP process is another area that is still nascent to most of the organizations. I understand that it is more relevant for organizations that have mature S&OP processes, but I have also seen people in leading organizations using simple excel capabilities to churn data, do lot of analysis and throw insights that are really effective for decision making. They may not have sophisticated what-if analysis capability but a smart blend of simple scenario planning with experience or gut-feel is sufficient enough to get them going…

I am sure you would have had such similar experiences as well. All of this has made me realized that although S&OP has got an ideal definition and approach, it is being used in different ways in each organization depending on how it is working out best for them. Each organization has its own set of organizational dynamics and constraints, and therefore, although we hear term S&OP being used by most of them, it may mean different things to each of them.

What are your views and thoughts on this. Do you agree to my opinion or do you have something different to share. It will be great to hear most of you; I am sure this is something that would have touched in some way or the other in your experience in supply chain.



I tend to agree that an S&OP process is tailored to the needs of a particular business environment.

The characteristics of the business environment and the type of supply chain structure effect the best structure of an S&OP process. For example, a low margin consumer poroducts business may require a different structure than perhaps a high margin, high tech electronics business. Each drives different requirements for the participation of supply or product management in the process. Corporate culture, in my experience, is an important consideration in initial and longer-term S&OP structure. Margin also drives different criteria in the selection of supporting technology.

This was an interesting and well articulated post.

Bob Ferrari
Author of Supply Chain Matters

Thanks Bob for your point of view on this. I definitely agree to what you have mentioned.

It was very refreshing to see your article (although a little late in time) but where ever you read something related to S&OP in the web, every one seems to have his own truth while you make it clear to me, that everybody needs to find the process to fit best with their structure and necessities. I agree completely with your article, I was introduced to the S&OP process by the beginning of the century, and I was told by consultants that the S&OP meeting (once mature) shouldn't take more than 2 hours... well, since then, I've never heard about an S&OP meeting that takes less than 2 hours, not saying the effort necesary to prepare all the information for the staff attending. I'll keep on looking for best real life experiences with S&OP.

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