Julie Fraser: S&OP matures into strategic process.

Julie Fraser

In tough times, everyone must pull together. Fortunately, companies have been learning to do that for a while. In the past five years, sales & operations planning (S&OP) has become a more common process for manufacturing companies of all sizes and segments. And it's being forged into a new and more valuable practice in the crucible of this challenging economy.

Since S&OP is a multi-departmental business process, it's bound to evolve. For many companies, it began as a tactical process to balance supply with demand. In the early stages, sales and forecasts often drive operations plans, so most demand-planning providers have experience supporting the process. As the process matures, companies recognize the need to bring warehousing and production in as full partners in the process.

With the credit crunch and market volatility, inventory must be central to the plan as well. In fact, in Europe, S&OP is commonly called sales, inventory and operations planning (SIOP). Both tactical and strategic inventory management are involved in effective S&OP.

Now S&OP is moving into a far more strategic realm. Companies are learning to drive activities throughout the company to better match financial goals and corporate objectives. As that occurs, the CEO and CFO should become involved as well.

While S&OP is a business process, not a software application, supply chain software is essential to supporting a mature S&OP process. Some of the key characteristics to look for in software to support strategic decisions are increasingly common:

Integration. Look for integration among data sets with master data management from broad suite supply chain management and ERP vendors such as i2 Technologies, Infor, JDA, John Galt, Logility, OM Partners, Oracle, Prescient, and ...