November 22, 2013

Driving S&OP to the Bottom Line

Gabrielle Doby | UWEBC Communications Student Assistant

“There are substantial opportunities throughout the supply chain and throughout the business if you do S&OP the right way,” said Mitch Bourget, Principal, Accenture.

At the November 15 Supply Chain Management Peer Group meeting, Bourget discussed the common challenges of sales and operations planning (S&OP) and how to overcome them with a strategic approach that will ultimately impact the bottom line.

Historically, S&OP processes have been a balancing act from the unit/volume perspective of supply and demand. According to Bourget, this process is often burdened by an excessive focus on metrics and historical performance data.

Today, supply chain practitioners are increasingly pressured to manage supply and demand while simultaneously considering the financial impact of their decisions as market volatility has increased. In response to these increased pressures, many organizations are employing techniques that have developed alongside the increasing expectations including demand shaping, responsive supply, financial planning and operating models.

S&OP requires extensive planning. Even with new tools, many organizations still employ the traditional tactical approaches of unit/volume balance. Bourget said, “There are new techniques, which provide what-if modeling and analytics, that can help; but, S&OP is really about planning, communicating, and decision-making.”

A successful S&OP strategy starts with cross-functional participation. Representatives from a diverse range of functions need to be actively involved in the process, said Bourget. Not only should a wide range of representatives be involved, they should have roles and responsibilities that are clearly defined. Bourget says analytical and financial roles especially need development and definition to contribute to the S&OP process. He recommends that organizations establish a regular process for assigning deliverables and activities for each team member each week to help align goals with the organization’s overall strategy.

S&OP also needs support from the higher management not directly involved in the process. Bourget said leadership should recognize that S&OP is a critical process and is a differentiator for the business because of its direct impact on the bottom line. Higher management has better reach in the corporation and will best be able to understand the financial impact of S&OP decisions.

Aligning the entire organization’s goals in the S&OP processes and integrating a cross-functional approach to corporate strategy is ultimately what drives the change from a tactical balancing act of supply and demand to a dedicated process. Bourget said, “You can pick up a point or two on your bottom line by doing this process right. It’s hard to find another piece of the business where you can have that much impact.”

Member companies can access Mitch Bourget's Mediasite recording and other meeting materials here.