Sales and operations planning (S&OP) helps you reduce waste and increase efficiency.
A well-planned and well-managed supply chain can save your company thousands of dollars a year. Those are dollars you may not even notice leaking out through hidden costs found in waste, rework, double handling, and quality claims.
Companies with the most efficient supply chains employ a process called sales and operations planning (S&OP), says Greg Lovensheimer, vice president of operations at Millcraft. S&OP represents a “fundamental shift in how companies do business,” he says, as it requires a coordinated effort from executive leadership teams and a shift from historical-based planning to forecasting 24 months into the future.
Tough? Yes. But, Lovensheimer argues, the effort is worth it. Here he highlights three ways S&OP can increase efficiency—and save you money—in your supply chain.
- Act on data, not hunches. Because S&OP relies on forecasting future trends rather than making decisions based on historical data, companies become proactive, rather than reactive. As a result, you better manage risks, respond to changes in your business environment, and quickly take advantage of new opportunities.
- Reduce product handling. S&OP improves logistics, which Lovensheimer describes as “playing chess with products—you want to win in as few moves as possible.” Fewer moves mean reduced risk of loss, mishandling, inventory inaccuracies, and even obsolescence.
- Build trust with suppliers. Proper forecasting involves building trusted relationships with suppliers as you work together to meet mutual needs. As a result, your entire supply chain strengthens and becomes a competitive differentiator in the marketplace.
S&OP is one of the best ways to drive out waste and inefficiency from your supply chain. And it puts your company in a position to take advantage of changing business conditions.
By Laurie Hileman