Why S&OP Is Critical to Supply Chains

Some believe that the concept of integrated business planning is replacing S&OP, given that it incorporates such elements as financial modeling and project strategy. But such concerns have always been part of S&OP, Bower says. "IBP," he adds, "is differentiation without real difference.... I'm not sure I really believe in it."

One new use for S&OP is managing the greater frequency of products with shorter lifecycles. Drawing on the planning element of the process, the concept can be an important means of balancing supply and demand on a tactical basis, Bower says. In effect, it provides "a bigger firehose for people fighting fires."

Looking to the future, Bower says S&OP offers opportunities to improve demand management. "Every good plan begins with a forecast," he notes. Certification is another important concern. Companies need to gravitate toward open-source technology and away from proprietary graphics and models. The approach should be similar to the multi-industry Supply Chain Operations Reference (SCOR) model, he says.

For companies seeking to maximize their use of S&OP, Bower envisions "a long road ahead." Over time, as more businesses adopt the practice, they will develop a "critical mass" of information and be able to share knowledge about best practices in supply-chain planning.

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Keywords: Sales & Operations Planning, Business Intelligence & Analytics, Business Process Management, Collaboration & Integration, Customer Relationship Mgmt., Event Management, Forecasting & Demand Planning, SC Finance & Revenue Mgmt., SC Planning & Optimization, Supply Chain Visibility, Global Supply Chain Management, Supply Chain Analysis & Consulting, HR & Labor Management, Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Integrated Business Planning, Supply Chain Operations Reference (SCOR) Model, Business Financial Planning and Modeling