What are the advantages of S&OP? As noted in the What is S&OP? article, Sales & Operations Planning (S&OP) provides companies with unique capabilities. A mature S&OP helps to reconcile cross-functional plans and manage risks. Thus, risk management provides transparency, stability, and alignment with corporate goals. Well-run S&OP programs provide companies with a distinct competitive advantage over their competition.
Key Benefits of S&OP
Companies that implement a mature S&OP following the 7-steps process and 5 Key Pillar, enjoy a few significant benefits to their operations planning. For instance, S&OP:
- improves business alignment,
- reduces expedite costs,
- improves utilization of capacity and improves return on assets (ROA),
- reduces cash requirement,
- improves supply chain risk management.
Organizational Co-Operation and Enhanced Decision-Making
The S&OP plan facilitates organizational cooperation because it enhances the flow of information throughout the organization. Data is standardized, shared and kept up-to-date. When Roles and Responsibilities of the S&OP are clearly defined throughout the organization, each team member is empowered. They can then make quick, accurate and informed decisions based on fresh information.
Instead of looking out just for the needs of their own organization, the S&OP process conditions team members to be cognizant of the impact that their decisions have on other departments. Accordingly, this heightened sensitivity creates an understanding of the need to work in a way that is mutually beneficial, compelling team members to make decisions that benefit the entire Corporation and not just their Department.
Key Capabilities of S&OP
When corporations embrace S&OP as a business framework, the S&OP process provides multiple capabilities that extend throughout the entire organization:
- executive decision support,
- cross-functional collaboration and alignment,
- scenario management,
- risk management.
Agile Decisions in a Responsive Business Environment
A rapidly evolving business environment frequently requires agile responsiveness to new environmental factors. Executive Management needs to feel confident that they have accurate information at their fingertips so they can quickly manage evolving risks to their business.
Finally, the ability to perform “what if” analysis to manage and mitigate risk, based on using the most up-to-date information available, is a important capability of S&OP.
Want to know more about the advantages and benefits of Supply Chain planning? Read our Data Sheet on Supply Chain Planning Solutions.