What are the 5 key pillars of S&OP? The What Is S&OP? article states that the structured format of S&OP processes makes the S&OP planning methodology repeatable across businesses and industries. Also, the S&OP process typically includes visibility and analytics, business simulation. And combined with cross functional collaboration, workflow management and operational reconciliation in real time.
S&OP Key Pillar 1: Visibility and Analytics
Data tells a story. Thus, listening to your data will help you understand your successes and your pain points. Data should be clearly visible to all team members. Allowing each team member to access a common source of up-to-date data is critically important. Indeed, it is fundamental to make sure that everybody is viewing performance results from the same vantage point.
Key Pillar 2: Business Simulation (Scenario Planning)
Planning enables businesses to take control of their destiny. Or at least to have a modicum of control over their future. When external events occur that require businesses to alter their plans, businesses must take quick decisions. Which new paths will provide the least disruptive alternatives? Which new paths will provide least expensive additional costs? “What if” planning enables a business to develop optimal alternative plans when faced with unexpected changes in plans.
Key Pillar 3: Supply Chain Collaboration
S&OP is a multi-functional process that elicits all of the functional expertise of individual team members, which is why collaboration is so important. Each team member has a clearly defined role. Thus, they can represent the requirements of their particular job during the S&OP planning process. Accordingly, the organization builds the S&OP plans to satisfy the needs of every team member. Empowered with the resources to do their jobs, the entire team can work towards the dual goals of meeting customer demand. Accordingly, they can also support the organization’s strategic objectives.
Key Pillar 4: Workflow Management
Providing the framework for a structured and efficient workflow is an important part of S&OP planning. Specific tasks within workflow management include process status tracking, task escalation, decision execution and process audits.
S&OP Key Pillar 5: Operational Reconciliation
Then, during the operational reconciliation phase of the S&OP process, the members review the needs of all departments. Thereby, they collectively create a workable, effective S&OP plan for the month (or other regular time frame). Supply side issues, including raw materials and back orders, are reviewed to make sure all needs for the upcoming planning period can be met with the revised S&OP plan. The committee also presents the Forecasts and reviews the prior month’s supply performance.
Finally, after adopting those 5 key pillars of S&OP, the organization has to define the Roles and Responsibilities of S&OP.
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