There has been talk recently that sales and operations planning (S&OP) software hasn't caught on with business to the degree that vendors had hoped. But JDA Software Group believes the concept still has validity. In fact, the company says, the next generation of S&OP applications can play a major role in helping retailers, distributors and manufacturers to cope with negative economic conditions.
Companies adopting S&OP today are ranging beyond its use as a tactical weapon to one that can aid in the alignment of product launches, marketing and sales programs, production plans and resource allocations, claims David Johnston, senior vice president of manufacturing and wholesale distribution with JDA. Industry leaders, he says, "understand that the optimized alignment of supply and demand can only be achieved through a formal, disciplined S&OP process that blends cross-functional collaboration, business-process integration and advanced technology into a single and comprehensive solution."
In moving away from the tactical approach, companies begin to incorporate S&OP into integrated business planning efforts. They align supply chain plans with corporate financial strategy, eliminating the corporate silos that block cross-divisional cooperation. Johnston says it's crucial to bridge gaps between the demand and supply side of operations, bringing together manufacturing, logistics, purchasing and upstream suppliers. At the same time, companies need to deploy profitability analysis with the participation of senior leadership. Built-in, best-practice workflows can make the most out of an integrated S&OP system, avoiding the trap of running disconnected software applications supported by non-current data. S&OP can help companies to realize continuous improvement in such areas as inventory turns, sales, cost and manufacturing effectiveness-but only if they rely on a set of key corporate metrics and take a long-term view of forecasting and planning. Each individual in the chain must be held accountable to a unified S&OP plan, based on the application of relevant benchmarks. Finally, Johnston calls for a formalized leadership structure within the user's organization, including monthly reviews by senior management, to ensure accountability for achieving the full benefits of an S&OP installation. In a recent JDA survey, "nearly 75 percent of respondents cited corporate culture issues as barriers to effective S&OP implementation." Only 16 percent of chief executive officers were involved in the process, Johnston says. "Accountability was low across the board."
