Better Sales & Operations Planning (S&OP) Helps Manage Global Supply Chain Risk

Have you reviewed your global supply chain plans recently? Many companies even now with so much uncertainty have not revisited their overall supply chain plans. Given global complexities, pandemics and tariff wars, the need for supply chain agility, risk management and contingency planning has never been greater.

Global Trade Magazine recently shared insights from Paul Baris on how S&OP can help companies have a long term process to ask the necessary strategic questions on a regular basis summarized below. Paul is a supply chain expert with over 30 years of experience in the industry as a VP of Supply Chain for several companies as well as a consultant implementing S&OP, Inventory Strategy and Demand Planning practices.

Mr. Baris suggests, “Stepping out of the day-to-day S&OE during the S&OP process allows for that broader perspective to evaluate “what-if” situations that could impact costs, demand, supply and margins before they reach fruition. In this manner, S&OP is a useful scenario-management tool to look at these cost changes, price increases and estimated adjustments to volumes at an aggregate level to quickly identify the potential impacts to the bottom-line without having to perform a time-consuming SKU-by-SKU analysis.

Contemporary S&OP tools often have scenario-modeling capabilities and increase the speed and accuracy of these strategic evaluation exercises. However, depending upon the scale and scope of a company’s supply chain, an expensive tool is not always necessary. Well-designed spreadsheet models populated by databases may be a sufficient starting point for a business. No matter what tool is utilized, the S&OP process is designed to identify potential issues and act as a launching point for projects elsewhere in the organization to identify methods for addressing those issues in the most cost-effective manner.

Companies with well-designed and utilized Sales & Operations Planning processes have well-demonstrated benefits of:

  • Reduced stock-outs, driving higher service level

  • Lower variable labor costs

  • More efficient raw material, work-in-process and finished goods inventory utilization

  • Lower transportation and material acquisition costs due to more stability

  • Higher gross margins

  • Increased top-line sales

Strategically including tariff management and other global supply chain variables in the S&OP process to evaluate possible impacts to the supply and demand balance, as well as cost structure, is critical to ensuring the continuity of supply necessary to provide high levels of service and cost management.”

At APICS Milwaukee, we’d add that S&OP process allows senior management to be more involved with running an operation. Now is the time to review your global supply chain plans to ensure your company is positioned for success moving forward.

Looking for more information on S&OP best practices? Join our next Breakfast Roundtable on August 19th where we’ll be sharing information on S&OP tools. Learn more…

APICS Milwaukee has been helping supply chain professionals advance in their careers for over 45 years with access to expert instructors and globally recognized certifications. We are the premier professional association for supply chain management, helping over 160 Milwaukee area companies represented by our members, with educational and networking opportunities.   

Let us help you advance your supply chain career in 2020! Starting in September, APICS globally recognized supply chain certification instructor-led courses will be available in the Milwaukee area for in-person and virtual for CPIM, CSCP and CLTD.  Learn more…

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