The benefits of demand forecasting come together with supply chain efficiency when all departments are working together and operating on the same page. This happens with an integrated sales and operations plan (S&OP). S&OP integration may not be easy at first as several factors must fall into place.
What Is Sales and Operations Planning?
Sales and Operations Planning is a collaboration and strategic alignment amongst business functions. The functions usually involved are sales, finance, marketing, and supply chain operations. Key stakeholders from these areas must unite to integrate their individual departmental goals into a larger common goal for the organization.
Challenges of S&OP Integration
One challenge of S&OP integration is management buy-in. Top-level executives within each department must make a regular commitment to the process of the integrated S&OP. This business model is not a one-and-done type of model. Regular communication amongst executives from each department is mandatory for this plan to work.
The most significant challenge, by far, of integrating S&OP is balancing operational costs with customer satisfaction. It’s a delicate balancing act. Profit margins and inventory management are often the victims here, but it doesn’t have to be that way.
The Right Hand Knows What the Left Hand Is Doing
With S&OP integration, there’s no more working in a silo and wondering how another department’s objectives align with yours or if you need to collaborate. Everyone comes together to determine one common goal and then each department figures out their piece of the puzzle to make the overarching goal a reality. The right hand fully knows and understands what the left hand is doing, and the rest of the body has joined in as well.
Getting Buy-in on Integration
Accurate demand forecasting works best when the company works together to achieve a common goal. There’s no push from sales on a product that finance knows isn’t selling at a given time while marketing promotes yet a different product. Once everyone understands how to work together, team spirit will soar, and productivity as a whole will increase.
The individual departments working as a single team provide a more accurate demand forecast for products. This creates supply chain efficiency, which only happens when the S&OP planning process is well-executed.
Benefits of S&OP Integration
Besides everyone being on the same page, there are additional benefits to sales and operations planning integration.
- Improved Supply Visibility
- Company-wide Collaboration
- Accurate Demand Forecasting
Improved Supply Visibility
Supply chain efficiency occurs with improved supply visibility. Supply chain visibility increases because departments are now talking to each other, and everyone better understands where everyone else stands. This gets clearer and clearer as more and more data is shared.
When department heads realize it’s better to work together, a strategic partnership is formed. This strategic partnership creates a good plan for the company as a whole, not each department individually. This partnership impacts operational efficiency and has a positive impact on profit margins.
Accurate Demand Forecasting
Address your supply chain’s constraints with accurate demand forecasting. The full benefit of demand forecasting is supply chain efficiency. Supply chains are more efficient when they know what is coming well ahead of time and can be prepared.
Create a Culture of Collaboration
Collaboration and communication start from the top down. Create a culture where this happens daily, and everyone will be on board. When everyone knows what goal they are working towards and no one feels they are working alone, separate from other departments, an authentic, collaborative culture has been achieved.
Develop key performance indicators based on the common goal that everyone is working towards for each department. This will help everyone understand their role within the larger plan. Provide an incentive when behavior promotes the cross-functional collaboration of the organization and supports the S&OP. This will further the culture of collaboration.
The T of SMART
Remember that SMART goal setting we were talking about earlier? S&OP integration is its own goal that must be included in organizational planning. And this means that it must have a time-bound aspect that shows the completion of the integration. NOTE: S&OP integration is never fully complete as it is a living thing that requires constant feeding. At this point, everything must be fleshed out, and departments are ready to move into business goals and focus less on integration goals.
S&OP integration is only complex until all departments get on the wagon to success. Once departments see how they can work together to meet an organizational goal instead of trying to work on it separately, everything within the organization is affected. With a solid corporate foundation, there is increased visibility, better demand forecasting, and the entire supply chain benefits.
Let Blue Ridge Global Help with Your Supply & Operations Planning
S&OP integration may seem daunting, but it doesn’t have to be. Blue Ridge Global is here to help you find a Single Version of Demand Truth. Our Sales & Operations Planning cloud-based supply chain solution enables you to develop and maintain a sound process for coordinating requirements and fulfilling demand. Request a live demo or contact us with questions and create a plan that boosts profit margins and eases supply chain nightmares.