Supply chain operations can be impacted even when there are no regular hiccups. So how do organizations ensure that their long-term S&OP framework remains on track on a daily and weekly basis? By implementing Sales & Operations Execution (S&OE) into S&OP.
That word is necessary for any successful business. Without planning, a business isn’t going to be around for long.
Successful manufacturing and supply chain organizations utilize Sales & Operations Planning (S&OP) to coordinate across business units. S&OP planning is designed to improve communication, align supply and demand, and to ultimately increase profitability.
Company leaders meet and collaborate for countless hours to formulate a S&OP to help guide their company and set a positive future course. S&OP establishes processes and procedures and makes forecasts for as few as three months and up to several years.
But is that enough?
Supply chain operations can be impacted even when there are no regular hiccups, but especially so when unplanned and unexpected challenges arise. How do organizations ensure that their long-term S&OP framework remains on track on a daily and weekly basis?
By implementing Sales & Operations Execution (S&OE) into S&OP.
What is S&OE and what is its relationship with S&OP?
S&OP looks at a larger piece of organizational planning and operations, while S&OE breaks that plan into smaller pieces that a company can more closely manage; it makes the larger plan a clearer reality for an organization.
S&OE takes the more comprehensive, complex S&OP processes and puts them into actional steps that have an impact on daily and weekly operations – all the way down to the shop floor. An S&OE focus is much more granular and studies short-term execution daily for up to eight weeks.
A focus all the way down to the SKU level with S&OE helps to ensure that products get into customers’ hands efficiently and effectively.
How S&OE can help your bottom line
An S&OE process provides a regular cadence to help departments within a manufacturing organization know what is happening daily. It also helps to tie daily and weekly activities back to the overall S&OP blueprint.
Forecasting is another area where an S&OE plan can help a company. Since a long-range S&OP must project for as far out as several years, it leaves more room for forecasting errors. When used in tandem with an S&OP, an S&OE helps to marry that extended view with a more accurate projection.
There is also an immediate dashboard and process flow with an S&OE that is more difficult to see with a longer-range planning focus. S&OE reduces the forecast to one week or a few weeks, which means that organizations can be much more precise when it comes to understanding market drivers and what is likely to occur. An S&OE helps leaders answer the question: “What are we doing today and how can we tie it to what we plan to do this quarter or this year?”
S&OE in action
Coca-Cola implemented S&OE into its supply chain operations in 2019. S&OE improved the company’s supply chain performance monitoring and helped to review previous performance and then address changes in supply and demand fluctuations.
S&OE helped Coca-Cola build a more agile supply chain that provided vital data in areas like distribution distance, stops, route time and numbers, and trip and fuel costs.
Levi Strauss & Co., a clothing manufacturer with more than 100,000 SKUs, has recently been in the news after it paired S&OE with its existing S&OP process and saw immediate improvements in numerous areas. The company reported that there was better communication and alignment within departments and that shared data made decisions clearer and more transparent.
Adopting S&OE, according to Levi Strauss & Co., also helped produce more accurate forecasting, which produced a better understanding of the entire process from production to distribution.
Utilize S&OE to keep your supply chain running smoothly
Taking something that is already providing a benefit to an organization’s supply chain operations and supplementing it with another tool is a win-win situation. S&OP provides the long-term operational and planning framework for future supply chain success.
However, implementing an S&OE strategic short-term focus that ties everyday operations to a company’s bigger picture is the next step. S&OE helps companies maintain their focus on long-term goals despite regular unforeseen challenges that can affect supply chain operations.
Start a discussion today to learn more about how Myrtle Consulting Group can help you implement S&OE into your supply chain operations.