In many manufacturing companies, a process known as Sales & Operations Planning (S&OP) aims to tie together sales forecasts, manufacturing plans, raw material purchases and inventory management. The logic is simple: figure out what customers are likely to want to buy, make it, and then sell it to them when they knock on the door.
The problem? In almost as many manufacturing companies, executives will readily point to a litany of S&OP failures: poor forecasts, lack of coordination between sales and production, turf wars, excessive inventory and a lack of responsiveness. In short, goes the received wisdom among analysts, academics and industry insiders alike, S&OP is a good idea that is often let down by sloppy execution.
In a just-published book entitled The Market‑Driven Supply Chain, longtime supply chain consultant and manufacturing executive Bob Burrows looks at what goes wrong with manufacturers’ S&OP processes, and sketches out what he terms “the seven guiding principles of the design of a market‑savvy S&OP”.
The bottom line: In a successful S&OP process, good analytics has a critical role to play. And the other day, I sat down with Burrows to discover how.
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