I recently saw this headline as I was scanning through news stories.
“Supply Chain Leaders Converge on Europe’s Diamond Capital to Debate the Most Important Catalysts for Business Growth”
I wasn’t invited, but the James Bond image of supply chain leaders converging on the diamond capital was intriguing. The news article went on to explain that this was the 2nd annual European Chief Supply Chain Officer forum, held in Antwerp, Belgium. There were several bullet points in the article, two are relevant to S&OP and caught my attention. One point was the disconnect between the supply chain and finance organizations, and the second point was a claim that only 5% of companies have a solid S&OP process in place (forecast accuracy is evidently to blame).
Excerpt from the article:
· The supply chain CFO – There is still a disconnect between the vital business functions of supply chain management and a company’s finance department. There was a general feeling that companies need to strengthen ties and build more empathy between departments about the day-to-day challenges. The fact that very few finance people attended the conference highlighted this lack of integration.
· S&OP best practice – The panel discussion on Sales and Operations Planning (S&OP) revealed that there is still a mountain to climb with only 5 percent of companies claiming to have a sound, well-structured S&OP process in place. Delegates accepted the merits of implementing a formal S&OP process but do not yet trust forecasting accuracy.
I am a little surprised that only 5% of companies claim to have a solid S&OP, but I am not surprised by the fact that forecast accuracy is one of the primary roadblocks. It is unfortunate, because I believe that one of the main benefits of a solid S&OP is to help you identify and quickly respond to inaccurate forecasts.
I agree with the first point regarding the disconnect between the supply chain and finance. In fact, this has been a theme I have seen repeatedly over the last few years. A tighter link between the departments would be mutually beneficial and would probably also add to the success of the S&OP process.
What do you think? I thought that more companies had formal S&OP processes in place. Would you have expected forecast accuracy was the roadblock? Do you think that tighter bonds between the supply chain and finance departments will improve overall performance?