0 Replies Latest reply on Nov 15, 2010 5:06 PM by laurenbossers

    Simon Ellis, S&OP Expert of the Week, Answers Your Questions


      We'd like to again thank Simon Ellis, who leads the supply chain strategies practice at IDC Manufacturing Insights, for serving as the Supply Chain Expert Community's S&OP Expert of the Week. Simon was gracious enough to answer questions submitted by our members. Below, you’ll find a selection of the questions submitted by the community and Simon’s responses.




      1. What’s the point of S&OP based on volume if it’s not feasible at mix? Shouldn’t mix planning be part of the process?


      I don't think anyone is suggesting that S&OP shouldn't be looking at mix planning. There are many companies that run planning processes at, for example, a brand-family level because based on the sell-through of their products it is an acceptable compromise. However, there are other companies that must plan at a SKU level either because the items are not inter-changeable or are not adequate proxies for demand. Consequently, if mix planning is an important component of your planning process then, yes, it absolutely needs to be reflected in S&OP.


      2. My company is just embarking on a sales and operations planning process. What is the ideal frequency of the process?


      That is a difficult question to answer in a vacuum, as I think it depends upon how your company manages the forecasting and planning process. If, for example, you tend to utilize bottom up forecasts from sales to drive supply requirements, then an "operational" S&OP probably should be run at least quarterly, with monthly preferred. If you tend to get top down targets, then a less frequent, strategic S&OP process can probably suffice. It is our experience that a blend of top-down and bottom-up, with monthly iteration, works well for most manufacturers.


      3. How should Business Intelligence views be incorporated into S&OP?


      I have long held the view that S&OP is 80% process and 20% technology. The use of an IT application can be very helpful, but only after the process has been clearly defined. Part of clearly defining the process is aligning decisions at the strategic-tactical-operational levels. Whether with S&OP, or some other business process, the ability to make the right decision depends upon the data and analytics capabilities available. Then, the degree to which those decisions cascade appropriately down through an organization depends heavily on the BI capabilities.