Don’t you just love going to trade shows and picking up glossy brochures from the various sales and operations planning (S&OP) vendor booths? Isn’t it great listening to vendors’ elevator pitches, watching their video demos, and collecting their branded T-shirts, pens, and calculators?
While you’re standing on that exhibit hall floor, everyone is smiling and helpful, and anything seems possible. S&OP solutions really do seem to address many of your biggest challenges. And the next cocktails-and-appetizers reception is probably just minutes away.
But when you return to your office the following Monday, the euphoria wears off. Yes, S&OP solutions do seem valuable on a gut level. But has anybody measured the bottom-line value of achieving S&OP excellence?
Actually, Oliver Wight has.
In case you’re not familiar with their work, Oliver Wight is a leading business improvement consultancy. Their specialists educate, coach, and mentor people to help them achieve business excellence and maximize their business performance.
A few years ago, Oliver Wight ran a survey of 40 of its clients who had achieved Class A (outstanding) performance in their S&OP processes. Some of the results are available in an Oliver Wight white paper.
Let’s take a look at the quantifiable results these clients achieved:
Increased forecast accuracy by 18-25%.
You can’t master demand planning if your forecasts are always wrong. Unfortunately, few companies can boast accurate forecasts, at least on a consistent basis. That means they must either carry buffer inventory, or constantly face the risk of running out of stock. By achieving S&OP excellence, you can avoid both of these undesirable fates.
Increased sales revenue by 10-25%.
Any manufacturer, distributor, or retailer that always has the supplies it needs is a company that can make sales with confidence. What kind of difference would a 10% boost in sales make to your bottom line?
Improved on-time delivery by 10-50%.
Few problems annoy — and ultimately drive away — customers as reliably as missed shipments. The fact that outstanding S&OP practitioners achieved such varying levels of improvement here would seem to indicate there was a pretty wide discrepancy in their on-time delivery rates heading into the S&OP optimization process. But suppose your company is already on the healthy end of the spectrum. There’s every reason to believe that you, too, could boost your on-time deliveries by at least 10% after achieving S&OP excellence.
The Oliver Wight survey shared three more valuable metrics, which we’ll explore in our next post. Want to talk S&OP excellence with a technology partner that knows how to get you to the next level? Call Demand Solutions today at 800-886-3737. Also, you can read more about S&OP in this free, downloadable white paper: "Five Ways S&OP Enables Collaboration and More Intelligent Forecasting."
Jeff Bower is the Demand Solutions Northwest Principal. Within this role, he ranges from Northern California to Alaska. He has nearly 22 years’ experience with Demand Solutions supply chain management software.