According to Gartner, there can be no effective sales and operations planning (S&OP) process without an S&OE—Sales and Operations Execution, process. In other words, why make a plan if cannot be executed accurately or cannot be translated into execution?
Many companies have or are in process of implementing S&OP solutions aiming to digitalize their supply chains. S&OP is essentially a high-level rough cut and long-term model of the supply chain.
Having S&OP and S&OE as two separate systems does not make sense, it is redundant and costly. Having two systems implies two disjoint systems that do not understand each other’s data model. This results in wrong projection of output, missed delivery commitments, too much inventory and misleading financial projections.
Most companies choose their supply chain planning vendor based on how nice it looks but pay very little attention as to how good the quality of plans are. Not all planning systems are created equal. Yes, every planning company can produce a “plan.”
Most supply chain practitioners believe that there is a need for both a long-term planning engine (S&OP) and yet another for plan execution (S&OE). The main reason is that S&OP can only provide a rough plan which is not good enough for execution for (say) this week or this month.
Digitalization and supply chain resiliency are the motivating factors for supply chain leaders to rush into modernizing their supply chain planning systems. First thing they hear is: “how about a S&OP solution?” S&OP will take you to only less than half way to a digital twin of your supply chain.
The digital twin of your supply chain must accurately reflect both the shape as well as behavior of your supply chain. In the absence of this you end up with a rough model of the supply chain. S&OP modeling is one step above spreadsheet modeling, what you are trying to get away from.
Do you know that with the application of an advance AI/ML driven solver your supply chains can deliver following: On Time Delivery performance of greater than 90% Inventory Turn Over of more than 15 Planning accuracy of greater than 95%