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In 2011, 65% of supply chains experienced a disruption, according to an analysis of corporate annual reports by Supply Chain Insights. Globalization has accentuated traditional risk factors, which can include unreliable lead times, capacity constraints and inventory shortages.

The complexity of today’s supply chains and a volatile economy has more companies recognizing and emphasizing the importance of Sales and Operations Planning (S&OP). Companies are focusing more on S&OP as they contend with tighter budgets and less predictability. Results from a 2011 Chief Supply Chain Officer survey show 48% of corporate respondents expect to increase their focus on S&OP.

S&OP provides value to businesses by eliminating data silos so key decision makers can see how their actions impact other parts of the company. Increasingly, companies are adopting S&OP plans that are integrated with financial planning and budgeting processes, according to a 2011 Aberdeen Group report. These companies, identified
as “best in class” by Aberdeen, are looking beyond traditional demand-forecasting S&OP to align financial objectives with their supply chain operations.

“Companies that manage S&OP purely as a supply chain process are not seeing the bigger picture,” according to a 2012 Ernst & Young S&OP report. “Today’s competitive market pressures require that S&OP focus less on yesterday’s back order and more on how the company’s existing capacity can meet long-term plans.”

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