Successful supply chain management requires flawlessly executing many different processes. To avoid and reduce stockouts, improve service levels, minimize overhead, and meet the needs of customers in a timely fashion, supply chain organizations need to seamlessly execute their day-to-day processes and procedures. This is where Sales and Operations Execution (S&OE) comes into play.
S&OE is crucial for warehouses and other supply chain businesses to bridge the gap between high-level plans and granular operations. S&OE are essential processes which allow you to swiftly navigate and respond to customer demands, market dynamics, and supply chain challenges, and match these realities with your organization’s larger plans.
S&OE plays a critical role in supply chain planning because it’s not enough to simply conceptualize plans: your organization needs to be able to execute them.
The $15.85 billion global supply chain is an incredibly complex behemoth, and supply chain organizations today are facing a long list of challenges including “labor shortages, equipment availability, and the ripple effect of global bottlenecks.”
For organizations to overcome these and other challenges, all while keeping appropriate levels of stock, predicting future stock needs, and improving their operations, two things need to happen: organizations need to both plan and execute business daily.
Long-term planning is known as Sales and Operations Planning (S&OP), while the short-term execution is S&OE.
S&OE is incredibly important in the supply chain planning process because it’s the detailed realization of long-term plans and refers to the way the S&OP plans are executed. It serves as a critical link, and ensures that forecasts, production plans, inventory levels, and distribution plans are integrated to the larger business goals, and that they’re synchronized to meet the reality of customer demand.
S&OE has a few key objectives, which highlight its importance in supply chain planning:
Other main objectives of S&OE include optimizing the utilization of resources (such as production, inventory, and distribution), and improving overall supply chain performance.
There are a few hallmark components of S&OE in supply chain operations. They might include:
S&OE is typically executed on a cyclical basis and might be conducted weekly (but sometimes can be daily). Some additional features of S&OE include comparing the actual stock needs against the needs outlined in the S&OP. If there are notable gaps between the plan and the actual demand, then steps can be taken to quickly adjust, and to meet the reality of the needs.
For supply chain leaders to successfully implement S&OE, here are some strategies to keep in mind.
Effectively implementing S&OE requires leaders to audit their current operations and processes. This can include assessing the systems and data, to understand the strengths, weaknesses, and areas for improvement when it comes to executing the big-picture plans laid out in the S&OP.
Your S&OE should have clearly defined goals. These can include improving customer service, better-utilizing resources, reducing your stock-related costs, or enhancing supply chain responsiveness, for example.
Excellent S&OE typically requires input from various teams, and there should be processes and procedures in place to help with collaboration, communication, and execution across various parts of your organization. Depending on the structure of your business, you might need to consider collaboration between teams such as sales, operations, production, inventory, and IT, for example.
Data is one of the most crucial components of S&OE, because it can inform the processes, and gives leaders full visibility of their supply chain organization. Tools that allow for real-time data are particularly useful for S&OE. Leaders might need to take sales data, demand forecasts, production schedules, and inventory levels into account, for example. Data analysis, data visualization, and scenario planning are also sources of data which might be useful here.
An organization’s ability to realize the S&OE processes will heavily depend on the technical tools that it’s using. A lack of appropriate supply chain technology can severely reduce visibility,hinder real-time observations and decisions, and can potentially lead to stockouts and excess inventory.
On the other hand, operations which use supply chain technology have advanced insights which distill key information. This can include rapid answers to questions about what is going to sell, what needs to be bought, what hasn’t sold, and what you’re out of.
Effective S&OE deployment requires supply chain teams to be ready to execute the processes outlined in the S&OP. This means that employees across all teams need to be well-trained, prepared for unexpected scenarios, and should be ready to pivot at a moment’s notice.
Breaking down the visions outlined in the S&OP requires detailed processes and workflows, which specify exactly what the day-to-day breakdowns of larger goals should look like. Because of this, leaders should clearly define the processes, workflows, and decision-making frameworks for the S&OE. You can also create guidelines for demand forecasting, inventory management, and distribution.
Organizations might encounter a few potential challenges when implementing S&OE. They can include:
S&OE is crucial to your organization’s day-to-day operations, and to the realization of your organization’s loftiest goals. And for seamless S&OE, your organization needs comprehensive supply chain technology, which gives you unparalleled insights into your operations in real-time.
That’s where we come in. StockIQ is a supply chain planning suite which gives you the data and tools you need to leverage S&OE, master your daily operations, and improve your processes. We know what you need to run efficiently, improve forecast accuracy, and reduce inventory levels, all while providing top-tier service to both your customers and shippers.
If you’re looking to enhance the way you approach S&OE, we should talk. Contact us today to get started.