A recent article in Industry Week summarized five things manufacturers should be able to do with S&OP data that were quite good. So good, in fact, that this post is going to summarize them before adding two more things that manufacturers should be able to do with S&OP data.
- Minimize Surprises
An effective S&OP process that focuses on collecting and understanding demand data from internal stakeholders and trade partners is essential if you want to minimize surprises such as a delayed shipment, insufficient supply, or raw material shortage.
- Optimally Manage Inventories
Having the right amount of product, at the right time, in the right place is key to increasing margins, cash to order cycles, and customer satisfaction, among other benefits.
- Improve Margins
Improving margins is often an area that’s under-emphasized in an S&OP process, and yet [it] is ultimately the most important factor in the health of a company. Making sure the relevant S&OP data, such as average product unit cost, inventory levels, logistics costs, anticipated margins, customer satisfaction rates, etc. is shared across marketing, finance, supply chain and the executive suite is critical because input and shared data amongst all functional groups is what drives margin improvements.
- Improve Customer Satisfaction Rates
Improved customer satisfaction gives you the ability to build stickiness with customers, which leads to profitable relationships. Knowing what your customers need, when they need it, and delivering on that need in a timely fashion is key to increased customer satisfaction — and good visibility will allow you to do just that.
- Better Resource Utilization
Each part of the S&OP process should leverage the data as fuel for the decision making process as this allows for fact-based resource allocation which enables significantly greater resource utilization.
These are great starting points, but don’t stop there when you can also use S&OP data to:
- Decrease Costs
Once you have an effective handle on demand across all product lines, you can use that knowledge to negotiate the best prices on parts against true volume levels. No more lowball estimates to be safe or missed rebates due to overly aggressive estimates.
- Effectively Prioritize NPD
Once you have an effective handle on sales across product lines, you can determine which types of products sell the best, and which products in the pipeline are the most likely to be successful. Focussing on these products should allow the company to most effectively utilize its resources.