Sales & Operations Execution forms the foundation for S&OP

How can you protect yourself against supply chain disruptions and volatile demand? An effective S&OP system is an important aspect of this, according to Sandeep Walia of Slimstock, but the operational planning layer is equally important. “Sales & Operations Execution actually forms the foundation for the entire planning structure. That’s where it all starts,” claimed Walia during Supply Chain Media’s S&OP Selection Day.

“Due to high uncertainty in global supply chains and volatile demand, many companies are currently holding extra inventory,” stated S&OP expert Sandeep Walia. At Nike in the US, for example, inventories are now 65% higher than normal. He warned of the cashflow problems that can arise as a result of high inventory, and of the subsequent pressure on margins.

“Some say the current disruptions are temporary, but I expect that what we are seeing now may well be the new normal. Companies need to start preparing for a VUCA (volatile, uncertain, complex and ambiguous, Ed.) environment, just as they need to prepare for other developments, such as the aging population or the fact that we are moving toward a circular economy.”

Clarifying the business strategy

But how can they do that? How can they prepare for supply chain disruptions and volatile demand? And what role does S&OP play in that? “It starts with clarifying your business strategy,” claimed Walia. “What kind of customer value do you want to offer?” Supply chain professionals often think in terms of inventory and product availability, but this is more about things like customer intimacy, product leadership or operational excellence.

Then it’s a matter of applying this strategy to the tactical level and ultimately to operations. “These three layers must be aligned in such a way that they optimally contribute to a company’s KPIs, such as EBITA and return on capital employed.” An effective S&OP system is an important factor in this, according to Walia, but the operational planning layer is just as important. “Sales & Operations Execution actually forms the foundation for the whole planning structure. That’s where it all starts.”

Did you miss S&OP Selection Day 2022?

Click here to read all the articles about S&OP Selection Day 2022. If you would rather see the sessions for yourself, you can watch the recording of this session here or download the presentation slides below.