S&OP

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S&OP

In situations where S&OP have been properly executed, it gives the organization a valuable insight to
its financial status (company’s health) and also arm the firm with the ability to anticipate and manage
demand fluctuations more effectively. S&OP offers the advantage of better integration amongst
respective functional departments of the organization. It improves communication and transparency
thereby reducing excess inventory, long lead times and improves ability to effectively respond to
opportunities. With a more efficient operation, the overall profitability of the organization will
increase.

As we all know predictions are not 100% accurate, it is never spot on particularly, with a volatile
market. There are endless number of factors that affect demand and consequently affect our sales
forecast and operations plan. This is one of the challenges of S&OP process. Another major challenge
is the fact that S&OP process involves lots of data gathering, data organizing and coordination that
require a considerable number of resources. The process is time consuming and labour intensive if its
to be implemented manually. The cost of deploying the right technology is also very pricey.

I have not been involved any S&OP process in the past. I would say the closest experience I have had
will be being part of the technical team that complied the operation manual for a start up construction
firm. And the process what not driven by sales forecast.

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