The Fundamental Foundation Of An Effective S&OP

The Fundamental Foundation Of An Effective S&OP

AUTHOR

Vivek Sood

TIME TO READ

minutes 

UPDATED ON

May 11, 2021

In a quotation famously and perhaps apocryphally attributed to Intel Corporation founder Andy Grove, he said: “For one brief moment the demand will equal supply and we will have the perfect union. Rest of the time we struggle with either too much supply or too much demand.”

Understanding and acceptance of the fundamental truth in the above quotation is perhaps the start of i-SOP – intelligent sales and operations planning.

No demand forecast is perfect and no supply system is capable of meeting all the demand perfectly all the time.

The result we are seeking is to work collaboratively, in order to create an organisation capable of maximising profitability under every demand and supply condition it could possibly encounter.

 That, in itself, is a lofty goal, given we don’t even know the whole range of demand and supply conditions that could possibly be encountered.

So, What Does A Well Functioning I-SOP Organisation Look Like?

Where we show i-SOP within the big picture of most of our strategic consulting work, we have highlighted all the various parts that must come together to create a good i-SOP process. 

The Goal We Are Seeking From This I-SOP Process Is Profit Maximisation. 

It is not inventory minimisation - there are numerous IT systems which purport to do this, and many do an adequate job.

It is not cost minimisation. Again there are numerous supply chain systems that do this adequately enough. The goal is not revenue maximisation either; numerous yield management systems do that adequately enough.

The end goal of a successful i-SOP process is profit maximisation, and to our knowledge there is no IT system which does this adequately enough – hence the need for an elaborate process aided by a toolkit.


Copyright - These concepts, frameworks and ideas are copyright of GLOBAL SUPPLY CHAIN GROUP from the time of their creation. Do NOT copy these without permission and proper attribution.

Notes:

  1. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, webinars, videos and training. You may have heard us say the same thing before.
  2. The date shown above the article refers to the day when this article was updated. This blog post or article may have been written anytime prior to that date. 
  3. All anecdotes are based on true stories to highlight the key points of the article - some details are changed to protect identification of the parties involved. 
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Vivek Sood

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