Supply Management Has an Important Role in S&OP

In manufacturing, traditional sales and operations planning is expanding beyond simple supply/demand balancing toward integrated business decision-making.

Service firms are also realizing the benefits of holistic business planning.

Integrated business planning is neither integrated nor complete without supply management which must come to the process with an understanding of the supply risks and a strategy for capitalizing on opportunities.

An integrated plan for the business must be informed by:

  • the relative bargaining position of the firm
  • supplier viability under multiple economic scenarios
  • trends and potential ranges for commodity and other prices
  • supplier and global supply capacities
  • advances in supplied materials or supplier manufacturing technology
  • other relevant context

Supply management must also be prepared to contribute to an integrated decision set for the business with:

  • a comprehensive analysis of total cost of ownership and the business’ sensitivity to each of component
  • strategies for structuring supply agreements to mitigate risk and minimize the cash-to-cash cycle
  • approaches for substituting information for time and inventory
  • sourcing alternatives to support sales and marketing initiatives as well as manufacturing and quality requirements
  • scenarios for reducing lead time and lot size

For more on this, have a look at my related presentation.

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About Arnold Mark Wells
Industry, software, and consulting background. I help companies do the things about which I write. If you think it might make sense to explore one of these topics for your organization, I would be delighted to hear from you. I am employed by Opalytics.

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