How can a global leader in industrial solutions recover when they realize their supply chain is more fragmented than connected? How does a company with a vast network ensure seamless planning and forecasting across continents? SKF, a 9 billion industrial manufacturer, confronted these challenges by transforming its supply chain planning into a harmonized way of working.
CHALLENGE
A supply chain ready for transformation
For years, SKF managed its supply chain regionally, with operations spanning over 94 manufacturing plants in 24 countries, serving more than 130 markets with a wide range of products. This decentralized approach made it difficult to gain a clear, company-wide picture, impacting agility and decision-making. As the company grew, so did the need for a global, streamlined approach to supply chain planning. It was time for a change.
SOLUTION
A strategic shift to global planning
SKF’s supply chain was too scattered—each region had its own way of forecasting and planning, making it nearly impossible to get a clear, company-wide picture. To stay ahead in a competitive market, they needed a more connected approach.
That’s when they decided to team up with Optilon. Together, they introduced a powerful solution designed to harmonize planning, optimize inventory, and automate key processes. The journey was mapped out in four key phases: feasibility, proof of concept, pilot, and deployment. Step by step, SKF moved from a fragmented system to a seamless, data-driven approach. It was a full-scale transformation.
RESULT
Results and benefits of Optilon’s planning solution
As with any major transformation, it took time for SKF to adapt to a new way of working. Ensuring planners were on board and engaged in the process was key to building confidence in the system. But once the team embraced the changes, the benefits quickly became clear:
MAIN BENEFITS
Reduced manual work by 20%, enabling a nearly fully automated supply chain planning process.
Improved demand forecasting accuracy by leveraging digital twin data and automation.
14% reduction in inventory achieved through optimized inventory management,advanced safety stock calculations, and replenishment planning—while maintaining service performance.
Increased responsiveness to market changes through real-time deviation alerts.
By embracing automation and intelligent planning through its partnership with Optilon, SKF transformed a scattered, manual supply chain into a streamlined, highly responsive operation. With better forecasting, clearer decision-making, and a more connected planning process, SKF is now equipped to handle challenges, drive efficiency, and stay ahead in the global market.
About SKF
SKF is the world’s largest bearing producer, serving 130+ countries and 40 industries. With 94 plants in 24 countries, SKF is automating Supply Chain Planning, allowing planners to focus only on deviations.
In 2020, SKF received the Gartner Supply Chainnovator Awardin the industrial category for its innovative use of a Digital Twin, implemented in collaboration with Optilon using the Optilon Integration Platform (OIP). Gartner describes the award as part of an annual program that “identifies, assesses, and awards outstanding examples of supply chain innovation.” The initiative recognizes unconventional, high-impact projects that are transforming supply chains and setting new industry standards.
Struggling with supply chain complexity? Let’s talk.
With a track record of over 1,000 successfully completed projects and 20+ years’ experience, Optilon is your trusted supply chain optimization partner. Book a meeting with us to discuss how we can help you create a solution that aligns with your specific needs and future business goals.
How should companies navigate supply chain challenges in 2025? With supply chains evolving at breakneck speed, companies must stay ahead of the curve to maintain their competitive edge. With deep industry expertise, Jens Stenquist, VP of Sales & Marketing, and Fredrik Jersby, VP of R&D, share their perspectives on 7 supply chain trends shaping 2025 – and what you can do to navigate this evolving environment.
1. From globalization to regionalization: A strategic shift
Globalization has long been a cornerstone of supply chain strategies. However, 2025 marks a shift towards regionalization. Changes in tariffs and trade agreements, the invasion of Ukraine, and economic fluctuations are pushing businesses to reevaluate their global setups. While global trade isn’t disappearing, companies must rethink their sourcing strategies, focusing on agility and resilience. The key question: Are your supply chains adaptable enough to withstand these changes?
2. Energy transition in supply chain: The power struggle
Energy is at the heart of every production and supply chain. The push for fossil-free energy is critical, but political and infrastructural roadblocks make it a complex issue. Companies are facing uncertainty around future energy prices, which are expected to rise, impacting the cost of goods produced and our supply chains. Delays in green investments highlight the need for a more balanced and sustainable approach. If a stable energy supply and stable energy prices are no longer a given – how will your business prepare for the energy shifts ahead?
3. Scenario planning: The ultimate competitive advantage
Forget simple forecasting – 2025 is the year of deep scenario planning. In today’s volatile world, businesses can no longer rely on one or two potential outcomes. Instead, they must prepare for 30 to 50 different scenarios to ensure agility in the face of uncertainty. S&OP is now a must-have forum to help balance finances, customer demand, and internal capacity. The companies that master scenario planning in 2025 will lead the pack.
4. AI and automation in supply chain: The hype vs. reality
AI is the hottest buzzword, but what does it really mean for supply chains? While generative AI is revolutionizing text and data handling, its impact on supply chain operations is still unfolding – and there’s a gap between expectations and outcomes. Many businesses are investing heavily in AI but struggle to see tangible results. The takeaway? Companies must approach AI investments strategically and focus on real, measurable improvements rather than just jumping on the latest trend.
5. Regulation contra innovation: Striking the right balance
Regulations like GDPR and CSRD aim to protect – but at what cost? And what are the consequences of different regulatory setups across different parts of the world? Excessive red tape can stifle innovation, particularly for small and mid-sized businesses. Striking the right balance between regulation and innovation is essential: regulations should enable progress, not restrict it. Rules should be simple to understand and apply, not obstacles. As companies navigate compliance challenges, those that find ways to stay agile while maintaining compliance will have a distinct advantage.
6. The future of payments: Is Bitcoin the answer?
It may seem unconventional, but decentralized payment systems like Bitcoin could be the future of global trade. Traditional payment networks are often outdated, slow, and expensive. Could a transparent, borderless currency transform supply chain transactions? While widespread adoption isn’t here yet, companies should keep a close eye on developments in blockchain and digital payments.
7. The role of science: Questioning everything
Science and data are the bedrock of our industry and critical to progress. A growing challenge is that specific findings are sometimes leveraged as political tools rather than being questioned and refined, as true science demands. Saying that scientific results cannot be questioned contradicts the scientific method rather than supporting it. Businesses must stay vigilant, evaluating trends and policies through a critical and informed lens rather than taking every new study at face value.
How to navigate the supply chain landscape in 2025
As supply chains become more complex, companies that adapt, innovate, and plan for uncertainty will come out on top. Here’s what you should focus on:
Master scenario planning: Go beyond basic forecasts and prepare for multiple future outcomes.
Build flexible supply chains: Dual sourcing and risk management must take priority over cost-cutting.
Invest in knowledge and technology: Stay ahead with AI, supply chain expertise, and cutting-edge insight closely linked to the supply chain area.
Supply chain in 2025: A year of reflection
At Optilon, we’re committed to helping businesses navigate supply chain complexity. Through insights, technology, and processes, we guide you every step of the way on your supply chain journey. Whether you need guidance on scenario planning, AI integration, or supply chain optimization, we’re here to help.
2025 will be a year of reflection. For those ready to embrace change, it also promises to be a year of growth and opportunity. The question is: Are you ready to lead the change?
How do large companies analyze and solve complex supply chain challenges? For over a decade, Optilon has helped one of the world’s leading companies in food processing and packaging with supply chain design and network optimization. The result? Improved structure, faster workflows, and greater efficiency.
CHALLENGE
How do we design an optimal supply chain?
For larger companies, which often have larger and more complex supply chains, evaluating investments or divestments is no simple task. It involves more than just analyzing costs or impacts in one single market – it’s about understanding the ripple effects across multiple factors and how your entire network will be affected.
Take a real-life example: About ten years ago, a world-leading food processing and packaging company faced the challenge of closing a factory in Sweden. Shutting down the factory raised critical questions. How will it affect customers who depend on that site for materials? What happens to the equipment? And how will the overall cost structure evolve?
Previously reliant on time-consuming spreadsheets, they recognized the need for a robust solution to address these types of complex supply chain challenges.
SOLUTION
Network optimization to ensure a cost-effective blueprint
After exploring various options, the food processing and packaging company chose to partner with Optilon. Through in-depth discussions, we decided to implement a robust system for network optimization – a critical component of supply chain design. While designing a supply chain involves creating a blueprint for how goods, information, and resources flow between locations, network optimization ensures that this blueprint is cost-effective and efficient by analyzing and selecting the best configuration of nodes (such as factories and suppliers) and links (such as transportation and duties).
Our team provided the tools and expertise to guide our customer through every stage, from installation to designing a customized input model. By parameterizing their supply chain in a decision model and integrating it into an optimization solution, we could simulate and optimize various scenarios, such as closing the factory. This allowed our customer to compare their current supply chain network against different scenarios, visualizing how key factors like cost categories, customer supply, lead time, and raw material flows might shift.
During a hands-on collaboration phase, we worked closely to overcome initial challenges and ensure a smooth startup. Once the model was finalized, our aftercare program provided ongoing support to ensure long-term success with the solution.
RESULT
Results and benefits of Optilon’s supply chain design solution
Upgrading to a robust supply chain design solution has delivered significant benefits to the food processing and packaging company, including improved structure, faster workflows, greater efficiency, and reduced operational costs. The implementation of an automated workflow has eliminated much of the manual labor previously required for data management. From a user’s perspective, the company finds this way of working far superior to Excel, as it handles large volumes of data more effectively.
MAIN BENEFITS
Improved structure
Enhanced capability to analyze complex problems
Increased efficiency
Reduced costs
Improved ability to analyze different business cases
Today, our customer continues to use the network optimization model to address the very challenges they faced a decade ago, including analyzing factory closures and their ripple effects. Building on this foundation, they now tackle scenarios such as demand reallocation between manufacturing sites and evaluating smaller investments like enhancing capacity or capabilities at specific locations.
Results and benefits of Optilon’s supply chain design solution
For instance, the model is employed to assess the impact of relocating a customer from one factory to another. This enables the company to identify opportunities to optimize transportation costs, improve factory utilization, and leverage favorable import-export tariffs. Additionally, by analyzing raw material fluctuations, they can anticipate operational impacts and prioritize suppliers who meet volume targets within desired cost thresholds.
These applications underscore the system’s ongoing value, transforming complex supply chain challenges into actionable insights that drive better decision-making and long-term efficiency.
The company has access to Optilon’s technical support for maintaining and enhancing the solution when needed. This includes assistance with tasks such as upgrading the platform, modeling new problem scenarios, or extending its functionality and structure. However, the solution is designed to empower customers to be self-sufficient, enabling them to operate, adapt, and develop it independently. Optilon’s support is available as a trusted partner to provide expertise and guidance whenever additional help is required.
They also turn to Optilon to meet staffing needs. As a relatively small team with specialized expertise, recruiting for roles requiring deep knowledge and an intricate understanding of the company’s supply chain is challenging. For them, the best way to bridge this knowledge gap in the short term is by engaging a consultant from Optilon.
Are you ready to simplify your supply chain challenges?
If you’re facing similar challenges, let Optilon help you turn complex into simple. With a track record of over 1,000 successfully completed projects and a 30-year integration heritage, Optilon is a trusted supply chain optimization partner.
Book a meeting with us to discuss how we can help you design a tailored supply chain solution that aligns with your business goals.
In today’s fast-paced business world, companies often juggle daily tasks with long-term goals. This is where S&OP steps in to help bridge the gap between strategy and operations, fostering better decision-making and teamwork. However, many organizations face challenges like poor implementation or overly ambitious plans. In this article, we’ll explore how to avoid these pitfalls and maximize the efficiency of your S&OP process. This is mastering S&OP 101.
S&OP: A tactical planning process
S&OP is a tactical planning process. Unlike operational or strategic processes, S&OP connects a company’s strategic goals with its operational activities. S&OP occupies the middle ground, bridging the gap where a tactical process may be lacking. It spans a time horizon longer than operational planning but shorter than strategic planning.
Unlike creating a business plan and reviewing it annually, S&OP is an ongoing process that continuously steers the organization toward its goals. It focuses on aligning operational efforts with the strategic direction, ensuring that decisions are made at the right level. This provides clear guidance to those working on the operational front.
The 5 steps of S&OP
In S&OP, there are five steps. Step one is a necessary preparatory step, whereas step two and three are pivotal, as they ensure alignment between what the market demands and what the company can deliver. Step one to four are the repetitive steps followed in S&OP, typically on a month-to-month basis.
Step 1. Portfolio Management
Portfolio Management is an activity that provides input to the following four steps in S&OP by determining which products should be included in the assortment. What products should we introduce, and which should we discontinue? This process ensures a balanced product lineup that aligns with customer demand and company goals.
Step 2. Demand Review
In step two, the focus is on assessing and forecasting market needs on an aggregated level. How much do we anticipate selling, and which product families will be in demand, month by month? This requires consensus across the entire sales organization, focusing on what can be sold. At this stage, it’s not about production limitations but sales potential.
Step 3. Supply Review
Once demand is understood, it’s time to evaluate the company’s ability to meet that demand. Operations, procurement, and logistics teams come together to discuss capacity, inventory levels, and any constraints that may affect production. Can we meet the demand? Do we have the necessary equipment, workforce, and materials in place? This step assesses the feasibility of delivering on sales expectations.
Step 4. Preparing for the executive meeting
By step four, the groundwork has been laid, but challenges may still remain. At this stage, senior management gets involved to address and resolve any remaining issues. Representatives from both sales and operations collaborate to clear the final hurdles, ensuring alignment across departments.
Step 5. Decision Making
In step five, leadership reviews the consolidated data and actively aligns decisions with the company’s strategy – for example, determining which markets will receive supply when demand exceeds available resources. This is where the plan is finalized. Key activities, actions, and even smaller investments are confirmed, solidifying the path forward.
Common pitfalls when implementing S&OP as a process
When companies fall into chaos, it is often this very chaos that drives change. In the hustle of daily operations – putting out fires, managing fluctuating inventory, and struggling to keep pace with rapid growth – it’s easy to lose sight of long-term goals. Service levels dip, operational inefficiencies pile up, and ambitious targets start to feel out of reach. Meanwhile, the company’s entrepreneurial spirit, where everyone rolls up their sleeves and works harder and harder, begins to look unsustainable.
At this point, it’s important to ask: Can we truly achieve our growth objectives if we keep operating this way? More often than not, the answer is no. The company reaches a point of organizational burnout, where the workload threatens the business’s future.
Rushing into making changes without a structured approach
All too often, companies rush into making changes, jumping straight into the hard work without a structured approach. Before attempting any improvements, it’s crucial to fully understand the existing system. Without this understanding, you’re not truly improving the system – you’re simply making changes.
Always start with the “why,” followed by the “what,” and lastly the “how.’ The “why” becomes the driving force for change, and this is where the pain points come into play.
The next step is to identify the core issues: Where is the real pain? What’s not working today – and maybe hasn’t worked for a long time? Often, it’s a lack of long-term tactical planning. Companies focus on short-term fixes, overlooking the chance to plan ahead and strengthen resilience.
The absence of well-established operational processes
Another pitfall is the absence of well-established operational processes, such as demand forecasting, inventory management, replenishment planning, and production planning. Without these processes functioning at a high level of quality, it becomes impossible to aggregate plans from the ground up effectively. As a result, decisions made at the executive S&OP level fail to translate into operational success.
Another challenge lies in the disconnect between sales and operations. These teams often function in isolation, tossing demands back and forth and blaming one another when issues arise. Establishing a shared vision for collaboration becomes essential. Company cultures, traditions, and especially divergent reward systems frequently pull departments in opposite directions.
On top of this, poor data control can render aggregated information either incomplete or so corrupted that it’s unusable. This issue spans from inaccurate or incomplete sales data to outdated BOM (Bill of Materials) and capacity data, severely impacting operational efficiency.
The method itself becomes more important than the results
In some cases, the method itself becomes more important than the results. When the focus shifts toward change for its own sake, you loose the original goal of improvement. This often results in friction and transitions that drain energy rather than drive progress.
There may also be resistance right from the outset. People remember past attempts that failed, fostering a mindset of “we’ve tried this before, and it didn’t work.” The organization carries the memory of previous initiatives that fell short, where they missed targets, and ultimately abandoned the effort due to poor outcomes.
How to successfully implement S&OP
You can implement an S&OP process without transforming the entire organization to embrace a process-oriented mindset. With the S&OP process as the base, you are able to describe and perform hands-on activities. Starting small, focusing on critical areas, and building on those successes can lead to meaningful progress without the pitfalls of overambition or resistance. It’s about introducing a new mindset and way of working that prioritizes a holistic view, communication, and continuous improvement.
First and foremost, you need to consider what you want to achieve. Has upper management decided that the company must become process-oriented because it’s the only way to survive? Or is the focus more on continuous small improvements and ongoing development? In the latter case, the chances of success are higher.
It’s also about perspective and method. There are many different methods, approaches, and philosophies, with S&OP being one of them. Companies already have processes, whether or not they formally recognize them. The problem arises because no one actively manages these processes when they go unacknowledged.”
When companies organize by function rather than process, each department focuses on optimizing its own work and results. There’s often little time to communicate. The holistic perspective is lost, and the various functions fail to synchronize. For example, a production department may focus on maximizing its efficiency without considering whether it creates bottlenecks in the supply chain or issues for the sales department. Ultimately, this type of sub-optimization can prevent the company from delivering products on time, in the right quantity, or with the quality that customers expect.
The value of using S&OP as a tactical planning process
S&OP provides a common language across the organization. By helping everyone understand how things work and how different departments interact, it ensures that employees know what to do, when to do it, and how to do it. This approach enables teams to move from reactive firefighting to proactive management.
Once you understand the system, teams can work toward better outcomes. Instead of relying on luck or guesswork when implementing changes, S&OP establishes a “baseline” that tracks progress, identifies areas for improvement, and supports necessary adjustments to drive continuous improvement.
At its core, S&OP fosters a holistic view of the business. It promotes collaboration and open communication, aligning efforts across the organization. By defining clear processes and uniting departments under a shared vision, S&OP ensures that everyone is working toward common goals, with streamlined information flow driving efficiency.
Establishing a clear structure is also key. By distinguishing immediate operational tasks from long-term strategies, teams can focus on the right priorities at the right time.
Moreover, this structure offers a strategic advantage. When customer demand shifts, the organization can adapt confidently, knowing it has processes in place to handle changes smoothly and without stress. Ultimately, it’s about driving sustainable growth while fostering a healthier organization.
Ready to take control of your operational efficiency?
Don’t let common S&OP pitfalls hold you back. Reach out to our experts today and discover how we can help you implement a streamlined S&OP process tailored to your business needs. Let’s turn tactical planning into a competitive advantage.
Nissens faced significant challenges in their S&OP process, using manual spreadsheets that hindered efficiency and business growth. With their mind set on transitioning from a people-dependent to a process-driven approach, Nissens turned to Optilon for a robust solution.
CHALLENGE
People-dependent and inefficient planning
Nissens were facing substantial challenges in their S&OP planning. Many tasks were done manually using spreadsheets, which slowed them down and hindered growth. This manual approach also made it difficult to adapt to changes and make improvements.
Nissens needed a solution that allowed them to plan their sales and operations more efficiently. They wanted to increase their forecast quality to optimize stock levels in their warehouses and provide better service to their customers. It wasn’t just about making things run smoother; it would also be an important step to refining their planning policies.
To achieve this, Nissens knew they had to move away from a people-dependent to a more process-driven approach. It was time to find a robust, sustainable, and reliable solution for their sales and operations planning.
SOLUTION
A smart system for Sales & Operations Planning
After evaluating a pool of candidates, Nissens invited a select few supply chain partners to present their solutions. After analyzing the pros and cons and engaging in discussions, Nissens chose Optilon, whose S&OP system best matched Nissens’ business needs.
Collaborating closely with Optilon’s dedicated team, Nissens shared valuable insights about their process, paving the way for Optilon to start the implementation phase. During this stage, Optilon built a customized solution tailored to Nissens’ unique business needs.
The implementation phase went smoothly. Optilon provided Nissens with structured files detailing the information required for the system. Nissens then extracted and shared data files with Optilon.
An extensive test period proved valuable
Nissens, together with Optilon, devoted over six months to rigorous testing. This allowed them to track and validate outcomes and ensure their new system aligned with their business goals. As some product groups would sell more during specific seasons, they focused on optimizing forecast accuracy and determining minimum stock levels for these groups. The system was set up with multiple individual season keys and forecast models tailored for each specific product group or even item number.
RESULT
Results and benefits of Optilon’s S&OP solution
As with most big changes, it took some time for Nissens to bring the organization on board. Listening to and getting feedback from the planning team was an important part of building confidence in the new system. But once everyone embraced it, the benefits became clear.
Nissens significantly reduced complexity in their planning department. In contrast to their previous system, which relied heavily on a single individual for manual updates, the new system truly transformed their process. Previously, the weekly task of adjusting reorder points, minimum stocks, and forecasts was laborious and time-consuming. Now, with improved data accessibility, Nissens’ system remains consistently updated.
Nissens discovered not only newfound efficiency but also other unexpected benefits. The shift from a high-risk, people-dependent setup to a process-driven one also aided digitalization and a shared perspective among team members.
MAIN BENEFITS
Optimized sales planning
Enhanced operations planning
Improved forecast quality
Optimized stock turnover
Increased growth
Enhanced efficiency
The new system has significantly enhanced Nissens’ S&OP processes, improving forecast accuracy, optimizing stock turnover, and ensuring OTIF performance. A huge benefit for the company is that it aligns with their ongoing digitalization efforts. Nissens has been able to integrate relevant data into their BI system and now gets a full view of everything across the organization. They can share real-time insights, whether dealing with warehouse availability challenges or showcasing their projected trajectory. This allows them to present a clear short-term outlook, ensuring everyone is on the same page, and a long-term perspective, providing a roadmap for the company’s collective future.
Increased growth and transparency
The new S&OP system has also played an important part in supporting Nissens’ business growth. In 2021, Nissens acquired a new company, which doubled their planning scope from 8,000 to 16,000 items, achieved with minimal additional resources. By sharing information with suppliers, purchasers, warehouses, and the finance team, they have been able to make more informed decisions and secure the necessary resources for sustained growth. This strategic approach has not only optimized Nissens’ internal capacities but also enhanced their overall operational efficiency.
Embarking on this sales and operations planning journey, integrating an efficient S&OP process that works has truly paid off for Nissens. It has brought value across the entire organization and will continue to support their business goals, also in the future.
About Nissens
Nissens is a leading manufacturer of essential thermal system components for the automotive industry. The company supplies the global aftermarket, offering a range of products covering everything from fast-moving to exotic parts for European, Asian, and American brands. With more than 10,000 products, Nissens has one of the most extensive selections of engine cooling parts in the industry.
Are you struggling with your S&OP setup?
Are you relying on spreadsheet programs such as Excel or rule-based processes in ERP systems to manage your S&OP? Have you come to the conclusion that these tools are not sufficient for supply chain optimization and critical business decisions?
With a track record of over 1,000 successfully completed projects and a 30-year integration heritage, Optilon is a trusted supply chain optimization partner.
S&OP is a critical business process for transforming strategy into execution and driving supply chain performance. Even though technology has advanced, many companies are still stuck using old-fashioned and inefficient methods, And there are some big misconceptions that are getting in the way. They exist because businesses don’t fully understand what S&OP is really about. It is time to debunk the myths.
What is S&OP?
Let’s begin by discussing what S&OP – Sales and Operations Planning – actually entails. S&OP is a forward-looking planning process, superior to the operational process and subordinate to the strategic process, bridging the gap between the two. It serves as a mechanism for aligning a company’s strategic objectives with its operational activities.
S&OP is used to continuously identify disparities between a company’s desired goals and its current trajectory, and find strategies for closing these gaps. This can include a range of actions, such as intensifying sales efforts within specific markets or product segments, increasing manufacturing capacity to meet projected demands, or reallocating resources to areas where they are more effectively used. In essence, S&OP is a structured approach to navigate a company toward its desired future state.
5 myths about S&OP – let’s debunk them
Now, let’s clear up some common myths and get to the bottom of the real value of S&OP.
Myth 1: S&OP is not a relevant operational process today
The concept of S&OP originated in the 1950s, evolving from a production-centric approach to enhance efficiency. It was never designed to be a process for gaining detailed knowledge of every aspect of a company’s operation. Instead of striving for operational precision, S&OP is a tool for planning and fostering flexibility. Today, the fundamental need for tactical planning persists.
Many of today’s companies find themselves caught in the “too late corner.” They primarily focus on assessing their order backlog for the next couple of months, and as a result, they struggle to maintain control and end up spending their time putting out fires.
To overcome this, it is not viable to merely focus on the short term and hope for the best. Looking further into the future and making the most of the information you can capture is essential. Companies must adopt a broader perspective and examine the dynamics of supply and demand across extended time horizons. This entails not only periodic assessments but also frequent monitoring to identify fluctuations and their recurring patterns. A key objective is to understand the flexibility required and how quickly you should adjust your capacity.
Myth 2: It is not worth it, as we cannot predict the future anyway
S&OP is not about predicting the future – it is about planning for the future. Sure, you can use it to analyze historical sales data and create forecasts to align supply with demand. But to unlock the true potential of S&OP, it should be used to understand where your business is today and where you want to be in the future. What is your current trajectory, and what is your desired destination?
This approach places you in control rather than at the mercy of the process. It allows you to gently steer your business in the intended direction. You can accelerate, decelerate, and manage marketing and capacity efforts accordingly.
Used correctly, S&OP is a multifaceted decision-making and gap-bridging process designed to guide your company toward its strategic objectives. It is not about predicting the future – it is about understanding the evolving reality that lies ahead.
Myth 3: S&OP is yet another time-consuming planning process
If this sounds familiar, it might be time to ask yourself this question: How much of your time do you spend on firefighting? The answer might reveal a significant gap in your organizational structure – an absence of a well-defined S&OP process.
As the old saying goes, “If you don’t plan, you plan to fail.” This is especially true when it comes to S&OP. While it isn’t a magic bullet that guarantees flawless outcomes, it serves as a cornerstone for informed decision-making and facilitates a culture of collaboration.
Imagine sending eleven soccer players onto the field without briefing them on their roles, the game strategy, or whether they should play defensively or offensively. Chaos would occur, and the chances of succeeding would be fairly small.
In the world of S&OP, the scenario is strikingly similar. Planning not only saves you from the chaos of reacting to problems as they arise. It also grants you a more transparent path toward achieving your objectives. S&OP, when executed right, is not just another planning procedure, but a value-adding mechanism.
Myth 4: S&OP is solely a supply chain issue
This myth is rooted in a silo mentality where each department operates in isolation, failing to communicate or collaborate effectively. This is often driven by performance metrics solely tied to individual functions. A “you handle yours, and I’ll handle mine” attitude dominates the workplace, and the overall success of the company – which should be the primary objective – becomes overshadowed.
In contrast, S&OP is the opposite of this approach. It shifts the individual focus towards an integrated plan and places the organization within an ecosystem where all departments work together towards a common goal, collectively contributing to the company’s success. The breakdown of traditional silos and adoption of a broader perspective fosters collaboration. Succeeding in S&OP is very much connected to acknowledging interdependence and prioritizing collective performance.
In summary, S&OP is not just a supply chain concern. It is a collaborative effort that involves the entire organization, including sales, operations, product development, finance, sourcing, procurement, and marketing.
Myth 5: A fancy S&OP tool is overkill when we have spreadsheets
Even though technology has advanced, many companies still rely on spreadsheet programs such as Excel or rule-based processes in ERP systems to manage their S&OP. So, isn’t using spreadsheets good enough? Well, it depends on the purpose.
Excel is a great tool for creating prototypes to test ideas in the context of S&OP. However, it is primarily designed for data input and manipulation rather than supply chain planning. As it relies on manual data entry, it has significant limitations in supporting comprehensive planning requirements, making it prone to errors.
The problem usually arises as organizations grow in their product portfolio, markets, or volumes. The more data they put into the system, the more complex it gets. This often leads to shortcuts and inaccuracies, making it inefficient and difficult to manage. Consequently, businesses may experience higher costs and operational inefficiencies.
Relying on spreadsheets for supply chain optimization and critical business decisions simply isn’t sustainable. Companies need to realize that spreadsheets must be replaced with more robust solutions for S&OP that support their future business requirements.
Do you want to improve your S&OP process?
Don’t settle for outdated S&OP methods. It is time to say goodbye to manual and tedious Excel corrections and welcome a highly flexible and easy-to-use solution.
With a track record of over 1,000 successfully completed projects and a 30-year integration heritage, Optilon is a trusted supply chain optimization partner.
Our flexible system for S&OP can be tailored to align with your specific processes while remaining adaptable to your evolving business needs. It is easy to implement and offers effortless integration with other systems to streamline your operations seamlessly. Explore our S&OP offer here!
