What is in this article?:
APQC’s data show that involving the supply chain functions (purchasing, logistics and manufacturing) in the S&OP process is associated with a lower inventory carrying cost and lower cost to conduct demand and supply planning.
Sales and operations planning (S&OP) has the potential to promote visibility within the enterprise and foster collaboration among business functions. However, the functions involved in the S&OP effort can vary from organization to organization. APQC asks organizations participating in its Open Standards Benchmarking in supply chain planning to indicate the business functions they involve in S&OP (Figure 1). Not surprisingly, sales and marketing is involved more often than not, with more than two-thirds of responding organizations indicating that they involve this function. Less frequently involved are supply chain functions, with 65% of responding organizations indicating that they include the purchasing and manufacturing functions and less than half reporting that they include the logistics function.
Given that S&OP can affect demand forecasts, inventory levels, raw material purchase projections, production plans and forecasted labor utilization, it is worth considering whether the involvement of all supply chain-related functions in S&OP could have a positive effect on supply chain performance. APQC compared the cost of supply and demand planning and the inventory carrying cost of organizations that involve each of these groups in S&OP to the costs of organizations that do not involve the groups.