AMR Report Explores 'Deadly Challenges' of S&OP

Feb. 23, 2010
Research study highlights the need for change management skills.

The global recession has revealed flaws many businesses had in their strategies. But a new study by AMR Research suggests that supply chain managers would have been better prepared for the changing conditions had they utilized sales and operations planning (S&OP).

Companies without strong S&OP practices take four to six months longer to sense shifts in demand adjust product portfolios, and respond with appropriate inventory strategies, according to the report, entitled, "Conquering the Seven Deadly Challenges of Sales and Operations Planning."

The study delves into the challenges businesses are facing in navigating their supply chain through the volatile economic upturn. Many companies, it says, are wondering how to best sense demand and drive excellence in supply chain planning. For two-thirds of companies, according to the report, the S&OP process remains stuck in neutral.

AMR Research Directors Jane Barrett and Steve Steutermann compiled five years of S&OP-related research to see what S&OP problems supply chain managers can expect to face. Among their conclusions, the report shows companies are getting worse, not better, at managing S&OP.

Barrett and Steutermann suggest that the flaw sits at a lack of change management. "We believe that S&OP maturity goes hand-in-hand with supply chain excellence and, more importantly, with the process of determining value and driving it throughout the value network," the report states.

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