Last Updated: June 22, 2018
Sales & operations planning (S&OP), an almost 40-year old decision-making process of aligning strategic plans in all lines of business to support long-term goals, has often been thought of as the heartbeat of a company because it keeps everything running smoothly. S&OP calls for a regular analysis of consumer demand and supply resources with the goals of improved forecast accuracy, decreased costs, and an improved view of capacity in all parts of a supply chain.
Proper S&OP helps organizations know when to launch products, how to price them, create production schedules, and much more. S&OP brings great value, but in an increasingly global business world, one in which quick turnaround of products and services and constantly changing consumer preferences have become standard, companies must take a fresh look at S&OP to ensure more efficient planning.
In a business environment that is becoming more connected each day, increased supply chain complexity is putting pressure even on the most well-run S&OP processes, increasing the difficulty of accurate forecasting and demand planning. Relying on outdated methods in S&OP can lead to poor data integrity and inaccurate analyses. In response, executives are leveraging predictive analytics to analyze and consolidate data from every corner of the enterprise to gain decision-driven information in real-time.
Top Benefits of Predictive Analytics in S&OP
A traditional S&OP process is comprised of three parts:
- Demand review
- Supply review
Within these three steps, sales, marketing, operations, finance, R&D, and IT align to create forecasts, synchronize the supply chain and discuss how to better integrate the strategies and goals of each business unit.
In today’s business environment, achieving effective S&OP will prove difficult without insights from advanced analytics, particularly predictive analytics. Predictive analytics shine in the second step of S&OP, the demand review process. Traditionally S&OP data is comprised of mostly historical internal data. As expansive new external data sources have become available, S&OP can improve demand reviews by assessing and addressing the drivers of demand fluctuations.
Three top benefits of this approach are:
- Using predictive analytics in S&OP helps executives stay on top of trends and provides opportunities to jump ahead of competitors by analyzing various types of unstructured data in real-time, providing actionable, data-driven insights.
- Predictive analytics in sales & operations planning allows business leaders to incorporate global data, which sets the stage for predictive sales planning; a process that assists S&OP teams in creating data-driven sales plans for all products with exceptional predictive insight. The use of global economic data helps with understanding upcoming economic risks that could greatly affect consumer demand and company-wide sales forecasts.
- Many business leaders are faced with questions like, “Will this product still sale next season?,” “How much lead time is needed?,” “Can our supply chains change quickly enough to do this?”, and many more. By leveraging predictive analytics in sales & operations planning, executives can run multiple “what-if” scenarios with unstructured and global economic data to create enterprise-wide contingency plans.
Today’s fast-paced, data-driven business environment has created the need for nimble processes, affording executives the ability to adapt quickly to market events without straying away from the company’s overall business plan. The integration of predictive analytics into S&OP will make for stronger, more defensible demand forecasts and gives business leaders more confidence in the effectiveness of said plans. With a more accurate forecast of demand, step three in S&OP, the supply review process, should result in reduced costs, optimized inventory levels, increased revenue and enhanced customer value.
Prevedere is powering the future of S&OP with Prevedere, a cognitive computing engine. Learn more about applying predictive analytics to S&OP in this webinar: Sharpen Business Performance with Predictive Analytics
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