2
What did we do in this study?
3
Survey demographics
Services – 18%
Banking & Financial – 11% US$100 million
to US$500
million
30%
4
Demographics – role
Order
Management
3%
Other
9% IT Development
Procurement
3% 19%
Product
Development
4%
Marketing
5%
Finance
Distribution 13%
6%
Demand Planning
6%
Manufacturing
6% Executive
Management
Sales Management 12%
7% Supply Planning
Source: Ventana Research 2006
8%
Sales and Operations Planning Research Study
5
1. There is confusion about the goal of
S&OP
corporate strategy
and goals. Make better
decisions
20%
All others are tactical Align operations
6
2a. Most companies are new to S&OP and
so lack a rigorous process.
7
2b. Most companies are new to S&OP and
so lack a rigorous process.
Line of business or
74% 26%
department
Multiple entities or
58% 42%
global level
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
8
2b. Most companies are new to S&OP and
so lack a rigorous process.
50%
47%
45% 43%
41% 42%
40%
40%
37%
35% 33%
31%
29%
30%
25%
20%
15%
10%
5%
0%
Established Balanced Consensus Formal Financial plan Strategic Formal demand New product Supply and
time fences scorecard or demand executive reconciliation initiatives and and supply introduction capacity
performance planning S&OP review projects review plans planning
reviews meetings meetings
9
Ventana Research S&OP Maturity Model
10
3a. There is a lot of room for improvement
35%
practice S&OP at a 35%
level. 26%
25%
23%
Only 16% of 20%
innovative. 10%
strategic level.
0%
Tactical Advanced Strategic Innovative
11
3b. There is a lot of room for improvement
20% 20%
17%
15% 15%
10%
10% 10%
5% 5%
0% 0%
Tactical Advanced Strategic Innovative Tactical Advanced Strategic Innovative
30% 40%
24%
25%
22%
30%
20%
19% 19%
15% 13% 20%
10%
10% 6%
5%
0% 0%
Tactical Advanced Strategic Innovative Tactical Advanced Strategic Innovative
50%
45% 44%
40%
35%
31%
30% 28%
25% 24%
22%
`
20% `
15%
10%
5%
0%
Improved Better inventory Better asset Better budgeting Better sales
customer service utilization utilization planning
Source: Ventana Research 2006
Sales and Operations Planning Research Study
13
4b. Benefits are not being measured.
For the top benefit of What performance measures are used for S&OP?
29%
30%
25%
25%
customer 20%
21%
satisfaction. 15%
16%
only 8 percent 0%
Forecast Sales Sales Plan to Profitability Customer Margin On-time Quality
accuracy revenue volume budget by product satisfaction attainment delivery
measure asset attainment grow th
14
5. Companies plan in isolated units
35%
30%
30%
25% 23%
20% 19%
18%
16%
15%
10%
5%
0%
Lack of single Lack of internal Lack of data Poor collaboration Lack of IT resources
forecast across all collaboration integration with customers
operations and
finance
Source: Ventana Research 2006
Sales and Operations Planning Research Study
15
6. Executive sponsorship and Finance
involvement are important.
All others
14%
In companies reporting
overwhelmingly strong P&L Owner (CEO or
GM)
32%
gains (the highest Plant Manager or
Director of
category) in customer Manufacturing
15%
satisfaction
either the CEO or
the CFO is the
Head of Finance
sponsor 100% of (CFO or Controller)
15%
Head of Operations
the time. (COO or VP of Ops)
24%
16
7a. When S&OP is the plan of record,
performance improves
S&OP plan
Somewhat well
alignment. 36%
W ell
34%
17
7b. When S&OP is the plan of record,
performance improves.
Who gets and uses the S&OP plan?
Contact Center 29% 37% 34%
18
Performance gains
50%
45%
40% 7%
35% 7% 4%
10%
5%
30%
4% 5%
6% 4%
8% 4%
25%
20%
36%
32% 33%
15% 29% 29%
27% 25%
24% 25% 24%
22%
10%
5%
0%
Forecast C ustomer Asset Inventory Order fill Revenue Working Perfect Return on Gross Inventory
accuracy satisfaction utilization value rate capital order assets margin turns
19
8. Improving the process a little brings big
gains
COMPANIES
CONTRIBUTING FACTOR WITH THE GENERAL
MOST GAINS TREND
Includes Finance in S&OP 91% 42%
Process includes financial plan reconciliation 82% 40%
Sales uses S&OP to adjust their plans 100% 63%
Company aligns financial plans with S&OP very well 55% 18%
S&OP has plan-vs.-actual reports 90% 53%
Executive Management included in the process 82% 46%
Capture assumptions and meeting notes 72% 36%
Top-level S&OP has regular agenda and key decisions 73% 40%
Includes multiple factories or regional operational facilities 70% 37%
Includes progress on projects and initiatives 78% 46%
Action items are assigned and tracked 70% 52%
Includes consensus demand planning 61% 33%
Creates plan quarterly or monthly 53% 34%
Includes multiple lines of business or brands 72% 56%
Has formal demand and supply review meetings 56% 42%
Has 18-month planning horizon 33% 14%
Neither Unimportant
important or 6%
unimportant Very
More than three out 15% unimportant
3%
of four respondents
(76%) told us that
software is an
important element Very
important
of S&OP. Somewhat
41%
important
35%
21
9b. Dedicated software is the right tool for
the job
What type of software is used for S&OP?
Dedicated
users are management
consultant-
provided
satisfied vs. 71%Dedicated on-
demand or SaaS
9%
14% Best-of-breed
that have a demand and supply
chain
dedicated, 5%
Financial planning
3%
vendor provided Data w arehouse
reporting and
Dedicated in-house
for S&OP IT developed
20%
22
9c. Dedicated software is the right tool for
the job
Why are users dissatisfied with their S&OP software?
35%
33%
31%
30%
25%
20%
18%
17%
15% 14%
13%
12% 12%
10%
7%
5%
0%
Difficult to do Supporting S&OP application Does not Inadequate Data gets No IT resources Users more Data is
what-if analysis applications not too complex to adequately reporting outdated quickly available to comfortable with inaccurate or not
integrated with implement and support role- capabilities implement and spreadsheets reliable
each other maintain based views maintain it
23
10. Users know what they need
24
11. Competitive pressures are driving
S&OP improvements.
What are the business drivers?
35%
30% 28%
25% 25%
25%
15%
10%
5%
0%
Competitive Complexity Rising Competitive Rapid Need for
pressures for caused by customer pressure for expansion in greater return
customer growth in new expectations new products business on assets
retention products or of order fill growth
services rates
Source: Ventana Research 2006
Sales and Operations Planning Research Study
25
12. Globalization adds complexity.
45%
40% 38%
36% 36% 35%
35%
32%
30%
25%
20% 19%
20%
15%
15%
10%
10%
5%
0%
Data Plans are Plans are Data Not enough Mistrust of Mistrust of Mistrust of We miss our
reconciliation inaccurate constantly collection data is plans at plans at plans at the performance
is more revised takes more included managerial executive line targets
difficult time level level personnel
level
Source: Ventana Research 2006
Sales and Operations Planning Research Study
26
Report recommendations for users
People
Broaden deployment to include executive management, finance,
manufacturing, demand planning, supply planning, marketing,
product engineering and design and IT functions.
Use a cross-functional team for plan development and reporting.
Have all departments use S&OP as the plan of record –
including Finance
Engage the CEO or CFO a sponsor
Process
Use S&OP to align operations with corporate strategic
objectives.
Have regular formal demand and supply review meetings and
look at actual-vs.-forecast targets.
Plans should cover 18 months and include multiple lines of
business or brands and multiple factories or regional operational
facilities across product lines.
Source: Ventana Research 2006
Sales and Operations Planning Research Study
27
Report recommendations for users
28
Report recommendations for users
Technology
Actively evaluate vendor-provided dedicated solutions
Look for software that has what-if scenario planning , real-time
dashboards, collaborative demand planning, automated financial
planning reconciliation and profit-based solving.
Consider supporting technologies like EAI and BI platforms
Performance Management
Match S&OP metrics with corporate goals
Integrate S&OP with Balanced Scorecard
29
Questions
Colin Snow
Ventana Research
650-931-0886
colin.snow@ventanaresearch.com
www.ventanaresearch.com
30
Biography
31