Lora Cecere Asks: Why Do People Question the Value of S&OP?
Frequently, I get asked the question, “What is the value of S&OP?” When I get the question, I smile. For clients that I have worked with on this topic, the value speaks volumes, but to companies trying to get started, the value proposition is elusive. So, today, let me answer the question by telling a story.
In 2005, I engaged with Sonoco Products, a packaging products and services company, to initiate some work on Sales and Operations Planning (S&OP). They had the vision, but they lacked technology. Last month, I shared the microphone with Keith Holliday, Vice President of Supply Chain, on an APICS webinar sponsored by Logility to discuss the value proposition of S&OP to Sonoco Products.
To understand the value of S&OP, let’s contrast Keith’s performance to one of his competitors Owens Illinois. The two companies’ results on operating margin and inventory turns are shown in figure 1. Notice the more controlled pattern of Sonoco products.
Figure 1. Comparison of Owens Illinois Versus Sonoco Products for the Period of 2000-2012