In both growing and declining sales volume environments, 90% of companies with sales and manufacturing functions in the United States are losing bottom-line value from ineffective Sales and Operations Planning (S&OP) processes and system technologies.

Over the past few years, we have seen companies lose value as they are slow in responding to these macro changes. For example, some industrial manufacturers in the United States have seen a sharp rise in sales following federal tax cuts in early 2018, however manufacturing and supply chains have been unable to adapt resulting in lead times blowing out, unit production costs rising and instances of key customers leaving as they were not prioritized. On the other end of the spectrum, companies with declining sales volumes are continuously late in changing their operating profile of their manufacturing sites, leading to excess inventory, low plant utilization and high fixed costs that don’t adjust to sales volumes.

At the core of both examples is an ineffective Sales and Operations Planning process, system and performance management culture. Compounding these issues is the current trend to implement digital technologies to resolve these issues, unfortunately the end result is increased levels of employee frustration and no improvement to the bottom-line.

Breaking down the silos

Five steps to start aligning your departments on the value-adding processes:

1. Segmented product strategies: develop clear and concise customer segments for each product group and communicate these clearly and frequently with your employees across all departments.
2. Simple processes across departments: establish a coherent and clear sales-to-delivery process that integrates all departments with a focus on the value adding activities (e.g. demand forecasting, pricing mechanisms, material requisitions, production scheduling).
3. Roles and interfaces clearly defined: individuals understand their role with Key Performance Indicators and frequent reviews conducted to drive process compliance and bottom-line results.
4. Robust system to support the process: data captured, processed and available in a timely and accurate manner to support decision making. Where possible, automation and machine learning leveraged to improve decision making accuracy and speed.
5. Incentive program: individuals motivated to proactively resolve customer issues (typically requires cross department communication) whilst also improving the end-to-end process.