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: