Rethinking the Value of S&OP

Earlier this week, Supply and Demand Chain Executive wrote a summary of the findings from a recent Aberdeen research study that analyzed the ability of sales and operations planning (S&OP) processes to impact company-wide performance. In their write up, the SDCE editorial staff report that "Companies' sales and operations planning (S&OP) processes are failing to improve enterprise-wide performance, and few companies believe that their S&OP process is adequate" according to Aberdeen's new study. In addition, the article notes that "while a majority of responding companies in the Aberdeen research said that S&OP has helped improve forecast accuracy and enhanced cross-departmental communication, most companies have not seen improvements in profit-related metrics like gross margins and customer retention."

Although based on a relatively small sample size of 140, these findings are remarkable even if they prove only directionally accurate, not statistically significant. Personally, I'd argue that based on the survey size -- and also because I'm not sure about the specific quality control of the sample -- it would be jumping the statistical gun to draw any universal conclusions. I'd also like to see if Hackett has any data which either agrees with the findings or refutes them. But regardless, the lack of correlation between margin performance and customer retention with S&OP investment is certainly telling and surprising. Kudos to Aberdeen for uncovering such a finding, which goes against the grain of most analyst studies which always seem to find a way to suggest the need to invest in a particular technology. After all, if there's a compelling financial reason to buy software, then there's a compelling need to buy third party research and solicit outside opinions as well.

If you're interested in learning more about Aberdeen's findings, you can download the full report here.

Jason Busch

Discuss this:

Your email address will not be published. Required fields are marked *