Over the past four decades, manufacturing, distribution and some service companies have invested management time and attention, consulting dollars and technology expense to properly balance supply commitments and realized demand. At the same time, they have been seeking effective ways to optimize trade-offs between working capital (inventory), operating expense, and provide consistent quality customer service. The results have been spotty at best. Measurable, lasting success has proved broadly, and somewhat surprisingly, elusive. Even now, it is still an exception to find a sustainable end-to-end demand/supply chain operating in a cross-functional, integrated and collaborative manner.
If this was a simple endeavor, good organizations would have mastered it long ago; the fact of the matter is, they haven’t. In fact, most sales and operations planning (S&OP) efforts are rewarded with frustration.
All too often, well-intentioned initiatives are chartered, staffed and supported with investment, but quickly plateau and wane without measurable payoff. Daily frustration is common, negatively impacting the health of the organization’s culture.
Even when the supply side of the organization operates in an aligned fashion, true demand-supply financial integration is extremely rare. A recent benchmark study by the Global Supply Chain Institute (GSCI), “Advanced Demand/Supply Integration (DSI) Best Practices,” found the real challenges with achieving demand-supply integration (DSI) performance, a support function of S&OP, are cultural and stem from an inability to align the various functional pieces into an integrated and collaborative whole.
