Sales and Operation Planning – How it Differs the World Over

Sales and Operational PlanningSince Sales and Operations Planning (S&OP) was first introduced back in the 1980s it has now become an accepted practice around the world. It has significantly changed how many supply chains operate. But is S&OP the same the world over, or are there certain differences in its methodologies across the various continents? If there are, this could be crucial information that needs to be fully understood when companies are seeking to further their global networks.

A study recently undertaken by the Aberdeen Group, and entitled “Sales and Operations Planning: a Global Comparison,” considered this question. The study sought to evaluate the workings of sales and operation planning in various regions around the world, analyzing the capabilities, the pressures, and the technologies of the 100 organizations that took part in the study.

The report collated the data geographically, in North America, EMEA countries and “all other countries” in regions such as Asia, the Caribbean, and South America.

The author of the study, Bryan Ball, explained that understanding how and why the differences exist in global sales and operations planning may suggest potential solutions to organizations in other regions who are tackling similar problems that may not have been encountered before.

Global Influences

The report took into account all of the conditions that the companies face in their own geographic areas. These conditions included customers demanding quicker and more accurate order completion; operating expanding global supply chains; the lowering of supply chain costs, and returning more top-line revenue.

As might have been expected, the one of the biggest pressures across all regions originated from customer demands. This demand was strongest in the EMEA countries at 55%, and lowest in North America at 46%. All other countries followed just behind the EMEA countries at 54%. As might be expected the composition of the demands was different from region to region.

In North America Increasing Top-Line Revenue is King

The report reveals that North American businesses concentrate more on increasing their top line. Statistically, the study shows the percentage of North American companies at 46%, EMEA countries at 23%, and all other countries at 38%. The report concludes that the reason North American companies are so focused on top line improvements could be to do with the maturity of the North America market.

In Growth Markets – Beating the Competition is King

When a market becomes more mature companies within it may struggle for a share of the revenue. When markets are still in their growth stages, being the first to market products and to get there ahead of the competition is the more important factor.

Global Processing Potential

You might think that when it comes down to having process capabilities organized in terms of sales and operation planning, that North American companies would lead the way. However, this was not found to be the case according to this study.

It may surprise some readers to learn that it is the “all other countries” category that takes first place, with the EMEA countries category in second. North America companies languished in third. The processes in question include:

  • The evaluation of restrictive planning situations while balancing supply against demand
  • The evaluation of unrestricted planning situations while balancing supply against demand
  • Reacting to unforeseen scenarios in order to be able to align them with sales and operation planning objectives

Monitoring the gap between sales and operation planning operations and fiscal budgets and taking appropriate corrective action.

Use of Technology

The study found that companies in the North American category were more prone to use legacy systems than best in class systems. Companies in EMEA countries used more modern technology as did companies in the “all other countries” category. This is put down to the fact that companies that operate in longer established markets hang on to the “tried and trusted” technologies; whereas companies operating in emerging markets utilize the latest releases of technology and software.

It also transpires that many North American companies may not use ERP (Enterprise Resource Planning).  It is surmised that the reason for this is that the legacy systems in question were developed independently rather than being incorporated into fully integrated systems.

The fact of the matter is that the use of non-integrated systems introduces delays into the decision-making processes that exist with other non-integrating applications. This delay also increases the margin for error in sales and operation planning programming. It is of course well known in supply chain management circles that minimizing delays and errors, increases processing time therefore improving the speed and the quality of the decision-making processes within global supply chains.

The study concludes that longer established markets lag behind in terms of both enablers and capabilities. It is apparent that the recently emerging markets in the “all other countries” category are ahead in terms of technology by dint of the fact that they have made their investments later, and did not suffer so much from the incumbency of existing legacy systems.

As regards companies in the EMEA region, when compared to “best in class” they had a significant lead in terms of having installing functional sales and operation planning processes.

The studies recommendations for each of the regions going forward, are as follows:

Companies in North America

Companies in North America need to:

  • Engage more with formalized sales and operation planning methodologies
  • Get away from old legacy systems and upgrade to best in class sales and operation planning systems in terms of planning capabilities
  • Move away from non-integrated software and invest in fully integrated programs
  • Invite sales and marketing departments to be involved in the forecasting process

Companies in EMEA Countries

The following courses of action were recommended for companies in EMEA countries:

  • Invest in the latest bespoke demand planning systems
  • Invest in upgrading technology for dealing with restrictive planning scenarios
  • Invest in upgraded technology in order to make best use of and stay current with integrated system technology
  • Invest in bespoke sales and operation planning systems with regard to specialty products and scenarios

Companies in the “All Other Countries” Category

  • Invest in the latest bespoke demand planning systems
  • Incorporates fiscal planning reporting into the sales and operation planning process
  • Integrate bespoke demand planning systems into the sales and operation planning process

One thing that is made clear within the Aberdeen Group report is that as the companies within countries classed as emerging markets invest in better sales and operation planning tools, the companies still relying on legacy systems will lose even more of their competitive edge. They must “wake up and smell the coffee”, and get out of complacency mode into upgrade mode. However the upgrade process must be carried out selectively in order to reap the maximum benefit and reassert competitiveness.

For those readers wishing to see the complete report, please click on this link.

Does the company you work for use sales and operation planning in its supply chain management software? If yes, what are the benefits that have been realized, and what improvements would you recommend having read the article above? To read the entire report, please visit

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