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The myths of S&OP

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Thor and Loki, two gods from Norse mythology, have seen a resurgence in popularity lately, likely due to the wildly popular Avenger and Thor movies. Or there’s the classic Greek myth about the Gorgon Medusa and how Perseus defeated her to save his mother from the clutches of a scheming king. Myths transcend generations. After all, who doesn’t love a good story? But that’s all they are—stories. And the same can be said for the most commonly believed myths surrounding S&OP.

In a recently released report, Supply Chain Insights (SCI) highlighted the top S&OP mythsi. In this blog, we’ll review a few of these myths and explain why believing in them can be hold your business back from being all it can be.

Myth 1: Companies don’t need a planning solution to drive an effective S&OP process.

It’s actually more a matter of finding the right solution to improve the effectiveness of your business’s current S&OP process. According to the report, organizations are reluctant to adopt planning solutions since they are already comfortable with the current setup of spreadsheets and enterprise business applications. Imagine a world in which you have no choice but to track all sales and operations processes manually in a spreadsheet. But with spreadsheets, how efficient can your business be? How much can it grow? Chances are, likely not much. Yet, only one out of two companies surveyed by SCI believes that their processes are effective.

Now imagine those processes on a global scale—such as managing a supplier in China while you’re in the U.S., for example. It’s impossible to have full visibility into the supplier’s operations without the right tool. But with the right solution in place, you can streamline those processes by providing a way to collaborate with suppliers, distributors, and other trade partners—all in one place.

Myth 2: S&OP can be effectively modeled using a spreadsheet.

Sure it can—if data and the market were to remain static. But the market is constantly changing, and modeling in spreadsheets can compromise your company’s ability to respond to disruptions. Companies also need to drill down to the most granular level of details during the S&OP process. Yes, spreadsheets are important to the business and a good starting place, but they simply can’t meet the challenges to help drive growth and improve profitability as they are unable to run “what-if” scenarios or provide an ultra-detailed view into data.

On the other hand, with well-chosen planning solution, you can quickly analyze the effects of unexpected or planned events to determine the optimal response by creating “what-if” scenarios and comparing them in real time, even for master data changes like new product introductions—something you can’t do in spreadsheets.

Still believe spreadsheets are the best solution? Here’s some food for thought: According to the Association of Chartered Certified Accountants (ACCA), more than 90 percent of spreadsheets contain errors, while more than 90 percent of spreadsheet users are convinced their models are error-free.ii

Myth 3: Supply chains are moving so fast that companies don’t have time to plan.

Let’s rephrase that: “Supply chains are moving so fast that companies who don’t have the right planning platform in place don’t have time to plan.”

The technology to keep up with supply and demand changes exists. Need to plan your supply chain a week or a month ahead of time? With the right solution, such as Anaplan’s Supply Chain Planning app, you should be able to quickly analyze the situation to determine the best supply planning response.

Do your due diligence

According to SCI, S&OP is growing in importance and a company cannot achieve their business goals “without the use of technologies.” Currently, a plethora of planning solutions is currently available on the market. It’s up to you to do your due diligence to determine which one is right for your business—and to banish these S&OP false beliefs back to the world of folklore and mythology.

What other S&OP myths have you come across? Share your thoughts in the comments!

i. Cecere, Lora. “Putting Together the Pieces: The S&OP Technology Landscape in 2015.” Supply Chain Insights (2015).

ii. Association of Chartered Certified Accountants (ACCA), “Talking Technology—Spreadsheet Solutions.” Published August 11, 2015. Accessed December 11, 2015.

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