Struggling to get everyone’s engagement in your S&OP process?
Use this as an example of what can happen when everyone’s too busy…
Here’s a £1.4 BILLION* excess inventory write-off (waste) that could have been avoided with an S&OP (Sales & Operations Planning) process.
Even in the face of Covid’s uncertainty and fierce global competition for PPE, a simple S&OP could have helped.
How? (Excellent question!)
1) Improved Collaboration – S&OP brings to the table sales, marketing, and operations to create a unified plan. In this case, involving healthcare providers (the “sales” side) in the S&OP process could have helped determine realistic PPE needs.
2) Demand Planning – S&OP involves creating a rolling demand forecast. Regular updates based on actual usage and changing pandemic conditions could have prevented over-ordering.
3) Inventory Management – S&OP helps identify potential inventory issues. Early estimates of excess PPE could have triggered efforts to find alternative uses, sell it, or adjust future orders.
What would the S&OP process involve?
1) Regular Meetings – Instead of a single large contract, having monthly meetings to review demand and adjust orders could have prevented overstock.
2) Basic Forecasting – Even a simple forecast based on hospital bed count and projected case numbers would have been better than no forecast at all.
3) Early Warning Signs – Regular reviews could have identified potential waste early, allowing for action like offering the PPE to other countries.
Bottom Line...
Overall, a simple S&OP process could have significantly reduced the waste by prompting;
- better communication,
- demand planning, and
- inventory management.
S&OP doesn’t have to be complex.
A basic process will show results.
*£1.4 BILLION = USD$1.78 BILLION = AUD$2.66 BILLION = €1.66 BILLION as at June 26, 2024.