Why S&OP is Critical for Manufacturing COVID-19 Recovery

We understand the recent health crisis makes for uneasy times and has already impacted many manufacturers in one way or another. Most businesses are wondering how big of an impact this will have on them and how they can best recover to plan for the future.

Scenario planning is more critical for manufacturers now than ever.

One of the biggest impacts we’ve seen for manufacturers is the shift in supply chain. More specifically the changes in customer demand, supplier disruption, and operational disruption. manufacturing why s&op is critical for covid 19 recovery

When it comes to customer demand, some manufacturing companies have seen spikes in demand and others have seen a significant decrease. Essential product demand has jumped 10X more than the ‘normal’ demand, but other non-essential items have been deprioritized and production has ceased. These are very different scenarios and some manufacturing companies are experiencing the extreme end of the spectrum, while some are on the other end. Both will likely experience supply chain ‘whip-lash’ when things return to normalcy. So, what can be done to ensure that companies in either scenario will bounce back strong?

With the implementation of S&OP (Sales & Operations Planning) into their processes, manufacturers can plan for different types of scenarios when it comes to customer demand, supplier disruptions, and operational disruption. This provides stability and preparation to teams across the organizations when the unexpected happens.

What is S&OP?

Essentially, S&OP should be the engine that runs your business:

  • It is an executive decision-making process
  • It balances demand and supply: volume and mix
  • S&OP ties operational plans to financial plans: ONE set of numbers
  • It is a forum for setting & executing the relevant strategy and policy

What are the high-level benefits from an S&OP implementation?

  • Maximized business profit
  • Maximized customer service
  • Better utilization of plant & equipment
  • Minimized costs
  • Minimized changes in production rates
  • Minimized changes in workforce levels

With S&OP prioritized within an organization, businesses can create scenarios and make a strategic plan in order to be proactive in that certain scenario, resulting in all the above benefits.

Getting started with S&OP requires a few simple steps.  Every manufacturing company forecasts sales and produces products, but how formal, accurate, & proactive is your historical process? Are you tracking your monthly numbers and improving on accuracy? Are your systems fully integrated to provide real time data for quick S&OP decisions? Are you ready for the “what if” scenarios in case of supply chain shutdowns or disruptions like what Covid-19 has caused?  We can provide the S&OP fully integrated enterprise design for best practice S&OP leadership.  At the start of the project before any type of design work, we determine the “low hanging fruit” that can be implemented immediately to accelerate your performance without incurring development costs resulting in delayed benefits. Contact us today & start reaping value as soon as the project begins.

Contact us to learn more about MCA Connect’s S&OP Assessment. With many S&OP implementations under our belt, we are confident we can help your project run efficiently and effectively.

Author: Howard Hohnadel, Managing Director

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