Executive Summary
Based on a survey of nearly 140 enterprises between June and July 2006, Aberdeen research finds that the top 5 pressures for improving S&OP processes are rising customer order fill rate expectations, better return on net assets, shrinking profit margins, customer retention pressures and extended lead-times due to global sourcing.

However, current S&OP processes are failing to alleviate many of these pressures. While a majority of companies report that S&OP has helped improve forecast accuracy and improved cross-departmental communication, most companies have failed to see improvements in profit-related metrics like gross margin and customer retention.

Aberdeen research finds that traditional sales and operations planning (S&OP) processes and supporting technologies are no longer sufficient in today’s high-pressured business environment. Sales and Operations Planning has evolved to become Integrated Business Planning. It is a truly cross-functional, multi-dimensional process that includes all elements of demand, supply and financial analysis in relation to the business goals and strategy.

Opportunities for Improving on Current S&OP Technology and Processes
• S&OP frequency: Companies with more frequent S&OP processes are experiencing better order fill results.
• Siloed S&OP: S&OP processes continue to be driven by individual organizations in the majority of companies (83% of companies) and only 17% of companies have cross functional teams.
• S&OP technology adoption: 41% of the companies surveyed reported that they are using spreadsheets for their S&OP solution. Nearly 30% of these companies have ERP solutions that are capable of doing S&OP demand and supply planning, but these companies have chosen to supplement with spreadsheets for their S&OP process.
• Executive reporting: 74% of companies are reporting that they don’t have adequate executive level reporting for the key performance indicators of the S&OP process.

Characteristics of Integrated Business Planning
The key differences of an Integrated Business Planning process compared with a traditional S&OP process are shown in Table i

Table i: Integrated Business Planning Process vs. Traditional S&OP