Supply chain agility has become key to addressing customer and market uncertainty—a hallmark of today’s volatile global economy. However, many organizations often mistakenly define agility as simply shorter lead and cycle times—believing that if the supply chain can react faster, it can reduce the impact of demand volatility. While reducing the time it takes to get goods to customers is desirable, in reality, lead time reduction alone will not enable a company to more effectively balance customer responsiveness and efficiency, nor capitalize on emerging opportunities more quickly than competitors.
True supply chain agility requires a robust Sales & Operations Planning (S&OP) process that enables a company to more accurately anticipate future demand and resource requirements, as well as more easily shift requirements as needed to accommodate customers’ changing demands.
In this paper, we explore why supply chain agility is so critical to competitive advantage and revenue growth, and how companies have used S&OP to help foster such agility. We also outline the basic elements of a strong S&OP process and the steps a company can take to begin benefiting from this powerful capability.
Businesses everywhere face a common challenge: growing profitably in a world marked by volatility and unpredictability. That is especially true for companies with global operations serving a highly diverse customer base, with a highly complex supply chain. Achieving best in class responsiveness to customer needs while controlling costs is critical. For these companies, an agile supply chain has quickly become a competitive necessity.
Yet, while many companies have made strides in fostering greater supply chain agility, they still struggle to keep pace with the market’s demands. In fact, our experience and numerous recent research studies have confirmed that many companies’ supply chains are not nearly as agile as the companies—and their customers—would like them to be. These companies face ongoing challenges in responding to customers’ needs, which ultimately results in a gradual erosion of overall business performance.
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