The Importance of Sales & Operations Execution (S&OE) in Overcoming Business Challenges
To better address increasingly complex business situations and obstacles, many organizations are implementing a new but complimentary alignment intersection called Sales & Operations Execution (S&OE). Issues arise in business operations when there is no formal integration between mid to long-term planning and tactical execution activities. Establishing a formal, structured S&OE process can better enable organizations to adapt rapidly to changing conditions and likewise feed back into long-range planning.
Why Sales and Operations Execution (S&OE) Is Crucial to Your Business
Sales & Operations Planning (S&OP), more recently evolved into Integrated Business Planning (IBP), is a critical success factor for establishing medium to long-term demand plans, aligning cross-functional partners and matching those demands plans to appropriate supply plans, often leveraging AI/ML and stochastic modeling.
S&OE, on the other hand, is a weekly process that acts as the link between near-term execution and long-term strategy as part of the organization's S&OP or IBP processes. S&OE deals with immediate issues to deal with the actual (versus planned) supply and demand issues. This meeting frequency is such that it's possible to determine short-term interventions and corrections to keep demand, supply, and finance aligned.
The goal of the S&OE processes is to assist in achieving organizational & financial objectives, and to identify variances as they begin to emerge and address them in weekly to bi-weekly cycles. Combined with performance management & analytical capabilities, S&OE can deliver the organization’s plan by proactively identifying gaps and quickly deploying countermeasures. As we all witnessed through COVID and the subsequent supply chain shocks, gaps to plan can include shipping delays, customer demand spikes, production shortages/capacity issues, logistics barriers, and warehouse constraints.
Monthly S&OP meetings can often get off track trying to solve operational issues rather than focusing on the long-term direction of the organization. Sales & Operations Execution meetings should run separately from S&OP to ensure near-term execution and likewise feed inputs back into the long-range planning process. S&OE fills the gap between S&OP and day-to-day operations. It recognizes that long-term plans cannot know exactly what short-term issues will arise or the severity.
How Does S&OE Integrate With S&OP/IBP?
With a mature S&OE process in place, an organization will better adapt and overcome executional issues, while also improving mid and long-term planning processes. Data & analytics will quickly inform the different cross-functional teams of the risks to the S&OP/IBP and financial plans and which actions will yield the greatest benefit.
Because there's a degree of overlap, some organizations feel these processes can be combined as separate stages in the same meeting. In fact, most S&OP meetings devote a certain amount of time attempting to resolve operational issues.
But when separate processes are combined or conflated, focus is lost and more time and attention is given to solving present and tangible short-term operational issues than establishing and refining long-range S&OP process strategies.
A separate S&OE is crucial because it removes distractions from S&OP meetings, allowing teams to concentrate on their primary task, which is delivering medium to long-term plans.
Sales & Operations Execution can be viewed as the missing link between S&OP and operations execution. It separates strategic planning from operational realities, while providing a critical link and feedback loop. S&OE in many ways simplifies S&OP, by creating focus and offering a structured management tool for addressing short-term imbalances and operational challenges.