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8. Incorporate monthly and weekly tradeoffs into S&OP
Sales and operations planning (S&OP) is a tactical process for end-to-end coordination,
collaboration, and alignment with a single plan for the enterprise. The process occurs over a
monthly cycle, with weekly updates and adjustments. S&OP is critical to the success of a
segmentation strategy because it is the process by which an enterprise aligns its decisions with
profit and customer service plans. These plans are then executed within the policies that have
been deployed to support the segmentation strategy.
S&OP is critical to segmentation in the following respects:
It enables financial and operational alignment with customer/product service and
profitability.
It provides a monthly forum for discussion about what is working and not working in
regard to segmentation strategies.
It includes what-if and scenario analysis to identify policy anomalies.
Leading companies are now using demand-shaping strategies and are linking their monthly
S&OP processes to their weekly CPFR channel processes for a closed-loop feedback system. For
example, some are using S&OP to synchronize back-end supply to front-end allocation and order
promising. Supply that is slated for channels with excess inventory can be diverted to channels
that can absorb it, or channel pricing changes can be made in anticipation of the incoming excess
supply. Thus, excesses and shortages are immediately identified, and demand-shaping and cross-
channel coordination strategies can be put in place to synchronize demand with supply.
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