ANALYSIS OF THE DEMAND AND S&OP PLANNING PROCESS IN BRAZILIAN COMPANIES – PART 2

In the first part of the presentation of the survey results on Demand Planning and S&OP¹ in Brazilian Companies, a brief description was made of the current situation and the challenges that companies face in serving an increasingly demanding consumer. The information collected shows that, despite the increase in the complexity of the Brazilian market with the diversification of products and increased competition, many companies still use the same planning mechanisms as in the past, that is, market changes were not followed at the same pace by the search for new solutions and planning mechanisms.

It is also worth mentioning the fact that, despite confirming the multidisciplinarity of this important process, there is still a strong commercial orientation in decisions related to meeting demand, which often do not take into account the supply, production and distribution capacities to do so. it. Thus, demand planning can represent a great opportunity to integrate the different functional areas of a company. This point will be the focus of this article, which will present the results of the research on S&OP initiatives in Brazilian companies.

SALES & OPERATIONS PLANNING PROCESS (S&OP) IN BRAZIL

The S&OP process deals with how to structure a single and integrated planning with the alignment of commercial and capacity plans, with monthly meetings for consensus and validation between the areas, and it is nothing new from a conceptual point of view, appearing in articles and books in the production planning and control area for more than two decades.

However, only in the last five years have we seen the term S&OP spread and its principles put into practice by a significant number of companies in Brazil. This finding was corroborated in our research when we asked directly about the use of S&OP and when this process had been implemented by the company, as shown in Graphs 1 and 2.

As we can see, more than 75% of companies use, are implementing or intend to implement the S&OP process, which reinforces the importance that demand planning has gained in recent years, since the success of the process necessarily depends on the involvement of high company direction.

Breaking down the data on the use of the S&OP process by sector of the economy, as shown in Graph 3, we can see that those sectors that have experienced great growth in recent years are the ones that make the most use of this initiative as a planning mechanism. Thus, we can assume that the need to make the best possible use of available capacity, in a growth scenario, was one of the great drivers of S&OP in our country.

The partnership of the ILOS Institute with AMR Research, one of the most important research institutes in the world in the area of ​​operations, allowed us to replicate some questions from a similar survey conducted in 2007 in the United States on the main challenges of the S&OP process in companies. Comparing the results of the two surveys, we realize that the challenges listed are cited more intensely in Brazil. In addition, as shown in Graph 5, we see that, while in the US the biggest S&OP challenges for companies are dealing with global teams and reaching an agreement between areas, in Brazil the challenges are to increase profitability with S&OP decisions and have quality data available for decision making.

These results are evidence of the difference in maturity in the process, which was adopted almost a decade earlier in American companies, and the number of multinational companies headquartered in each of the countries. Despite the enormous challenges that we still have ahead of us for the improvement of S&OP in Brazilian companies, the results achieved so far, and presented in Graph 6, are very significant and very encouraging.

It should be noted that, in addition to the more immediate objectives of S&OP, which are improving sales forecasting and reducing inventories, optimizing the use of assets, improving the “perfect order”, improving launching new items and increasing revenue were cited as results achieved by more than 50% of companies. The improvement in sales forecast accuracy averaged 41%, while the average inventory reduction was 23%.

CONCLUSION

We can therefore conclude that, despite the many improvements to be made, the S&OP process is a reality as a short-term planning tool in Brazilian companies and is already showing encouraging results. Unfortunately, the extent of the research was such that we are unable to publish it in its entirety in these two articles. Thus, for those interested in the demand planning area, the Market Intelligence area of ​​the ILOS Institute launched an ILOS Panorama with the detailed results of the survey and additional information, which allow executives to improve their processes and use performance indicators that support the growth of their companies.

BIBLIOGRAPHY

WANKE, P.; JULIANELLI, L. Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods, Editora Atlas: Rio de Janeiro.

PANORAMA ILOS – Institute of Logistics and Supply Chain. Research: Analysis of the Demand Planning Process and S&OP in Brazilian Companies, 2010.
¹Acronym in English for Sales and Operations Planning or Integrated Sales and Operations Planning, in free translation into Portuguese.