S&OP: Should Not Be a Hammer Seeking a Nail

May 9, 2023
5:15 pm

Organizations use S&OP as a hammer in search of a nail. The process is not a panacea for the lack of organizational alignment or clarity on strategy.

Currently, LinkedIn is flooded with smiling pictures of supply chain business leaders attending conferences. The good news is that we can attend conferences again. The bad news is that most discussions are based on opinions, not facts. As a contrarian voice in the industry, I want to share some research to steer the conversations towards a more fact-based dialogue. (I know. The industry is full of strong opinions. I can only try.) My goal is to help.

In this post, I want to focus on tactics that work and don’t drive success based on recent research of 107 business respondents. (The panel group is sourced from my group of LinkedIn followers. I openly conduct and share research in front of the firewall.)

Supply Chain Center of Excellence

Let’s start with a discussion on Supply Chain Centers of Excellence. I know, a Supply Chain Center of Excellence sounds like a good idea. Right? I used to think so as well. The problem is that few companies have a clear definition of excellence compounded by the lack of clear definition of a business strategy. As a result, with the lack of clarity on supply chain excellence, the group flounders. In Figure 1, we share the gap analysis.

Figure 1: Supply Chain Center of Excellence Gap Analysis

To understand the root issue, we analyzed the impact of different factors on Sales and Operations effectiveness (S&OP). In the survey, companies rated their S&OP process on a scale 1-5 with a score of five representing capabilities in five areas: the ability to sense and respond to demand and supply volatility, organizational alignment to the plan, the connection of planning to execution, the ability to balance demand and supply to develop a feasible plan, and the organization’s ability to maximize opportunity and minimize risk.

“If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail.”

Abraham Maslow, 1966

In Figure 2, we share the relative maturity value of the respondents. A score of 5 was very effective, while a score of 4 is somewhat effective, and a score of 3 represented average capabilities, and a score of 2 was somewhat ineffective and 7% represented a process that was not effective. The average score was 3.11 and there were no respondents that rated their process effective on this definition.

Figure 2: S&OP Maturity

The exciting trend I observe in many industry white papers is the overuse of the S&OP to solve all supply chain maladies. It reminds me of the hammer and nail quote. As a result, I find the concept of S&OP over-used. It is not a panacea. I find that S&OP does not drive organizational alignment, nor is it a replacement for a clear supply chain strategy. However, the research does support that companies with a strong business intelligence center of excellence, a chief supply chain officer, and a clear supplier development program tend to perform better on S&OP. (The correlations at an 80% confidence level are circled in Figure 3.) It also supports that companies with strong manufacturing scheduling capabilities in process-based companies score better on S&OP. (There is no similar correlation for the other elements of planning.)

Figure 3: Gap Analysis of S&OP Maturity Factors Along with Significance Testing

Why does a Business Intelligence Center of Excellence score higher on driving effectiveness than a Supply Chain Center of Excellence? The Supply Chain Centers of Excellence struggle to define excellence in organizations with increasing alignment issues. (Alignment gaps grew three-fold over the past decade.) This group struggles if companies cannot clearly define an operating strategy and a supply chain excellence definition. In contrast, a Business Intelligence Center of Excellence has a clear, non-controversial agenda to help the organization use data better.
And why does a Digital Supply Chain Transformation Effort not score higher? The answer lies in the lack of clear definitions to drive outcomes. Most are engaged in digital supply chain transformations without clear grounding on “the what” and “so what” of the initiative. Digital supply chain transformation is a fad. Hollow words thrown around a stage without clear meaning. What does it mean? I don’t know. There is no standard definition.
Or the use of Channel Forecast Data? I also think that the industry is not clear on how to transform demand processes based on channel data.

Summary

So, if you are at a conference hearing a presentation on S&OP imagine where the presenting company is on maturity and ask for feedback on this research. Let’s make supply chain a fact-based discussion. The reason? Too much is dependent on not getting caught up in industry groupthink.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)

Case Study: A Scrappy Demand Management Approach

June 9, 2026 5:37 pm

This study of Franklin Sports shines a light on the work that needs to be done at the sales account level to challenge a retail forecast, and also highlights the importance of a new technique for a forecast engine — reinforcement learning.

Artificial intelligence comes in many forms — large language models, generative AI, machine learning, unstructured text mining, deep learning, neural networks, reinforcement learning, agents, and agentics. While the industry is wigging out about agentics, I think reinforcement learning is a great step forward in the journey of Artificial Intelligence.

Can We Side-Step the AI Spin Cycle?

June 7, 2026 3:44 pm

When it comes to combining tech, 1+1+1 should equal more than 1. The impact should be exponential. Unfortunately, today, the answer is 0.

What do I mean? Let me explain.

I find that the supply chain technology market moves slowly along traditional technology lines. Conferences are usually focused on the use of technology, not on redefining work. This bothers me. I want it to bother you as well.

Here I share some insights to drive change.

Supply Chain Shaman