Your Team Has the Answers. Your Process Is the Problem.
Authors: Terese Hunwick & Brendan Bronson
Every month sales, operations, finance, and planning teams hold Sales & Operations Planning meetings (also known as S&OP, ES&OP or IBP meetings). These meetings typically cover items such as forecasts, capacity, and demand—but all too often participants leave feeling the like the true underlying challenges are not being addressed. The entire team, from Senior Executives to Analysts, can become less and less engaged in a process that promises to improve collaboration and operating results but never fully delivers. Sound familiar?
Many organizations believe they conduct the ES&OP process at a high level. APICS reports that most companies indicate they have some version of S&OP in place (APICS). Yet, according to practitioners, a smaller subset has mature processes that can be leveraged as a true decision-making engine rather than a coordination ritual. Even fewer companies regularly benchmark their processes to understand how they compare to their competitors.
When planning is structured mainly for alignment (bad assumptions that are, at least, consistent) instead of accountability, your best people (and their insights) can get trapped. The real power of mature ES&OP lies in flipping that dynamic: those very voices at the table that drive trade-offs, own trade-offs, and translate talk into action.
What’s the business impact when the process works? Organizations with mature ESOP processes report EBITDA margin uplift of 2–4 percentage points or higher. In more aggressive transformations, as much as 5–10% margin improvement can be realized (LMA Consulting Group). For inventory, benchmarks suggest reductions of 12–70% depending on starting maturity (DBM Systems Ltd).
On a service and cash metrics basis, the gains can be dramatic when firms shift from reactive to proactive planning. Aberdeen research found that “best-in-class” ES&OP companies post almost 10 percentage points higher customer service rates and a 38-day advantage in cash conversion cycles relative to peers (ASCM Grand Rapids).
When is the last time your organization benchmarked its ES&OP organization, processes and tools? Most organizations are leaving margin on the table and missing opportunities because their ES&OP processes are immature. Do an assessment and determine where you can improve operations with your team.
At Freshbank Partners, we help industrial companies build decision-centric ES&OP. If your team has insights that never become action, let’s talk about turning your process into your growth engine.
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