--- title: Data Requirements for S&OP Global Planning description: With only 20% more data, global planning can increase value by 20% through improved profit margins and revenue. Sequential planning is no more. image: https://download.riverlogic.com/hubfs/Blog_Images/Moving_To_Global_Planning.jpg --- ### Get in Touch [![logo](https://download.riverlogic.com/hs-fs/hubfs/logo.png?width=3153&height=398&name=logo.png "logo")](http://riverlogic.com) [![logo-hover](https://download.riverlogic.com/hs-fs/hubfs/logo-hover.png?width=3153&height=398&name=logo-hover.png "logo-hover")](http://riverlogic.com) - [Solutions](http://www.riverlogic.com/solutions) - [Capacity Planning](https://download.riverlogic.com/solutions/capacity-planning) - [Commodity Trading & Logistics](https://download.riverlogic.com/solutions/commodity-trading-and-logistics-optimization) - [Product Mix & Customer Profitability](https://download.riverlogic.com/solutions/product-mix-customer-profitability) - [Production Planning](https://download.riverlogic.com/solutions/production-planning-and-scheduling) - [Sales & Operations Planning](https://download.riverlogic.com/solutions/sales-and-operations-planning) - [Sourcing & Procurement](https://download.riverlogic.com/solutions/sourcing-and-procurement-optimization) - [Supply Chain & Logistics Optimization](https://download.riverlogic.com/solutions/supply-chain-optimization) - [Supply Chain Network Optimization](https://download.riverlogic.com/solutions/supply-chain-network-optimization) - [Trade Promotion Optimization](https://download.riverlogic.com/solutions/trade-promotion-optimization) - [Industries](https://download.riverlogic.com/industries) - [Building Products](https://download.riverlogic.com/industries/building-products) - [Chemicals](https://download.riverlogic.com/industries/chemicals) - [Consumer Packaged Goods](https://download.riverlogic.com/industries/consumer-packaged-goods) - [Food and Beverage](https://download.riverlogic.com/industries/food-beverage) - [Manufacturing](https://download.riverlogic.com/industries/manufacturing) - [Mining & Metals](https://download.riverlogic.com/industries/mining-and-metals) - [Oil & Gas](https://download.riverlogic.com/industries/oil-and-gas) - [Pharmaceuticals](https://download.riverlogic.com/industries/pharmaceuticals) - [Pulp & Paper](https://download.riverlogic.com/industries/pulp-and-paper) - [Utilities](https://download.riverlogic.com/industries/utilities) - [Technology](https://download.riverlogic.com/technology/prescriptive-analytics-platform) - [Our Platform](https://download.riverlogic.com/technology/prescriptive-analytics-platform) - [Prescriptive Analytics](https://download.riverlogic.com/technology/prescriptive-analytics) - [Resources](https://download.riverlogic.com/resources) - [Blog](https://download.riverlogic.com/blog) - [News](https://download.riverlogic.com/news-2) - [Testimonials](https://download.riverlogic.com/testimonials) - [Partners](https://download.riverlogic.com/partner-program) - [Our Partners](https://download.riverlogic.com/our-partners) - [About Us](https://download.riverlogic.com/about-us) - [Contact Us](https://download.riverlogic.com/contact-us) - [Our Board](https://download.riverlogic.com/board-of-directors) - [Our Leadership](https://download.riverlogic.com/leadership) - [Careers](https://download.riverlogic.com/careers-current) - Get in Touch Get in Touch [![Get in Touch](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/484375/8a2efec4-88ad-40a3-bc49-91f4a5e57e38.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/484375/8a2efec4-88ad-40a3-bc49-91f4a5e57e38) Share This [mailto:?subject=Data%20Requirements%20for%20S&OP%20Global%20Planning&body=https%3A%2F%2Fdownload.riverlogic.com%2Fblog%2Fdata-requirements-for-sop-global-planning](mailto:?subject=Data%20Requirements%20for%20S&OP%20Global%20Planning&body=https%3A%2F%2Fdownload.riverlogic.com%2Fblog%2Fdata-requirements-for-sop-global-planning) # Data Requirements for S&OP Global Planning ### Moving from Sequential Planning to Global Planning Gartner has recently covered the S&OP software market with their [Magic Quadrant for S&OP Systems of Differentiation](https://www.gartner.com/doc/3040317/magic-quadrant-sales-operations-planning). Gartner defines **S**ales and **O**perations **P**lanning (S&OP) **S**ystem of **D**ifferentiation (SOD) as a software solution that supports a Stage 4 or higher-maturity S&OP process.   In this blog post, we’ll discuss the additional data requirements of a Systems of Differentiation from a Systems of Record and how it can be leveraged to enable global planning. We covered the need for moving from sequential planning to global planning in a [previous](http://www.riverlogic.com/blog/sequential-planning-out-global-planning-in) blog post. ### Data Requirements for S&OP Systems of Record vs. Systems of Differentiation The data requirements for an S&OP Systems of Differentiation is additive in terms of the S&OP Systems of Record. In fact, getting 20% additional data (in addition to what they already have from their S&OP systems of record) could give them 80% or more of value through improved profit margins and revenue. Table 1 illustrates this point. ****Table 1. Data Requirements for Enabling S&OP Systems of Differentiation**** | **Organization** | **Requirements for enabling S&OP Systems of Record** | **Data Requirements for enabling S&OP Systems of Differentiation and Innovation** | | --- | --- | --- | | Sales/Demand | Sales Forecast History Per Customer /Per Region/Per SKU Forecast Average selling Price as an input | *In addition to S&OP SOR* Price is not only an input, it is a decision variable as well | | Finance | Currency Costs | *In addition to S&OP SOR* Taxess Working Capital Currency as a decision variable | | Inventory | Inventory levels Safety Stock Holding Costs | *In addition to S&OP SOR* Inventory Versus Outsourcing tradeoffs | | Manufacturing | Variable costs of manufacturing/resource Capacity Utilization of resources    -Unit cost of manufacturing | *In addition to S&OP SOR* Fixed Costs Resource utilization as a decision variable Costs as a decision variable | | Logistics | Variable Costs/Lane    -Inbound/Intra/Outbound Transportation plans are created after the S&OP plans are created. They are mostly not integrated with each other. | *In addition to S&OP SOR* Fixed costs Ability to model transportation as a constraint variable | | Procurement | Cost/Unit              | *In addition to S&OP SOR* Fixed costs | ### Additional Business Value that can be Gained through this Enhanced Data In order to help explain how S&OP SOD solutions can provide additional value through the additional data identified in Table 1, we can look at demand optimization, supply optimization and financial optimization as three distinct examples. #### Demand Optimization versus Demand Planning S&OP processes which are driven by a layer based approach look at demand planning as the first step of a demand planning implementation. The focus of this approach is towards enabling the ability to generate demand forecasts at a SKU/Location combination or maybe at a higher level of the product hierarchy for a period of say 8-12 months. The S&OP SOR focus on automation of existing Excel based demand planning processes. They have basic statistical forecasting processes which assume price and average cost/unit as a given. **Additional Data**: **Additional Value through Demand Optimization using a S&OP SOD**: By focusing on additional data elements such as price and the impact price will have on demand, companies can now enable demand optimization scenarios. #### Supply Optimization versus Supply Planning The S&OP SOR focus on Rough Cut Capacity planning instead of true supply planning. These solutions make simplistic assumptions of aggregate capacity resources without consideration of multiple resources, batch processing, **Additional Data:** **Additional Value through Supply Optimization using an S&OP SOD:** Opportunity to optimize supply based on constraints instead of just matching against demand. The solution should model fixed cost of operating resources as well as the variable cost of producing units of products. Instead of making decisions based on average cost/unit of manufacturing products, the tradeoffs should be made with demand and financial dimensions simultaneously. Questions such as “what is the average profit margin I will make with operating my resource for 1 more hour?” should be answered very easily by the solution. #### Financial Optimization versus Financial rollup/disaggregation S&OP SOR have very limited capabilities in this area. These solutions make simplistic assumptions on Average Selling Price and Average cost. These solutions essentially aggregate /disaggregate financial data. **Additional Data:** **Additional Value from Financial Optimization using an S&OP SOD:** The solution should provide the opportunity to move from just meeting demand to optimizing commercial objectives such as success of new products and also allows to evolve from estimated minimum cost to optimizing profit while meeting growth targets. Cost modeling should evolve from predefining fixed/variable to tying them into the decision. For example, product sourcing assumes capacity is a fixed cost, while capacity planning treats some capacity (such as shifts and overtime) as variable. Decisions should be made based on corporate and business unit financial statements – the solution should reflect these including representing policies and targets as constraints or objective function. A more complex constraint at organizations would represent ratios as constraints or objective function. For example, the constraint may be expressed as inventory turns, profit margin or ROIC. ### Closing Remarks In conclusion, by building on top of the infrastructure that existing [S&OP Systems of Records](https://download.riverlogic.com/blog/data-requirements-for-sop-global-planning) planning tools have created and implementing a global planning solution, it is possible to gain significant additional business value with minimal costs. 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