--- title: Sales and Operations Planning is Still the Best Way to Manage Global Supply Chains description: "How do you manage a global supply chain? It's the same it's always been: Have a single minded focus towards a great S&OP process and supporting technologies." image: https://download.riverlogic.com/hubfs/Blog_Images/GloablSupplyChain_072516.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=Sales%20and%20Operations%20Planning%20is%20Still%20the%20Best%20Way%20to%20Manage%20Global%20Supply%20Chains&body=https%3A%2F%2Fdownload.riverlogic.com%2Fblog%2Fsales-and-operations-planning-best-way-to-manage-global-supply-chains](mailto:?subject=Sales%20and%20Operations%20Planning%20is%20Still%20the%20Best%20Way%20to%20Manage%20Global%20Supply%20Chains&body=https%3A%2F%2Fdownload.riverlogic.com%2Fblog%2Fsales-and-operations-planning-best-way-to-manage-global-supply-chains) # Sales and Operations Planning is Still the Best Way to Manage Global Supply Chains **The evolution of linear supply chains into global demand-supply networks has been happening over the last two decades.** Companies have benefitted from low cost supply of labor as well as raw materials to bring down the Cost of Goods Sold for the products that they manufacture. This has resulted in bottom-line profits. However, the path has also been significantly challenging in terms of quality issues, increasing labor costs in emerging markets, lack of agility to respond to market events, etc. There has also been significant improvement in automation in terms of robotics and 3D printing. The goal of this blog is not to discuss whether this globalization is good or not. **Our assumption is that the inexorable force of global markets is going to shape supply chains in the future as well**. So what does one do to manage the global supply chain? The answer is not anything new – it’s the same as the past few decades: A single minded focus towards a great Sales and Operations Planning (S&OP) process and supporting technologies. ### Focus on S&OP (AKA Integrated Business Planning) Today more than ever, there is financial pressure to perform. This is driven by the increasing power of retailers and circumstances imposed by the recession. This has resulted in the need for companies to clearly understand the financial impact of their decisions; however, four inter-related factors make this difficult: It is important to look at the S&OP problem through the lens of the CEO/CFO. Organizations must look at charts of financial accounts and net income, focusing on the value chain. In other words, **you truly need to develop an integrated business plan as part of its data model in terms of finance, supply, demand and any value chain function that needs to be modeled.** ### Three Characteristics of S&OP Processes for Global Supply Chains #### 1) Modeling Global Constraints Companies that have global supply chains need the ability to consider global constraints that span multiple dimensions such as operations, finances and time. Every company operates within a large set of constraints, including annual budgets, material purchase contracts, resource capacity, hospital ward space, environmental regulations, customer order contracts, financial reporting regulations and so on. While these financial, physical and policy constraints can impact an entire organization, most planning processes are still done by department, business unit, geography or some other hierarchy. **It is important that there is a global process that balances demand and supply across all these planning levels and aggregates the data so that there is global visibility**. Even better will be the ability to generate the plans based on consideration of global constraints – the evolution of computer hardware and software is taking us in that direction. #### 2) Consideration of strategic planning as part of S&OP process A big challenge with today’s S&OP processes is that they were designed to solve an operational problem with monthly frequencies. **In global supply chains, however, it is important to consider strategic time horizon as well**. For a strategic horizon, the ability to model the network, do capital investment analysis, make decisions regarding closing facilities, and model currency fluctuations takes precedence. For a tactical horizon, the ability to model facilities down to the workstation level, batch processing, lot sizes and yields takes precedence. #### 3) Shape demand instead of just planning for it Traditional S&OP processes take the demand plan as an input, and at best they allow users to prioritize which demand they want to fulfill first. This is a manual, trial-and-error process where the “strategic” customers always win. Whether the company engages in bid support, customer negotiations, trade promotions or marketing, there is a significant opportunity for companies to evaluate the product, customer and price/discount/promotional mix. But **this evaluation must happen in the context of a global optimization**, whereby the marginal impact on profit is evaluated simultaneously with the supply and financial plans. **By doing this, not only will profits increase, the entire organization will evolve into an advanced level of managing customer, product and campaign profitability**. ### Closing Remarks The globalization of supply chains is a phenomenon that cannot be reversed, and companies that fight it will find it hard to survive in our increasingly competitive environment. **Those companies who are smart (and would prefer to remain competitive and profitable) will realize the opportunities within S&OP and rework their existing processes to aggressively manage to the constraints that their organizations face.** **[![Case Study: River Logic Cox Wood](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/484375/f56b96e7-db8d-47b7-adce-654c3feb68a7.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/484375/f56b96e7-db8d-47b7-adce-654c3feb68a7)** You May Also Enjoy Reading [Are You Ready to Learn How to Transform Your Supply Chain?](https://download.riverlogic.com/blog/are-you-ready-to-learn-how-to-transform-your-supply-chain)…[(Read More)](https://download.riverlogic.com/blog/are-you-ready-to-learn-how-to-transform-your-supply-chain) [The Top Supply Chain Blogs in 2021](https://download.riverlogic.com/blog/the-10-best-supply-chain-blogs-for-2021)…[(Read More)](https://download.riverlogic.com/blog/the-10-best-supply-chain-blogs-for-2021) #### About River Logic We’re on a mission to ensure companies across the globe drive maximum value with every decision they make, no matter how complex. 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