Hitachi Consulting Reveals How Chemical Companies Can Optimize Sales & Operations (S&OP) With the Right Organization, Process & Technology

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Hitachi Consulting's market survey identified a number of barriers to achieving SO&P success in the chemicals industry. Chemical companies without proper and effective S&OP tools are functioning in a more immature planning environment. But a solid foundation is only the start on the road to success. Disciplined and consistent processes, internal and external collaboration, performance management, integrated business planning and the right tools and technology all must work together to optimize the SOP process.

Companies that do not employ a robust Sales & Operations Planning program can leave a lot of money on the table through lower revenues and customer satisfaction and increased costs in raw materials, manufacturing, warehousing and distribution.

Hitachi Consulting, a leading provider of IT consulting and management consulting solutions and services, in tandem with Worldwide Business Research (WBR), conducted a market survey on Sales & Operations Planning (S&OP). The 17-question survey targeted Supply Chain, Operations, Logistics, and Finance executives in global chemical companies and focused on benchmarking key issues, initiatives and technologies. The survey identified a number of barriers to achieving SO&P success in the chemicals industry.

“Companies that do not employ a robust Sales & Operations Planning program can leave a lot of money on the table through lower revenues and customer satisfaction and increased costs in raw materials, manufacturing, warehousing and distribution,” said Steven Crosnoe, Senior Vice President, Process Industries for Hitachi Consulting. “However, S&OP in the chemicals industry is complex and comes with many challenges. So it is no surprise that many chemical companies are dissatisfied with the results of their current processes.”

According to the survey results, the number one barrier was the lack of effective S&OP tools. “Companies without proper and effective S&OP tools are functioning in a more immature planning environment,” said Crosnoe. “Use of spreadsheets as the standard Sales & Operations Planning tool is still prevalent in the industry; however it is agreed among many industry leaders that it impedes the maturity of the S&OP process.”

In close relation, the lack of supporting data accuracy and integrity was identified as the number two barrier. Some of the other barriers uncovered in the survey include:

  •     Lack of C-level executive sponsorship, support and vision;
  •     Tying ultimate decision-making responsibility to P&L leadership;
  •     Using too few Key Performance Indicators (KPIs);
  •     Not employing cross functional teams for internal collaboration

Crosnoe continued, “Chemical companies need mature tools and processes to gain the true benefits of S&OP. But a solid foundation is only the start on the road to success. Disciplined and consistent processes, internal and external collaboration, performance management, integrated business planning and the right tools and technology all must work together to optimize the SOP process.”

About Hitachi Consulting Corporation
As Hitachi, Ltd.'s global consulting company, with operations throughout North America, Europe, the Middle East and Asia, Hitachi Consulting is a recognized leader in delivering proven business and IT strategies and solutions to Global 2000 companies across many industries. With a balanced view of strategy, people, process and technology, we work with companies to understand their unique business needs, and to develop and implement practical business strategies and technology solutions. From business strategy development through application deployment, our consultants are committed to helping clients quickly realize measurable business value and achieve sustainable ROI. Hitachi Consulting's client base includes 25 percent of the Global 100 as well as many leading mid-market companies. We offer a client-focused, collaborative approach and transfer knowledge throughout each engagement. For more information, call 1.877.664.0010 or visit http://www.hitachiconsulting.com.

About Hitachi, Ltd.
Hitachi, Ltd., (NYSE: HIT/TSE: 6501), headquartered in Tokyo, Japan, is a leading global electronics company with approximately 360,000 employees worldwide. Fiscal 2010 (ended March 31, 2011) consolidated revenues totaled 9,315 billion yen ($112.2 billion). Hitachi will focus more than ever on the Social Innovation Business, which includes information and telecommunication systems, power systems, environmental, industrial and transportation systems, and social and urban systems, as well as the sophisticated materials and key devices that support them. For more information on Hitachi, please visit the company's website at http://www.hitachi.com.

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Lisa Nemec
Hitachi Consulting
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