How to Drive Business Value Through Digitalization of S&OP and IBP Processes

February 01, 2022

In April 2021, McKinsey wrote “an integrated sales and operations planning (S&OP) cockpit can guide scenario-based decision-making for the supply chain, and […] enables decision-makers to maximize revenue and margins while optimizing trade-offs on inventory and costs.” Indeed, businesses need to manage and control their supply chain processes in order to achieve certain objectives. Finding solutions to control inventory, reduce delivery time and cope with demand fluctuations is critical for supply chain managers.

S&OP or Integrated Business Planning (IBP) is a monthly cross-functional process which enables organizations to provide forward-looking visibility across the end-to-end value chain and production sites—typically 18 months ahead. This process provides considerable value to businesses by ensuring that the company is working towards its strategic profit and loss goals, balancing end-to-end supply and demand and maximizing profitability.

AspenTech has been providing robust S&OP solutions for over 30 years. The offerings include Aspen Collaborative Demand ManagerTM (CDM) and Aspen Supply Chain PlannerTM (SCP). Aspen Supply Chain Management (SCM) InsightsTM, the latest product in the portfolio, enables cross-functional stakeholder collaboration within a single flexible environment designed to digitally operationalize the monthly S&OP and IBP processes, as shown in the chart below:


These processes typically include a number of key departments within an organization, including sales, marketing, product management, supply chain, manufacturing, logistics and finance (especially in the case of IBP).

The demand planning process enables businesses to gain consensus on what will be sold and what revenue will be realized as the company looks to the future. The output from the demand planning process is an unconstrained forecast.

The objective of the supply planning process is to create a profit-optimized end-to-end plan detailing procurement, manufacturing and distribution plans and also includes a profit and loss view. In this part of the process, different ‘what if’ scenarios can be run by modifying different assumptions and inputs.

The Pre-S&OP/IBP alignment or reconciliation meeting enables stakeholders to discuss and resolve supply and demand imbalances. It’s ideal for cross-functional teams looking to discuss the risks associated with various scenarios and then document these risks.

The goal of the final step, the executive S&OP/IBP meeting, is to present the recommended plan for management approval. Once approved, this would trigger the cascading downwards into the Sales and Operations Execution (S&OE) processes and the associated operational planning and scheduling decisions. This process repeats on a monthly or weekly basis.


Aspen SCM Insights Key Benefits

By leveraging Aspen Supply Chain Management (SCM) planning and optimization decision support tools and the Aspen Enterprise InsightsTM collaborative platform, Aspen SCM Insights can digitalize the overall S&OP/IBP planning process. This is a huge time saver for users as all the information they need to drive their S&OP and IBP decisions is available in a centralized location, enabling increased collaboration on a central visualization platform.

Aspen SCM Insights eliminates employee productivity killing tasks and supports all the sub-processes and the key activities that occur during critical alignment meetings. It provides the following key capabilities:

Workflow Enablement and Meeting Management
Within each sub-process, there are key meetings where cross-functional team members meet to synch up and align. The Demand Consensus meeting is an example of a key meeting that occurs during the Demand Planning process. Aspen SCM Insights makes these key meetings more productive.

Action, Task, and Knowledge Management
There are many actions and follow up items resulting from a S&OP/IBP process. Aspen SCM Insights provides the means to easily manage such actions and items. Furthermore, Aspen SCM Insights makes it easy to capture comments and the high-value unstructured conversational data that occurs during the process.

Data Governance
Infusing data governance as part of an overall S&OP/IBP process is key to ongoing value maximization of the enabling Aspen Collaborative Demand Manager and Aspen Supply Chain Planner optimization and analytical solutions.

Workflow Configuration Flexibility
Aspen SCM Insights is inherently very flexible and configurable. It can be readily adapted to incorporate your company’s specific nuances to how S&OP/IBP process and key meetings are conducted. Demand and Supply Planning data outputs are published from the Aspen CDM and Aspen SCP analytical solutions. The outputs from these solutions including updated demand forecasts, supply plans, manufacturing capacity plans and distribution plans are all critical inputs across various stages of the S&OP/IBP process.


To learn more, visit our Aspen SCM Insights solution page.

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