How can your company eliminate surplus inventory to boost supply chain operations?
Many businesses find themselves overwhelmed by surplus inventory which coincides with their struggle to manage erratic demand patterns. SMBs are holding a troubling average of 38% excess inventory according to new statistics while larger operations with more than 500 staff members struggle with an even greater excess inventory rate of 44%.
The worst part?
Businesses continue to repeat their purchasing mistakes even though they have surplus inventory on their shelves. The retail sector saw a 9% increase in purchase orders since early 2023 with demand peaking at 16% growth right before the holiday season.
Thankfully, there’s a better way.
Proper alignment between your business goals and Sales and Operations Planning (S&OP) leads to significant reductions in inventory expenses and enhances customer satisfaction. Through effective demand planning businesses utilizing Netstock’s solutions have successfully cut their inventory levels by more than 25%.
What You’ll Find Inside
- Why S&OP Alignment Matters Today
- How to Connect Business Goals to S&OP Processes
- The Role of Netstock’s Solutions
- Getting Buy-In From Leadership
- Implementation Tips for Rapid Results
Why S&OP Alignment Matters Today
S&OP alignment has moved from optional to absolutely essential because of modern market volatility.
Look at the numbers: Throughout 2023 and 2024 businesses kept their inventory spending levels almost the same while facing market volatility. The same inventory spending persists through market changes from 2023 to 2024 because businesses fail to adapt which results in the massive inventory excess we previously discussed.
Here’s the problem:
Misalignment between your S&OP process and business objectives causes departmental conflicts. Sales promises unrealistic delivery times. Operations overcompensates with excess inventory. Finance panics about tied-up capital.
And the result? A mess of inefficiencies and increased costs.
Using Netstock sales and operation planning software establishes the framework companies need to dismantle silos and ensure team alignment. Businesses witness tangible benefits when they implement this system with precision.
Real alignment requires every department to operate from shared data while making decisions based on common business objectives and understanding their impact on other teams.
How to Connect Business Goals to S&OP Processes
Business alignment begins with ensuring complete understanding among all employees about the company’s overall objectives. Your S&OP process should function as a direct support mechanism for achieving your business objectives.
Here’s how to make that connection:
- Pinpoint 3-5 principal business objectives whether it’s boosting revenue growth or decreasing costs while ensuring priority clarity.
- Transform your business targets into S&OP measurements by establishing metrics that directly reflect these goals.
- Netstock’s custom dashboards give everyone access to KPIs related to stock-outs and working capital alignment.
- Align your S&OP process with these metrics to ensure each meeting and decision supports business objectives.
Netstock stands out by processing data into actionable insights that empower your business to make decisions which support your goals.
The Role of Netstock’s S&OP Solutions
Traditional S&OP processes frequently fail due to their heavy dependence on spreadsheets and tribal knowledge along with disconnected systems. Netstock takes a dramatically different approach.
At its core, Netstock’s S&OP solution delivers:
- The solution uses artificial intelligence to create forecasts which become more accurate over time by combining both numerical and descriptive information from every part of your business.
- Netstock provides scenario planning tools which allow businesses to respond quickly to unexpected supply chain disruptions or sudden changes in demand.
- Organizations can realize a return on investment within a matter of weeks after Netstock completes its 90-day system implementation.
Netstock’s biggest benefit stems from its ability to consolidate all necessary data into one unified platform. Users can avoid searching multiple systems or resolving inconsistent data. The entire team uses one unified source of truth for their work.
Most S&OP implementations generate overwhelming complexity at an alarming rate. Netstock addresses complexity by concentrating on building a strong link between your organizational planning and your business results.
Getting Buy-In From Leadership
Leadership support is essential to make any S&OP process work effectively. This guide demonstrates the steps needed to get executive endorsement:
- Link S&OP enhancements to the financial results that executives value
- Launch with a small-scale pilot program which delivers immediate positive results.
- Demonstrate successful implementations by presenting metrics and case studies from other companies who have used Netstock.
- Show real-time progress by utilizing Netstock’s dashboards during executive meetings
Executives are interested in the results rather than the methods used. Highlight the 25% inventory reduction and improved customer satisfaction delivered by S&OP instead of its mechanics.
As Netstock’s CTO Barry Kukkuk explains: Through Netstock’s technology businesses gain unmatched visibility and accuracy which enables them to cut costs while quickly adapting to market demands.
Your leadership team will respond better to S&OP improvements when you highlight the bottom-line benefits. The possibility for financial gain is enormous due to SMBs holding 38% excess stock on average. Diminishing half of this excess stock would release massive capital which can be redeployed into productive investments.
Implementation Tips for Rapid Results
Looking to quickly achieve success with your S&OP alignment? Follow these proven implementation strategies:
- Before launching any new system conduct data cleansing to verify that your product master data, inventory counts, and sales history remain accurate
- Prioritize your A-items which represent the top 20% of products that generate 80% of sales.
- Create teams with representatives from sales operations finance and executive leadership.
- S&OP achieves optimal performance through a stable monthly schedule.
- Netstock’s specialized implementation team can get you operational in just 90 days according to their proven timeline.
The quickest way to achieve results is by targeting your first efforts on areas that will deliver substantial impacts. Begin with your most important products and top customers instead of attempting to solve everything at once.
Real-World Success Story
The mid-sized manufacturing enterprise faced challenges with both overstock and stock shortages which made their situation both typical and aggravating. Netstock’s S&OP solution implementation combined with process alignment to business goals resulted in:
- 27% reduction in overall inventory
- 15% improvement in service levels
- Cash flow improvement of over $2 million
The most impressive part? The company achieved these results within only four months of starting implementation.
The company started with a familiar problem. The sales team produced their own forecast while operations developed an alternative one and finance maintained a separate third forecast. Each department created their own buffers because they did not trust the numbers from other departments. The company’s Netstock system started by ensuring all departments used consistent data before introducing scenario planning tools for coordinated disruption management.
Wrapping It All Up
In today’s fluctuating market environment aligning your business goals with S&OP best practices is necessary for survival. Through effective strategy and the use of Netstock’s S&OP solutions you can enhance your inventory management and supply chain operations.
Remember these key points:
- Your S&OP process should actively support your business goals.
- Enhance your decision-making capabilities through Netstock’s AI-powered forecasts and scenario planning tools.
- Concentrate your efforts on performance indicators that generate genuine business value.
- Start with high-impact areas for quick wins
- Create cross-functional cohesion by utilizing common data points and unified goals.
Are you prepared to eliminate the excess 38% inventory that is impeding your business performance? Netstock’s tested methodology provides you with the means to synchronize your S&OP planning with your organizational targets.
When you align business goals with powerful tools your inventory management will turn from being a liability into a competitive advantage. Your business needs that advantage now more than ever in today’s difficult market.