The Importance of Sales and Operations for Manufacturers
Sales and Operations Planning (S&OP) – the process of aligning marketing and sales with operational endeavors – has been around for over 30 years and is particularly important for manufacturers. Due to the capital-intensive nature of their business models, manufacturers depend on predictable revenue streams. Complex physical operations are often rigid and cannot be easily modified to meet shifting customer trends in an inexpensive manner. For these reasons, sales and operations need to be aligned to provide a unified, real-time view of all steps of the customer journey.
The importance of S&OP extends beyond sales and operations to encompass nearly every senior leadership role:
- CEOs are responsible for developing the best strategy for driving growth, increasing profits, and balancing long-term goals and risks. To accomplish this, they need immediate access to every piece of data regarding their business. If they have to consult multiple sales and operations leaders – and if those leaders don’t have the most current data – the CEO’s effectiveness is diminished.
- Due to the increase in speed of the cash conversion cycle manufacturers are experiencing the demand for decreased obsolescence and tighter margins, CFOs require greater control and insight into sales and operations than ever before.
- COOs use S&OP to provide all stakeholders – many of whom hold subjective opinions and opposing goals – with information related to data and facts related to production efficiency and fill rates.
Despite the importance of S&OP for the success of manufacturing organizations, only 40% of companies feel their S&OP processes are effective[i]. This is largely due to poor visibility and the challenges that come with integrating sales and operations data. Typically, customer insights exist in various siloed platforms, ERP systems, and spreadsheets, making it difficult to predict demand accurately. This can lead to inventory buildups, stock outs, and increasing warehouse costs, all of which reduce operating margins and revenue.
To solve this problem, manufacturers need a solution that helps them understand their customers needs by providing visibility across sales activities and the entire supply chain.
How Salesforce Manufacturing Cloud enables unified, 360-degree customer visibility
Salesforce’s Manufacturing Cloud is the ultimate tool for sales and operations planning and alignment. By enabling visibility and collaboration between sales and operations teams, the entire manufacturing organization gains a better view of customers through two primary tools: Sales Agreements and Account-Based Forecasting.
- Sales Agreements let manufacturers unify their ERP data and run-rate business in order management systems so that account and operations teams can get a 360-degree view of their customers. When agreement changes are required, they can be immediately incorporated into the sales agreement, providing a single source of truth. Account teams can manage the entire lifecycle of the agreement, as well as performance and volume agreements against forecast metrics.
- The Account-Based Forecasting tool provides manufacturers with a complete view of all upcoming opportunities alongside current business and sales data. This lets operations, sales, and finance teams break down information siloes and create more accurate forecasts. Market demands and shifting customer requirements can be documented in the tool, allowing teams to collaborate, adjust, and view forecasts based on up-to-date data, making profits, margins, and transactions more predictable.
“In the manufacturing industry, changing customer and market demands can have a devastating effect on the bottom line, so being able to understand what is happening on the ground is imperative for success,” said Cindy Bolt, SVP and GM at Salesforce. “Manufacturing Cloud bridges the gap between sales and operations teams while ensuring more predictive and transparent business, so they can build deeper and more trusted relationships with their customers.[ii]”
By integrating sales and operations, conflicting goals are easily harmonized. Finance can develop a budget and create forecasts with confidence in their accuracy. Sales teams can guarantee product availability, maximizing market share and revenue in the process. Finally, operations teams can minimize demand uncertainty while improving costs and optimizing factories based on accurate consumer sales data.