A specialty chemical company implemented Sales and Operations Planning (S&OP) to improve integration between business planning, finance, and supply chain operations. S&OP aligned demand and supply planning across an 18-month horizon using new Advanced Planning software. This allowed the company to reconcile plans in detail and aggregate. As a result, business profitability increased 80% over three years through improved forecasting accuracy, on-time delivery, inventory reductions, and cost savings of $53 million.

1. S&OP Case Study: $650 Million Specialty Chemical
Company
Company Profile
Public specialty chemical industrial products company with operations in the US,
Germany, Korea, and Mexico. More than 1 Billion pounds produced and supplied
annually to 1800 customer locations worldwide for a wide variety of industrial
applications. Company was the market leader in a capital intensive industry.
Challenge
The Company just went live on SAP, with new processes, tools, and data sources. The
Planning processes were loosely integrated with poor visibility of demand/supply
balance. There were numerous service issues and late deliveries. Communication
gaps between business, finance, and supply chain were common, and there was no
linkage between volume forecasts for supply chain and financial forecast. The company
desired to improve supply chain performance, reduce costs, and increase business
profitability.
Solution
Sales and Operations Planning was implemented along with designing new demand
planning, supply planning, and capacity planning processes. Advanced Planning
software (APO) was implemented to enable demand and supply planning. With the
implementation of S&OP, all business plans were integrated into one single plan. The
time horizon for these plans was extended to 18 months. Demand and supply plans
were reconciled at the detailed and aggregate level and linked to the operating plan.
S&OP was used to execute the business plan and plan for the resources and
investments needed. Functional leaders were empowered to make critical decisions
aligned to the integrated S&OP plan.
Results
Over the next 3 years, business profitability increased by 80%. There was improved
teamwork and alignment between functional areas doing what was in the best interest
of the business. Other benefits realized include:
 Forecast accuracy increased from 50% to 85%
 Supply Planning accuracy increased from 60% to 90%
 Revenue forecast accuracy increased from 50% to 97%
 On-Time delivery increased from 80% to 98%.
 Inventory level reduced by 40%
 Costs reduced by $53 MM over 3 years
 Net asset investment decreased by 25%
 ORONA increased from 5% to 13%