Enhancing supply chain planning via quantitative approaches in make-to-stock industries with uncertain demand

Sales and Operations Planning (S&OP) has been recognized as one of the best business practices for cross-functional, integrated tactical planning, as it ensures effective alignment between demand and supply. To account for financial and portfolio management integration, and to improve supply chain visibility, S&OP has been complemented with Collaborative Planning, Forecasting, and Replenishment (CPFR), resulting in the so-called Extended S&OP (eS&OP). This paper aims to assess the added value of S&OP quantitatively and eS&OP under uncertain demand in make-to-stock supply chains. We test our models on a case study in the electronic components industry. According to the findings, S&OP contributes to improving the company's efficiency by tackling sources of inefficiency, such as the holding costs of raw materials. With the forecast accuracy decreasing, S&OP concurrently decreases costs, delivering superior customer service. eS&OP further adds efficiency across the end-to-end supply chain: the information passed over by the manufacturer to the suppliers supports them in reducing the raw materials' holding costs and the express replenishment and shipments.