The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0960-0035.htm

Framework for measuring Framework

for measuring
performance of the sales and performance
operations planning process
Hana Hulthén 809
Department of Industrial Management and Logistics, Received 16 May 2016
Lund University, Lund, Sweden Accepted 27 May 2016
Dag Näslund
Department of Management, University of North Florida,
Jacksonville, Florida, USA and
Department of Industrial Management and Logistics,
Lund University, Lund, Sweden, and
Andreas Norrman
Department of Industrial Management and Logistics,
Lund University, Lund, Sweden

Abstract
Purpose – The purpose of this paper is to develop a framework for measuring the S&OP process
performance.
Design/methodology/approach – The method used is a multiple case study of five companies from
different industries based on data from 12 structured interviews.
Findings – The main result is a framework to measure the S&OP process. It includes concrete
suggestions for organizations when developing measures to increase effectiveness and efficiency of the
process. It will also help organizations to standardize measures and to enhance organizational
transparency. Our results include measures for every step of the process as well as for the outcome of
the process. The authors highlight the importance of cross-functional measures along with measures
that focus on how to conduct the process. The framework is founded on a set of criteria on appropriate
measures such as comprehensiveness, internal process efficiency, horizontal and vertical integration,
internal comparability, and usefulness. The study contributes to performance measurement literature
and the S&OP literature.
Research limitations/ implications – Validation of the framework is desirable in similar as well as
other contexts. Implementation challenges should also be investigated.
Practical implications – The framework provides guidelines in order to measure, analyze and
improve the effectiveness and the efficiency of the process.
Originality/values – This is the first framework for measuring the S&OP process that includes
detailed measures for each step of the process, for the outcome of the process as well as how to conduct
the process itself.
Keywords Efficiency, Case study, Effectiveness, Performance measurement framework,
Sales and operations planning process (S&OP process)
Paper type Research paper

Introduction
The sales and operations planning (S&OP) process is a medium and long-term International Journal of Physical
Distribution & Logistics
planning tool that strives to synchronize various, functional organizational plans Management
(customers, sales, marketing and new products development, manufacturing, Vol. 46 No. 9, 2016
pp. 809-835
sourcing and financial plan) into an integrated set of tactical plans (Grimson and © Emerald Group Publishing Limited
0960-0035
Pyke, 2007; Lapide, 2004a). The developed plans should support management in DOI 10.1108/IJPDLM-05-2016-0139
IJPDLM resource allocation decisions in order to deliver value for customers at the least
46,9 possible cost (Godsell et al., 2010; Milliken, 2008). The goal of the S&OP process is
thus to balance supply and demand, and to provide early signals of potential
imbalances (Ivert et al., 2015; Thomé et al., 2012a). The key benefits are, ideally,
increased sales revenue and improved allocation of resources leading to increased
profits (Cecere et al., 2009). It is often suggested that the S&OP process should consist
810 of the following five major steps: data gathering, demand planning, supply planning,
pre-meeting, and an executive meeting (Wagner et al., 2014; Jacobs et al., 2011;
Grimson and Pyke, 2007).
Yet, despite the fact that the S&OP process as a concept is more than 25 years old
(Ling and Goddard, 1988), there are several problems related to measuring S&OP
process performance. First, a standardized approach to systematically evaluate S&OP
process performance does not exist (e.g. Ivert and Jonsson, 2010; Grimson and Pyke,
2007). Second, the term S&OP process performance is not clearly defined in either
academic or in practitioner literature which, naturally, complicates the development of
a standardized approach to measure the S&OP process. Third, even though existing
research offers a large number of measures (e.g. Thomé et al., 2012a) at different
organizational levels (Cecere et al., 2009; Grimson and Pyke, 2007), the existing
measures are widely dispersed and they also differ among authors (Tuomikangas and
Kaipia, 2014; Thomé et al., 2012a). Consequently, a common drawback of many
organizations is the application of too many measures (Cecere et al., 2009). Fourth, the
focus of the measures is mainly on the performance of the organizational functions
rather than on the performance of the cross-functional process (Thomé et al., 2012a).
These measures tend not to support the S&OP vision of cross-functional integration
(Keal and Hebert, 2010).
In addition, several challenges of measuring the S&OP process performance were
identified in previous literature. The major challenges concern the design of cross-
functional trade-off measures that are critical for balancing the often incongruent
functional goals, and the alignment of the trade-off measures with business strategy
and reward systems to monitor the strategy progress (Tuomikangas and Kaipia, 2014;
Thomé et al., 2012a; Grimson and Pyke, 2007; Caplice and Sheffi, 1995). Furthermore,
organizations seem to struggle with measuring deviation from demand forecast and
budget, with monitoring adherence to supply and demand plans (Lapide, 2004a), with
identification of trends and possible threats (Bower, 2005), and with evaluation of
various planning scenarios (Cecere et al., 2009), as well as with accountability for the
S&OP measures and their unbiased evaluation (Grimson and Pyke, 2007; Bower, 2005;
Lapide, 2004a).
For all these reasons, there are calls for the development of a process-oriented
framework for evaluation of the S&OP process performance (Thomé et al., 2012a).
Therefore, the purpose of this paper is to develop a framework for measuring the S&OP
process performance.
In the following section we review existing literature in order to develop an initial
theoretical framework. The literature review starts with a section on performance
measurement systems for processes/supply chains in general before we discuss
existing literature on measuring the S&OP process performance. We proceed with a
description of the multiple case study method used for this study. After that, we
present our case analysis resulting in a framework to measure the S&OP process
performance. Finally, we discuss potential theoretical and managerial implications of
this research as well as opportunities for future research.
Frame of reference Framework
Performance measurement systems for measuring
Much of the performance measurement literature is inspired either by the balanced
scorecard (BSC) (see e.g. Kaplan and Norton, 1993) or by the work by Neely (1998).
performance
Neely suggests two major perspectives to be considered when measuring performance
of a process: effectiveness and efficiency. Effectiveness refers to “[…] the extent to
which customer requirements are met” while efficiency is “how economically the 811
organization’s resources are utilized when providing a given level of customer
satisfaction” (Neely, 1998, p. 5). Similarly, Kaplan and Norton implicitly use
effectiveness and efficiency in their “customer” and “internal process” perspectives
in the scorecard.
Kaplan and Norton (1993), Neely et al. (2000) as well as other authors stress certain
key characteristics in order to capture process performance. The most important
aspect is the need to link strategy and measures via process orientation (Bourne et al.,
2003; Ittner and Larcker, 2003; Naslund, 1999). In other words, the measurement
system should be based on the organizational strategy, help implement the strategy,
and provide feedback as to whether the organization is “on track” or whether
adjustments in direction are necessary. In addition, organizations need a balanced set
of measurements to prevent sub-optimization in any given area. Interestingly
enough, a synergetic effect may arise since performance measurements can promote
process integration by making the process more visible, by enabling the generation of
process knowledge and by making process output relevant to each functional unit
(Beretta, 2002).
Although various perspectives have been used to discuss performance
measurements in a supply chain context, many aspects are similar to the more
general discussion (Gopal and Thakkar, 2012; Shepherd and Günter, 2006). The
importance of aligning performance measures with organization strategy, for example,
is often mentioned (Chen, 2008; Holmberg, 2000; Globerson, 1985). Hence the BSC has
been used to stress that also supply chain performance measures should include four
balanced clusters: financial, customers, internal processes, and innovation and learning
(Brewer and Speh, 2000; Kaplan and Norton, 1993).
Caplice and Sheffi (1995) emphasize systems thinking when providing criteria for
performance measurement systems such as comprehensiveness, causal orientation,
vertical and horizontal integration, internal comparability, and usefulness.
Comprehensiveness relates to including measures of financial results, customer
satisfaction, and internal process efficiency. Causal orientation refers to tracking root
causes of performance. Vertical and Horizontal integration capture the goal
congruence between corporate as well as functional goals. Internal comparability
recognizes trade-offs between various dimensions of performance (i.e. financial and
non-financial measures), while usefulness underlines the understandability of
measures for decision makers.

S&OP process performance measurement

Although we find S&OP measures in the literature, they do not seem to meet many of
the criteria suggested by Caplice and Sheffi (1995). One of the major drawbacks is the
absence of a comprehensive process-oriented framework for measuring performance of
the S&OP process, as pointed out by several authors (e.g. Tuomikangas and Kaipia,
2014; Thomé et al., 2012a; Milliken, 2008).
IJPDLM It could be argued that the BSC approach or the SCOR model approach might be
46,9 applied to attain the process perspective. The SCOR model provides measures in five
different process categories (plan, source, make, deliver, and return). The model also
divides measures into strategic, tactical and operational levels (Chae, 2009; Lockamy
and McCormack, 2004; Gunasekaran et al., 2001). Thomé et al. (2012a) synthesized and
structured a large number of related measures (Table I) by using the process categories
812 (except the return category) of the SCOR model. The four categories were
complemented with the two additional categories of S&OP dashboard and end
results. The dashboard strives to evaluate the facilitation of the meetings, and reviews
the functional plans and their adherence to the S&OP plans. The end-results focus on
measuring profit rates and contribution margins.
Milliken (2008) used the BSC approach to develop an S&OP Scorecard that consists
of demand, production, inventory, and logistics measurement categories. The
alignment of the scorecards performance indicators (KPIs) across the organization is
vital, and hence each KPI should be defined in terms of its target, tolerance range, point-
in-time data as well as trends. Yet we find both the SCOR and the BSC approach to
primarily focus on a more aggregated level, and thus they do not consider the specific
activities of the S&OP process as a cross-functional (horizontal) planning process.

Reference

Classification of measures Thomé et al.

(2012a)
Plan Inventory turnover/level; track variations in inventory levels; rate of
obsolete inventory; cash to cash cycle time; planning cycle time; forecast
volatility; track variations in customer demand; order fill rate; product
development cycle time; level of customer perceived value of product;
total production
Source Lead time; materials quality; supplier fill rate; track variations of
deliveries with suppliers
Make Capacity utilization; production lead time; production quality, track
variations in production; flexibility (product, volume, mix); production
costs; human resource productivity index; production capacity shortages
Deliver On-time delivery of goods; lead time; delivery reliability performance;
track variations in delivery capability; delivery speed; delivery
flexibility; distribution costs; customer satisfaction/retention
S&OP Accuracy of forecast techniques; adherence to sales, marketing and
dashboard operations plan; forecast vs order; total sales as proportion of demand;
variance regarding baseline forecasts and budgets; measurement of
major strategic initiatives; actual vs planned demand; actual vs planned
production; actual vs planned inventory; actual quantities shipped vs
quantities ordered
End results Gross profit return on space; return on net assets; gross profit return on
inventory; company/product profitability; contribution margins
S&OP scorecard Milliken
(2008)
Demand Total demand; demand vs S&OP; forecast accuracy
Production Total production; production vs S&OP; S&OP capacity utilization
Table I. Inventory Total finished goods inventory; inventory vs S&OP; raw materials
Frameworks of inventory; non-saleable inventory
S&OP performance Logistics On-time shipping; actual shipped quantity vs order quantity; total fixed
measures distribution cost
Other authors have structured measures based on S&OP process maturity levels Framework
(Tohamy et al., 2013; Cecere et al., 2009; Grimson and Pyke, 2007) as performance for measuring
measures may differ based on the various maturity levels of the S&OP process itself
(Grimson and Pyke, 2007). Five often described maturity levels for S&OP performance
performance
measurements are: no measures, reactive, standard, advanced, and proactive, all with
different suggested measures (Table II). In level 1, companies lack S&OP
measurements and are limited to standard financial accounting systems. In level 2, 813
functional measures are predominant, and the sales measures tend to dominate over
the operations measures. The approach is in general more reactive than proactive
(Grimson and Pyke, 2007). In level 3, integrated measures emerge (Tohamy et al., 2013)
while level 4 is characterized by measures of new product introduction and trade-off
measures intended to balance the often-contradicting functional goals. Moreover,
measures on the S&OP process efficiency are introduced to provide feedback to team
members on their participation in the process (Tohamy et al., 2013; Grimson and Pyke,
2007). In level 5, profitability aspects are added, which means that managers are
responsible for meeting plans, and to jointly attain cost-effective outcomes and to
maximize profitability.
Similarly to the BSC or SCOR-based models, this approach also seems to be more
focussed on the aggregate level without ample consideration for the specific activities
of the S&OP process as a cross-functional (horizontal) planning process. In addition,
vertical integration of measures in terms of match between corporate and functional
goals is mainly related to profit, yet measures that track how the S&OP process
affects company profitability are rare (Cecere et al., 2009; Grimson and Pyke, 2007).
Horizontal integration and internal comparability through trade-offs is limited.
Finally, the existing S&OP measures do not consider internal process efficiency
(Table AI).

Reference/S&OP measures
Maturity level Grimson and Pyke (2007) Tohamy et al. (2013) Cecere et al. (2009)

Level 1 No measures Order fill rates

Inventory costs
Level 2 Operations meet the sales plan Functional costs Assets utilization
Forecasted error Inventory levels
On-time shipment Order fill rate
Level 3 Level 2 plus: On-time delivery Order fill rate
Sales on forecast accuracy Supplier lead time Inventory turns
Order cycle time Functional costs
Integrated measures Forecast error
Level 4 Level 3 plus: Trade-offs Working capital
New product introduction Forecast variability Total costs
S&OP efficiency Total costs Customer service
Perfect order Demand error
Lead times
Level 5 Level 4 plus: Supply chain trade-offs Demand risk
Profitability Customer service Table II.
Cash flow Maturity level of
Market shares S&OP performance
Profit measures
IJPDLM Process-oriented framework of the S&OP process performance
46,9 To develop a framework to measure S&OP process performance, Neely’s (1998)
discussion about measuring process effectiveness and efficiency forms an initial
foundation for a framework. The S&OP process effectiveness impacts both the overall
corporate effectiveness and the corporate efficiency. It means that an organization with
an effective S&OP process should be effective in meeting external customers’
814 requirements as well as efficient in allocating corporate resources.
Similarly, S&OP process efficiency relates to how well the S&OP process itself is
managed – for example in terms of its procedures, organization and resource
utilization. Our initial framework is presented in Figure 1.
Current measures in S&OP literature. We use this framework for a first review of
measures in the S&OP literature. We began by categorizing identified measures in terms
of S&OP process effectiveness and efficiency in general. The effectiveness measures
were structured into three categories: demand, supply or other measures. Related to
efficiency, we did not find many measures in the previous literature (Table AI).
The S&OP process effectiveness and demand measures focus on forecast
accuracy, new products-related measures (Grimson and Pyke, 2007), and adherence to
sales/marketing plans (Lapide, 2004a, b). Quality of input data used for development
of demand plan was also stressed (Bower, 2005). The S&OP process effectiveness and
supply measures are mainly related to delivery reliability (Godsell et al., 2010),
inventory levels (Chae, 2009), capacity utilization (Grimson and Pyke, 2007),
production and distribution costs (Milliken, 2008), and adherence to operations plans
(Lapide, 2004a, b).
Regarding other measures related to S&OP process effectiveness, they are
primarily concerned with cross-functional integration. To allocate the minimum
amount of necessary resources, it is crucial to align the often conflicting functional
goals with process goals. Therefore, several authors advocate cross-functional trade-
offs between measures, for example between customer service and inventory levels,
between flexibility and supply chain costs (Tuomikangas and Kaipia, 2014), and
customer service vs inventory (Thomé et al., 2012b). However, the existing S&OP and
performance literature is insufficient regarding which trade-offs would be optimal for
measuring the output of the process, and also the performance of the individual
process steps.
Wagner et al. (2014) and Godsell et al. (2010) emphasize alignment of cross-functional
measures with business strategy and reward systems to support the vision of
alignment. Moreover, financial measures, such as return on assets (Keal and Hebert,
2010), company/product profitability (Grimson and Pyke, 2007), and contribution

S&OP Effectiveness measures: How does the S&OP plan influence corporate effectiveness and efficiency?

S&OP process
A stepwise process Output: Corporate
to balance supply and demand S&OP Effectiveness
plan and Efficiency
Figure 1. resulting in an integrated S&OP plan
Key areas of S&OP
process performance
measures S&OP Efficiency measures: How well is the S&OP process managed?
margins (Milliken, 2008) are often included. Related to financial reconciliation of S&OP Framework
plans, Oliva and Watson (2011) stressed comparison between converted plans from for measuring
units to the organization’s financial targets.
S&OP process efficiency relates to how well the S&OP process itself is managed.
performance
Several authors mention aspects such as cross-functional integration, procedures,
organization, and resource utilization, yet they provide few examples of actual
measures (see Table AI). Bower (2005), for example, discusses monitoring of follow-up 815
activities. Grimson and Pyke (2007) stress communication of plans, while other authors
add meeting efficiency, monitoring the attendance of all S&OP team members,
pre-meeting work done on time, and the re-planning frequency (Cecere et al., 2009;
Lapide, 2004a). Both Bower (2005) and Lapide (2005) also emphasize how top
management support is pivotal. Yet, again, existing literature is rather scarce on how to
measure S&OP process efficiency.

Research design
This study utilizes a multiple case study method to extend theory within S&OP process
and related performance measurement literature. The exploratory nature of the
research supports the choice of this method (Yin, 2009). While the selected cases
represent contemporary descriptions of the investigated phenomenon, the informants
were also asked to reflect on the past, current, and desired future situations (Eisenhardt
and Graebner, 2007). The unit of analysis is performance measurement practices of the
S&OP process.

Sample selection
The sample consists of five companies from different industries. The case companies
were selected from an internally developed survey (answered by 63 companies). In the
survey, the companies were asked to assess their S&OP process maturity level by
answering a set of questions based on the Grimson and Pyke (2007) framework. We
first identified firms that stated their perceived maturity level as medium (level 3) or
high (level 4). We could not identify any company that evaluated itself as being at the
highest maturity level 5.
A second criterion was how important the companies perceived the S&OP process
to be. We selected companies who ranked the level of importance at level 8-10 on a 1-10
scale (1-low importance; 10-very high importance). Companies fulfilling these criteria
were invited via e-mail or phone to participate in the study.
The final sample thus consists of companies with experience, knowledge and
interest in this applied research area. The following five case companies are included
in the study (Table III): Information Technology (InfoTech), Telecom, Energy,
Medical Technology (MedTech), and Cosmetics. To ensure anonymity, the company
names have been removed. In terms of maturity levels, three companies represent
S&OP maturity level 3, and two companies are at level 4. In terms of how the
companies perceived the importance of the S&OP process, two companies perceived
the importance at level 10; two companies were at level 9, while one company
indicated level 8.

Data collection
In total, 12 interviews were conducted with people directly involved or accountable for
the S&OP process at each case company. The number of informants and their functions
IJPDLM Case companies InfoTech Telecom Energy MedTech Cosmetics
46,9
S&OP process
maturity level 3 3 3 4 4
Importance of
S&OP process 10 10 8 9 9
Interviews 2/2 hours 3/2 hours 4/2 hours 2/2 hours 1/2 hours
816 (number/
duration)
Title of the Vice Managers: Managers: Managers: Manager:
informants president Demand Regional material Director Senior director
operations, planning process, group, head of supply chain of global
Table III. demand head of demand, homecare, (S&OP business
List of the case manager improvement/ marketing leader), development
companies and performance intelligence, global (S&OP leader)
informants market operations

varied across the cases (Table III). The interviews were conducted face-to-face, recorded
and transcribed.
The extensive interview protocol (see Appendix 2 for a reduced version) was
reviewed for clarity and comprehensiveness by academics, and a pilot interview was
conducted to test the protocol. The protocol was then modified accordingly to its final
version (Krause and Ellram, 2014). The protocol includes both structured and semi-
structured questions to serve as a guideline for the overall discussion. While the line of
inquiry was followed during the interviews, conversational questions were asked when
needed. This approach helped to reduce potential biases of the responses (Yin, 2009).
The interview protocol consists of background company information and questions
regarding currently used measures of S&OP process effectiveness and efficiency. The
terms effectiveness and efficiency were explained to the informants prior to the
interviews to avoid misunderstanding. Associated with S&OP process effectiveness,
informants were asked to list their current measures and indicate on a scale of 1 to 5
(1-strongly disagree; 5-strongly agree) the importance of the measures and motivate
why they are/are not critical. Similarly, related to S&OP process efficiency, the
informants evaluated on a scale of 1-5 the degree to which different process-oriented
activities correspond to their current situation. Additionally, the aim of these questions
was to identify what activities were monitored or not monitored. Finally, data on
desired measures were also collected.
Additional data were collected to corroborate and augment the evidence from the
interviews (Krause and Ellram, 2014). The data included copies of presentations and other
material, such as charts, process maps, consulting reports, and organizational websites.

Data analysis
The transcribed interviews were coded and analyzed by applying within-case analysis
and cross-case analysis. During the within-case analysis, we separately coded the
responses from each individual interview at each case company by following the key
areas, S&OP process effectiveness and efficiency, from our theoretical framework.
Then, we compared and synthesized the results into one representation for each case.
In the cross-case analysis, we used axial coding to link the results from the within-
case analysis across the cases. We searched for patterns and aggregated the findings
across the five cases in an iterative approach (Yin, 2009; Miles and Huberman, 1994). Framework
Collected primary data from the cases, archival secondary data, and the theoretical for measuring
framework were combined to develop an understanding of the studied phenomenon
(Krause and Ellram, 2014).
performance

Research trustworthiness
Several authors (e.g. Krause and Ellram, 2014; da Mota Pedrosa et al., 2012; Yin, 2009) 817
suggest a list of criteria to ensure research trustworthiness. In this study, we collected
primary data by interviewing the most relevant informants in each case organization.
The interview data were supplemented by archival data and other data in order to
triangulate the responses. The analysis and results were reviewed by peer researchers
and presented and discussed with the informants. A case study protocol, multiple
tables and charts were compiled as a part of the research database, including the
interview protocol, the recorded and transcribed interviews, the data coding and
analysis, as well as the quality evaluation criteria (available upon request from the
authors). The case study quality criteria are summarized in Table AII.

Case descriptions
In the following section we describe the currently used S&OP process measures at the
case companies. Although the studied cases do not distinguish between the key areas
of S&OP process effectiveness and efficiency, we use these areas to structure the
measures. Based on existing theory, we further divided the S&OP process effectiveness
measures into demand, supply and other measures (Table IV). For each category we
discuss both existing measures as well as challenges. The observed efficiency
measures at case companies are summarized in Table V. We also present desired
measures for both S&OP process effectiveness and efficiency. The desired measures
denote new measures not currently used that the informants listed themselves as
beneficial to be introduced (Table VI).

S&OP process effectiveness measures

Demand related measures. The demand related measures used by the cases are quite
few. A demand forecast related measure that we observed at all cases is the demand
forecast accuracy. While all the cases follow this measure on a global aggregated level,
the Telecom and MedTech cases use additional measures. Telecom monitors market
region forecast accuracy and forecast value added. The former refers to a
disaggregated demand forecast for key products and regions. The latter assesses the
value added through each of the forecasting steps (i.e. on regional and global level). The
MedTech case adds a comparison between the demand forecast and the planned sales
forecast, based on information from regions.
We identified other demand related measures such as demand plan stability at the
Telecom, and customer complaints and sales related measures (e.g. category
performance, average order size, net price/unit) at the Cosmetics case.
Supply related measures. The two dominant groups of supply related measures in all
cases are delivery quality measures (e.g. delivery reliability, deliver in full on time, on the
shelf availability, or picking accuracy) and inventory measures (e.g. inventory turnover/
levels, obsolete inventory, stock outs or safety stock). The third large group of measures is
production capacity including various type of measures related to energy, labor,
production capacity utilization (e.g. capacity flexibility/capability, energy utilization rate,
IJPDLM Maturity Demand
46,9 Case level measures Supply measures Other measures

InfoTech 3 Demand forecast Delivery quality Cross-functional trade-offs

Demand forecast Delivery reliability Trade-offs not defined
accuracy Inventory Integration of measures with
Inventory turnover (a) Strategy
818 New products yes
development (b) Reward system
Ramp up accuracy Linked to the business goal
Other
SC cost
Customer service level
Telecom 3 Demand forecast Delivery quality Cross-functional trade-offs
Demand forecast Delivery reliability Trade-offs not defined
accuracy Inventory Integration of measures with
Market region Inventory turnover (a) Strategy
Forecast Buffer level adherence Overall KPIs reviewed for
accuracy Scrapped material level Their alignment, but not the
Forecasted value Production capacity Functional goals
added Flexibility/capability/ (b) Reward system
Demand plan utilization Lack of alignment
Demand plan New products
stability development
New products
introduction
Energy 3 Demand forecast Delivery quality Cross-functional trade-offs
Demand forecast Delivery precision Trade-offs not defined
accuracy Deliver in full on time Integration of measures with
On the shelf availability (a) Strategy
Inventory Measures designed to support
Legacy products level Strategy
Stock outs (b) Reward system
Maximum Lack of alignment
recommended stock
Compliance
Production capacity
Energy utilization rate
Labor efficiency factor
Expected capacity needs
Other
SC cost
Supply plan adherence
MedTech 4 Demand forecast Delivery quality Cross-functional trade-offs
Demand forecast Delivery reliability Defined trade-offs measures
accuracy Lead time (e.g. demand plan vs production
Sales forecast vs responsiveness plan; actual inventory levels vs
demand forecast Inventory inventory targets; inventory
Inventory levels/ levels vs capacity levels; actual
turnover financial performance of plans
Obsolete inventory vs business targets)
Table IV. Product shortage Some KPIs not synchronized
S&OP process
effectiveness
measures (continued )
 Maturity Demand
Framework
Case level measures Supply measures Other measures for measuring
Alignment of measures with
performance
Production capacity
Production capacity strategy and reward system
utilization Measures aligned with strategy
Other Measures aligned with reward
Customer service level 819
Transportation costs
Cosmetics 4 Demand forecast Delivery quality Cross-functional trade-offs
Demand forecast Delivery reliability Trade-offs not defined (but
accuracy Unit/order fill rate inventory levels vs actual sales;
Other demand Picking accuracy sales plan vs demand plan
related Inventory monitored)
Customer Inventory levels Alignment of measures with
complaints Obsolete inventory strategy and reward system
Sales related Safety stock; return Aligned with strategy partly
measures units Measures aligned with reward
New products
development
New products
introductions Table IV.

or labor efficiency factor). Capacity utilization is not followed in the InfoTech case due to
outsourced production. The next group of measures consists of new products
development measures (e.g. ramp up accuracy, new product contribution margins or new
product development milestones). These types of measures are common for the cases with
higher rate of product innovativeness such as in the InfoTech, Telecom and Cosmetics
cases. The supply related measures receiving the least attention are supply chain cost,
customer service level, and supply plan adherence.
Other measures. Only one of the studied cases, the MedTech case (maturity level 4),
defined and used cross-functional trade-off measures. The company’s trade-off measures
include demand plan vs production plan, actual inventory levels vs inventory targets,
inventory levels vs capacity levels, and actual financial performance of plan vs business
targets to balance the demand and the supply side. According to the informants, the trade-
offs reduce the problems with purely functional measures and thus they also increase the
cross-functional integration. They also help in early identification of capacity shortages
and decisions concerning temporary inventory increases. Yet, some key performance
indicators still need to be synchronized to alleviate divergent opinions about plans. The
Cosmetics case is aware of the trade-off relation between inventory levels vs actual sales,
and sales plan vs demand forecast. The aim of the trade-offs is to coordinate functions and
their individual goals to support the overall organizational goal, however, they are not
used as systematic measures.
The InfoTech, Telecom and Energy cases (maturity level 3) have not yet defined or
applied cross-functional trade-off measures. The InfoTech case prefers to capture the
trade-offs through focussing on service level, delivery precision, total supply chain
costs, and inventory turnover. In the Telecom and Energy cases the trade-offs have not
yet been clearly defined due to lack of a process view.
Alignment of measures with strategy and reward system was observed only at the
InfoTech, MedTech and Cosmetics cases. The InfoTech case linked their rewards
IJPDLM Maturity
46,9 Case level Monitored Not monitored

InfoTech 3 Process Process

Actual performance against S&OP metrics Pre-meeting work done on time
but insufficiently Re-planning frequency
820 Ability to respond to unplanned demand Resource efficiency related to
Organization conducting S&OP process
Communication of metrics but insufficiently
Progress of plans
Availability of planning data
IT support to collect measures
External partners involved via IOIS
People
Top management support
Process owner established
Telecom 3 Process Process
Gaps between financial plans and S&OP Pre-meeting work done on time
plans monitored but insufficiently Re-planning frequency
Organization Resource efficiency related to
Communication of metrics but insufficiently conducting S&OP process
Progress of plans Ability to respond to unplanned
Availability of planning data demand
IT support to collect measures
External partners involved via IOIS
People
Attendance at regional S&OP meetings
Top management support
Process owner established
Energy 3 Process Process
Supply and demand planning in balance Pre-meeting work done on time
Planning linked to execution Re-planning frequency
Organization Resource efficiency
Communication of metrics but insufficiently related to conducting S&OP
Progress of plans process
Availability of planning data Ability to respond to unplanned
IT support to collect, visualize metrics demand
External partners involved via IOIS
People
Top management support
Process owner established
MedTech 4 Process Process
Actual performance against S&OP metrics Pre-meeting work done on time
Organization Re-planning frequency
Communication of metrics Resource efficiency related to
Progress of plans conducting S&OP process
Availability of planning data Ability to respond to unplanned
IT support to collect measures demand
External partners involved via IOIS
Table V.
S&OP process
efficiency measures (continued )
 Maturity
Framework
Case level Monitored Not monitored for measuring
performance
People
Process owner established
Top management support
Cosmetics 4 Process Process 821
Actual performance against S&OP metrics Pre-meeting work done on time
Organization Re-planning frequency
Communication of metrics Resource efficiency related to
Progress of plans conducting S&OP process
Availability of planning data Ability to respond to unplanned
IT support demand
External partners involved via IOIS
People
Process owner established
Top management support Table V.

Maturity S&OP process

Case level S&OP process effectiveness efficiency

InfoTech 3 Ramp down accuracy for end-of-life products na

Telecom 3 Supply plan adherence na
Comprehensive cross-functional measures with trade-offs
Standardized measures
Energy 3 Profit measures Rate of
Total cost vs customer service level metrics decisions made
at the
S&OP meetings
MedTech 4 Financial consequences of deviation between demand plan na Table VI.
and sales/business plan S&OP process –
Cosmetics 4 Customization of measures na desired measures

system to the overall strategy and the S&OP members are evaluated on their
performance mainly in terms of forecast accuracy and inventory turnover.
In the MedTech case the measures are aligned with strategy and reward on
various levels. The S&OP team members are evaluated based on their performance
on targets such as forecast accuracy, inventory levels, customer service level,
production efficiency, and supply plan adherence. In the Cosmetics case, the
informants stressed that there is a need to regularly update the measures as the
strategic goals change. Regarding the alignment with reward system, each member of
the S&OP team has its own performance document that reflects individual as well as
overall company performance.
The Telecom case struggles to align their functional goals with the overall KPIs
which are synchronized with strategy. In the Energy case, the measures are designed to
support the strategy, according to the informants. Associated with the reward system,
both companies experience difficulties.
IJPDLM S&OP process efficiency measures
46,9 We grouped the observed S&OP efficiency based on their conceptual similarities into
three major clusters: process, which refers to supply and demand planning routines;
organization, which relates to communication of S&OP measures throughout the
organization; and people, which is associated with cross-functional teams and
executive participation at the S&OP meetings.
822 In terms of process measures at maturity level 3, the Energy case checks that
supply and demand planning is in balance, and that planning is linked to execution.
The InfoTech and Telecom cases experience challenges with their routines. In the
InfoTech case the current monitoring frequency of daily performance against S&OP
measures is not efficient. To shorten the feedback loop, the goal is to implement an
information system that can support monthly status overview in relation to the
S&OP plan. In the Telecom case, the monitoring of gaps between financial plans and
S&OP plans to take corrective actions is biased as there is an information
inconsistency due to different data sources used by financial controllers and demand
planners for financial forecast planning. To overcome this, the informants expressed
desire to standardize forecasting of products, services and finance. In the
MedTech and Cosmetics cases at maturity level 4, actual performance against the
S&OP measures is regularly monitored to proactively alert when deviations from
the planned targets occur.
Related to the organization measures, all the studied cases monitor the progress of
plans and guide the companies throughout the execution of plans. Moreover, IT
support is utilized to gather relevant performance measures, and external partners
are integrated via inter-organization information systems (IOIS) to avoid redundant
data entry. The Energy case further utilizes dynamic visualization of sales and
potential demand to support long-term planning, while the other cases plan to
implement this type of monitoring in the near future. The cases at maturity level 3 are
rather insufficient in communicating the S&OP metrics through the various
organizational levels.
The people related measures, detected at all studied cases, reflect mainly top
management support, the appointment of a process owner, and that the S&OP team
consists of people that can make decisions. Additionally, at maturity level 3, in the
Telecom case, attendance of decision makers at regional S&OP meetings is tracked. In
the Energy case, top management support is regularly evaluated via a survey to map
the degree of knowledge and involvement of the process leader.
All the studied cases show deficiencies in monitoring the process related
measures such as pre-meeting work conducted on time, re-planning frequency, and
the resource efficiency of conducting the S&OP process. The reasons, according to
the informants, are that pre-defined routines are well established and followed.
However, the MedTech case pointed out that they do experience deficiencies in
the pre-meeting work and that they are forced to take actions to rectify deficiencies.
The meetings efficiency is negatively affected, and this leads to imbalance in
responsibilities as other people need to take over someone else’s responsibility areas.
Additionally, none of the cases currently monitor resource efficiency related to
conducting the process.
Moreover, four out of the five cases do not monitor the ability to respond to unplanned
demand in a timely manner. In the Telecom case it is monitored insufficiently as there is a
lack of measures for unplanned demand and the required reaction time. In the Energy,
MedTech and Cosmetics cases, the ability is not monitored at all.
Desired measures Framework
The informants stressed the need to introduce additional S&OP measures for measuring
(see Table VI). We have clustered these measures based on the two main areas of
effectiveness and efficiency. Related to the effectiveness, the maturity level 3 cases
performance
mentioned more measures than the level four cases. The suggested measures varied
among the cases.
Associated with the S&OP process effectiveness, the InfoTech case calls for an 823
additional measure such as ramp down accuracy for end-of-life products to reduce
obsolete inventory, which is very relevant for the innovative products. Telecom
desires to introduce supply plan adherence to complement the established demand
plan adherence, and comprehensive cross-functional trade-off measures. According
to one of the informants, the currently used measures are designed to consider the
S&OP meetings’ agenda or the accountability of the participants, rather than focus on
the overall performance of the process itself. The informants also stressed a need to
standardize current measures (e.g. forecast accuracy) as they are often based on
various elements (e.g. different time horizons, product granularity and segments).
This might lead to biased decision making. In the Energy case, the informants
emphasized measures to capture the financial performance of the process such as
actual vs planned profit and the need to monitor alignment between total cost and
customer service level.
The MedTech case desired measures on financial consequences of the deviation
between the demand plan and the sales plan. The Cosmetics company advocated
customized key measures for different target groups (e.g. for the executive meeting,
S&OP review meeting).
Regarding the S&OP process efficiency, very few efficiency measures were
emphasized by the case companies. In general, the informants (at maturity levels 3
and 4) explained that as they follow established routines related to the process in
terms of activities, information sharing, and participation at meetings, they do not
consider it necessary to add additional efficiency measures. Only the Energy case
expressed desire to track efficiency through rating decisions made at the
S&OP meetings.

Results and discussion

The purpose of this study is to develop a framework for measuring the S&OP process
performance. In the following sections we discuss the development of the final
framework (Figure 3) through matching the identified measures from our cases with
those from S&OP performance measurement literature and with our initial framework
(Figure 1). The initial framework consisted of S&OP process effectiveness and S&OP
process efficiency. In the context of the S&OP process, effectiveness relates to how the
plan influences corporate effectiveness and efficiency, while efficiency refers to how
well the S&OP process is managed. We discuss the specific measures for each of the
two key areas, as well as how the final framework meets the criteria for performance
measures (Caplice and Sheffi, 1995).

Development of the framework

To measure performance of a process it is vital to understand the individual process
steps, including outputs, in addition to understanding the result/output of the entire
process. The S&OP process is often outlined with five major steps (Wagner et al., 2014;
IJPDLM Jacobs et al., 2011): data gathering, demand planning, supply planning, pre-meeting,
46,9 and executive meeting. The output of Step 1 is updated data and KPIs from previous
months. A consensus-based baseline demand plan is the output of Step 2, while a
rough-cut capacity plan concludes Step 3. During the pre-meeting (Step 4), both plans
are balanced to arrive at an integrated set of plans. At the final Step 5, an integrated set
of plans is approved. This plan represents the output of the S&OP process and has a
824 direct impact on the overall business output.
To further develop a process-oriented framework, we used Neely’s key areas of
effectiveness and efficiency, and the S&OP process steps and outputs (Figure 2) to
structure the identified measures from the five cases.
Cross-case analysis and pattern matching showed both differences and similarities
between the cases. In order to develop the framework, the empirical data were
matched with measurements suggested in literature (Figure 3). We argue that this
framework better meets the criteria for performance measurement systems proposed
by Caplice and Sheffi (1995).

S&OP effectiveness measures: how does the S&OP plan influence corporate
effectiveness and efficiency?
The data indicate that the cases with more mature level of the S&OP process also use
more advanced measures. The level 3 cases focus predominantly on monitoring
demand forecast, delivery quality, and inventory and production capacity. In contrast,
one of the level 4 cases measures cross-functional trade-offs, and it also aligns these
measures with overall strategy and rewards systems. Regarding the effectiveness,
there is a joint challenge for all the cases to define measures not only aligned cross-
functionally but also with business strategy and rewards systems.
In our proposed framework, we stress the importance of monitoring the quality and
comprehensiveness of the data coming into the S&OP process (Step 1 – data gathering).
Input data quality relates to reliability, timeliness, and availability. Moreover,
standardization of the elements that constitute various measures (e.g. different time
horizons, product granularity and customers/markets segments) is vital. Several
authors suggest that the previous months data used as input should contain reverse
historical trending up to 12 months (Bower, 2005) and all known factors that might
impact future demand (Lapide, 2003).
To develop an unconstrained demand plan (output of Step 2), demand forecast
accuracy is important, and this measure is monitored by all the cases. All known
factors that can affect demand needs to be considered, such as measures related to new
product development (e.g. cycle time, launches) (Grimson and Pyke, 2007), and slow
and obsolete inventory (Chae, 2009). The empirical data indicate monitoring mainly
demand forecast accuracy and ramp up (i.e. launches) and ramp down (i.e. phasing out)
accuracy of products. These types of measures correspond to the maturity levels 2, 3
and 4 (Tohamy et al., 2013; Cecere et al., 2009; Grimson and Pyke, 2007).
Associated with the supply side of the process (Step 3, supply planning), measures
currently used cover the main aspects of capacity planning. However, the number of
measures needs to be reduced (and hence be more useful) to better represent key
measures of resource capacity, inventory and delivery, which also appear at maturity
levels 2, 3, and 4 (Tohamy et al., 2013; Cecere et al., 2009). The proposed key
performance indicators for the framework are therefore capacity capability
(e.g. utilization) (Grimson and Pyke, 2007), inventory adherence (Chae, 2009), and
inbound delivery reliability (Godsell et al., 2010).
 S&OP Effectiveness measures: How does the S&OP plan influence corporate effectiveness and efficiency?

S&OP process

1: Data Gathering 2: Demand Planning 3: Supply Planning 4: Pre-meeting 5: Executive

meeting Output:
Corporate
Output: Output: An integrated Effectiveness
Updated data and KPIs Consensus based Output: Output: An integrated Output: S&OP plan and Efficiency
unconstrained baseline Rough-cut capacity plan set of plans An integrated S&OP approved
from previous months
demand plan plan approved

S&OP Efficiency measures: How well is the S&OP process managed?

performance
for measuring
Framework

process performance

outputs
process steps and
measures and the
Key areas of S&OP
Figure 2.
825
 46,9

826

Figure 3.
IJPDLM

S&OP process
for measuring the
performance of the
Proposed framework
S&OP Effectiveness measures: How does the S&OP plan influence corporate effectiveness and efficiency?

Input data quality Forecast accuracy Resource adherence Trade-off measures Plans adherence Actual vs target
• Reliability, • Demand forecast • Capacity capability • Cross-functionality • Supply and • ROI
timeliness, accuracy • Inventory adherence (e.g. demand plan vs demand plans • Customer
availability • Ramp up/down • Inbound delivery production plan) adherence requirements
• Standardization accuracy reliability • Alignment with • Financial met (e.g.
• Customization strategy and reward adherence of plans perfect orders)
system

S&OP process

1: Data Gathering 2: Demand Planning 3: Supply Planning 4: Pre-meeting 5: Executive

meeting Output: Corporate
Output: Output: An integrated Effectiveness
Updated data and KPIs Consensus based Output: Output: An integrated Output: S&OP plan and Efficiency
from previous months unconstrained baseline Rough-cut capacity plan set of plans An integrated S&OP approved
demand plan plan approved

S&OP Efficiency measures: How well is the S&OP process managed?

Process Organization People

• Supply and demand planning • Communication of S&OP measures • Degree of cross-functional
routines • Monitoring of progress of plans participations
• Meeting efficiency • IT support to gather and analyze • Degree of executives
• Resource efficiency committed relevant performance measures participation
to conduct S&OP • Competence/skills
Step 4 is related to the development of an integrated set of plans, by balancing the Framework
demand and the supply sides. The literature suggests trade-off measures for measuring
(Tuomikangas and Kaipia, 2014) to monitor how the plans balance the often
conflicting functional goals of the demand and the supply side of an organization.
performance
These measures are associated with maturity levels 4 and 5 (Tohamy et al., 2013; Cecere
et al., 2009). However, the literature is rather rare on examples of these measures.
We also observed that the studied cases experienced difficulties in defining such 827
measures, with only MedTech at level 4 defining and applying trade-off measures such
as demand plan vs production plan, actual inventory levels vs inventory targets, and
inventory levels vs capacity levels. At maturity level 3, the cases experienced
difficulties in aligning cross-functional trade-off measures with business strategy and
reward systems (Godsell et al., 2010). On the other hand, only one of the maturity level 4
cases (MedTech) achieved this type of integration of S&OP measures.
Finally, in Step 5, the goal is to approve the set of plans – in a final and
approved S&OP plan. Step 5 concerns the financial reconciliation of plans including
the need to compare the plan to the organization’s financial targets (Oliva and
Watson, 2011). The trade-offs measure of financial performance of plans vs business
targets is used by only one of our cases (MedTech) at level 4. Additionally, the
informants also stressed the desire to implement supply and demand plan adherence
measures, which is in line with Lapide (2004 a, b) suggesting sales, marketing and
operations plans adherence.
The output of the S&OP process, the S&OP plan, is directly related to the overall
business output (corporate effectiveness and efficiency). Our studied cases perceive it
as challenging to assess the financial benefits in relation to the resources committed to
conduct the process. The desired measures include, for example, profit measures
(actual vs planned profit) or total costs vs customer service level. The literature
suggests multiple perspectives of such measures (Caplice and Sheffi, 1995). Thus, we
propose actual return on investment (ROI) vs target to capture the corporate
effectiveness (i.e. customer satisfaction) and corporate efficiency (i.e. resource
allocation). Additional relevant measures might be “customer requirements met”
(e.g. perfect orders) vs targets, but also actual inventory turnover, and gross profit
vs targets, as emphasized by, for example, Tohamy et al. (2013) and Cecere et al. (2009)
at maturity level 5.

S&OP efficiency measures: how well is the S&OP process managed?

Generally, our data suggest that the studied cases measure the efficiency of the S&OP
process implicitly, rather than explicitly. At level 3, the Energy case monitors top
management support and information preparation and sharing (i.e. IT support to
gather, analyze and visualize performance). Meeting efficiency (i.e. attendance of
decision makers at S&OP meetings) is only measured by the Telecom case.
The remaining cases at levels 3 and 4 consider meeting efficiency measures
(e.g. pre-meeting work done on time, re-planning frequency) (Cecere et al., 2009) as
redundant as they have established and also follow clear routines. However, some of
the informants would like to implement the rate of decisions made at S&OP meetings
as a meeting-efficiency measure.
At maturity level 4, the cases monitor information preparation and sharing
(i.e. availability of planning data, IT support, and external partners involved via IOIS).
Planning linked to execution is successfully operationalized through communication of
S&OP measures across the companies and the cross-functional team monitors the
IJPDLM progress of plans. However, the level 4 cases are lacking in monitoring cross-functional
46,9 integration of plans (i.e. the ability to respond to unplanned events in a timely manner)
(Bower, 2005). None of the studied cases monitor amount of resources (resource
efficiency) committed to conduct the S&OP process.
By comparing the literature and the data, we propose that a set of S&OP efficiency
measures be part of the S&OP framework. Based on their conceptual similarities we
828 grouped the measures into the three categories: process, organization, and people.
The efficiency measures can be applied for each of the five steps of the process and for
the entire process.
Process involves supply and demand planning routines (e.g. evaluation of planning
scenarios during supply and demand balancing) (Bower, 2005), and meeting efficiency
measures (e.g. monitoring of attendance of all S&OP team members at each S&OP
meeting, frequency of meetings, pre-meeting work done on time, and re-planning
frequency) (Lapide, 2004a). As our data suggest, the meeting efficiency measures are
more relevant for an organization with low level of S&OP process maturity that have
not yet established clear meeting routines. For the more advanced levels, a measure
such as rate of decisions made during S&OP meetings can be added. In the literature, a
similar meeting efficiency measure associated with level 4 is feedback on performance
of the S&OP team members (Grimson and Pyke, 2007). Another indicator of S&OP
efficiency to be considered is resources committed to conduct the process.
Organization includes communication of S&OP measures (e.g. regular
communication of S&OP measures across organization) (Bower, 2005; Grimson and
Pyke, 2007); monitoring of progress of plans (e.g. compelling events are monitored, as
well as the ability to respond to these events in a timely manner); and IT support to
gather and analyze relevant performance measures (Lapide, 2005).
The People category refers to degree of cross-functional participation at S&OP
meetings; degree of executive participation (Bower, 2005) (e.g. regular surveys to evaluate
the level of commitment and involvement); and competence and skills (e.g. the S&OP
team should consist of people with sufficient knowledge and who can make decisions).
Furthermore, there needs to be a clear process owner, and the process responsibilities
should be clearly defined (Grimson and Pyke, 2007).

Meeting the criteria on performance measures

One issue in the previous S&OP performance measures literature is the deficiencies of
the existing measures in terms of the criteria on appropriate performance measures
suggested by several authors (e.g. Tuomikangas and Kaipia, 2014; Thomé et al.,
2012a; Caplice and Sheffi, 1995). Our framework attempts to satisfy these criteria.
Comprehensiveness is addressed by including multiple perspectives of financial
results (e.g. ROI) and customer satisfaction by connecting the output of the S&OP
process (i.e. the S&OP plan) to the overall business output represented by corporate
effectiveness and efficiency. The internal process efficiency relates in our framework
to the proposed set of measures of S&OP process efficiency with subgroups of
process, organization and people. The horizontal and vertical integration of measures
is captured by emphasizing the integration of the measures cross-functionally
through trade-offs, and alignment with business strategy (e.g. Holmberg, 2000;
Globerson, 1985) and reward systems. The internal comparability is handled by using
financial and non-financial trade-off measures. Finally, our framework contains a
limited number of key measures, which should ensure its usefulness (Caplice and
Sheffi, 1995). We have also included measures capturing the aspects of quality, cost, Framework
flexibility, timeliness and innovativeness, and learning (Shepherd and Günter, 2006; for measuring
Brewer and Speh, 2000).
performance
Conclusions and future research
This study started by highlighting the lack of process-oriented frameworks for
measuring the S&OP process performance, both in the existing S&OP literature and in 829
practice (Thomé et al., 2012a; Ivert and Jonsson, 2010). Development of such
frameworks can enhance analysis of S&OP process performance and a timely
identification of deviations from targets for organizations.

Managerial implications
One managerial implication is that our framework can provide guidelines for
organizations when developing measures to increase effectiveness and efficiency of
their S&OP process. The framework will also help organizations to standardize
measures, to enhance organizational transparency and, ideally, to improve the
process analysis leading to potential organizational changes. This, in turn, should
lead to increased corporate effectiveness (e.g. customer satisfaction) and efficiency
(e.g. resource allocation). Thus the framework can also support organizations in their
efforts to become more process oriented.
Another benefit of our framework is that it provides measures for each step of the
process. The logic of the framework is that if the performance of a process step is
improved, then overall performance of the S&OP process should also be improved. Not
only does the framework thus facilitate a conceptual view of the process but it also
provides organizations with the opportunity to analyze and improve each step of the
process. With our framework, companies can take the required action in a proactive
rather than reactive manner.

Theoretical contribution
Our proposed framework adds to the existing S&OP performance frameworks,
such as the SCOR model framework developed by Thomé et al. (2012a) and the S&OP
scorecard by Milliken (2008). Contrary to the existing rather generic frameworks, our
process-oriented framework specifically addresses the performance of the
S&OP process by considering all the major process steps and their related outputs.
Another contribution is the balanced categorization of measures based on the key areas
of a process performance such as effectiveness and efficiency (Neely, 1998). While, e.g.,
the scorecard approach implicitly uses effectiveness and efficiency in the customer and
internal process perspective, our comprehensive framework explicitly defines and
structures the related measures and their relation to the process performance. Further,
our framework considers criteria on appropriate performance measures as suggested by
Caplice and Sheffi (1995) such as comprehensiveness, internal process efficiency,
horizontal and vertical integration, internal comparability, and usefulness.
Our results also show that the most prevailing measures used by the cases are related
to the S&OP process effectiveness rather than the process efficiency. This result confirms
some of the previous studies (e.g. Grimson and Pyke, 2007). Concerning the effectiveness
measures, the study indicates that while the cases monitored demand forecast, delivery
quality, inventory, production capacity and new products development, only one of the
cases has implemented cross-functional trade-off measures and aligned those with
IJPDLM overall business strategy and the reward system. This issue corresponds to previous
46,9 research (see e.g. Tuomikangas and Kaipia, 2014). Regarding the efficiency measures, at
the studied cases, a majority of the aspects related to process, organization and people are
monitored; however, there are still problems with measuring S&OP meetings efficiency,
resource efficiency related to conducting the process, ability to respond to unplanned
demand in a timely manner, inconsistency of measures, and insufficient communication
830 of measures across organizations. The desired measures also include mainly
effectiveness measures ranging from ramp down accuracy of legacy products to
comprehensive cross-functional measures, and profit measures.

Limitations and future research

Our research furthermore provides several future research opportunities. The framework
is based on five cases; hence, validation is desirable through additional cases in similar as
well as other contexts, for example in the service industry. The framework could also be
tested, e.g. by action research, where the focus could be on the implementation of the
measurement system and how it supports decisions that lead to observable performance
improvements. Additionally, potential challenges to implementing the framework could be
examined. The frequency of measuring the process has not been clearly discussed in
previous literature. Considering that the process is typically conducted on a monthly basis,
the evaluation of the process performance can follow the same outline with monthly
reviews. However, this issue needs to be further investigated in future research. More
research is also needed to provide increased insight into, as well as suggestions on, how
organizations can advance from one maturity level to another, and also how to
dynamically adjust S&OP measurements to contextual factors such type of products (i.e.
functional, innovative) or changes in business strategy. Finally, the recent advancement of
applications and platforms for business intelligence and data analytics provides improved
support systems for collecting and analyzing data, and to present the results in informative
dashboards customized for different users. Research could investigate how these currently
are, or could be, used to improve S&OP performance measurement systems.

References
Beretta, S. (2002), “Unleashing the integration potential of ERP systems: the role of process-based
performance measurement systems”, Business Process Management Journal, Vol. 8 No. 3,
pp. 254-277.
Bourne, M., Neely, A., Mills, J. and Platts, K. (2003), “Implementing performance measurement
systems: a literature review”, International Journal of Business Performance Management,
Vol. 5 No. 1, pp. 1-24.
Bower, P. (2005), “12 most common threats to sales and operations planning process”,
The Journal of Business Forecasting Methods & Systems, Vol. 24 No. 3, pp. 4-14.
Boyer, J.E. Jr (2009), “10 proven steps to successful S&OP”, Journal of Business Forecasting,
Vol. 28 No. 1, pp. 4-10.
Brewer, P.C. and Speh, T.W. (2000), “Using the balanced scorecard to measure supply chain
performance”, Journal of Business Logistics, Vol. 21 No. 1, pp. 75-93.
Burrows, R.P. III (2007), “Demand driven S&OP: a sharp departure from the traditional ERP
approach”, The Journal of Business Forecasting Methods & Systems, Vol. 26 No. 3, pp. 4-13.
Caplice, C. and Sheffi, Y. (1995), “A review and evaluation of logistics performance measurement
systems”, The International Journal of Logistics Management, Vol. 6 No. 1, pp. 61-74.
Cecere, L., Barret, J. and Mooraj, H. (2009), “Sales and operations planning: transformation from Framework
tradition”, AMR Research, May, pp. 1-9.
for measuring
Chae, B. (2009), “Developing key performance indicators for supply chain: an industry perspective”, performance
Supply Chain Management: An International Journal, Vol. 14 No. 6, pp. 422-428.
Chen, C.C. (2008), “An objective-oriented and product-line-based manufacturing performance
measurement”, International Journal of Production Economics, Vol. 112 No. 1, pp. 380-390.
da Mota Pedrosa, A., Naslund, D. and Jasmand, C. (2012), “Logistics case study based research: 831
towards higher quality”, International Journal of Physical Distribution and Logistics
Management, Vol. 42 No. 3, pp. 275-295.
Eisenhardt, K.M. and Graebner, M.E. (2007), “Theory building from cases: opportunities and
challenges”, Academy of Management Journal, Vol. 50 No. 1, pp. 25-32.
Gianesi, I.G.N. (1998), “Implementing manufacturing strategy through strategic production planning”,
International Journal of Operations & Production Management, Vol. 18 No. 3, pp. 286-299.
Globerson, S. (1985), “Issues in developing a performance criteria system for an organization”,
International Journal of Production Research, Vol. 23 No. 4, pp. 639-646.
Godsell, J., Birtwistle, A. and van Hoek, R. (2010), “Building the supply chain to enable business
alignment: lessons from British American Tobacco (BAT)”, Supply Chain Management:
An International Journal, Vol. 15 No. 1, pp. 10-15.
Gopal, P.R.C. and Thakkar, J. (2012), “A review on supply chain performance measures and
metrics: 2000-2011”, International Journal of Productivity and Performance Management,
Vol. 61 No. 5, pp. 518-547.
Grimson, J.A. and Pyke, D.F. (2007), “Sales and operations planning: an exploratory study and
framework”, The International Journal of Logistics Management, Vol. 18 No. 3, pp. 322-346.
Gunasekaran, A., Patel, C. and Tirtiroglu, E. (2001), “Performance measures and measures in
supply chain environment”, International Journal of Operations & Production
Management, Vol. 21 Nos 1/2, pp. 71-87.
Harwell, J. (2006), “Sales and operations planning in the retail industry”, Journal of Business
Forecasting, Vol. 25 No. 3, pp. 4-10.
Holmberg, S. (2000), “A systems perspective on supply chain measurements”, International
Journal of Physical Distribution and Logistics Management, Vol. 30 No. 10, pp. 847-868.
Ittner, Ch.D. and Larcker, D.F. (2003), “Coming up short on nonfinancial performance
measurement”, Harvard Business Review, Vol. 81 No. 11, pp. 88-95.
Ivert, L.K. and Jonsson, P. (2010), “The potential benefits of advanced planning and scheduling
systems in sales and operations planning”, Industrial Management & Data Systems,
Vol. 110 No. 5, pp. 659-681.
Ivert, L.K., Dubovska-Popovska, I., Fredriksson, A., Dreyer, H.C. and Kaipia, R. (2015),
“Contingency between S&OP design and planning environment”, International Journal of
Physical Distribution & Logistics Management, Vol. 45 No. 8, pp. 747-773.
Jacobs, R.F., Berry, W.L., Whybark, D.C. and Vollmann, T.E. (2011), “Chapter 5:
sales and operations planning”, in Jacobs, R.F., Berry, W.L., Whybark, D.C. and Vollmann, T.
E. (Eds), Manufacturing Planning and Control, The McGraw-Hill Companies, Inc., pp. 115-148.
Kaplan, R.S. and Norton, D.P. (1993), “Putting the balanced scorecard to work”, Harvard Business
Review, Vol. 71 No. 5, pp. 134-142.
Keal, D.A. and Hebert, P. (2010), “Benefits to blood banks of a sales and operations planning
process”, Journal of Blood Service Management, Vol. 50 No. 12, pp. 2785-2787.
Krause, D. and Ellram, L.M. (2014), “The effects of the economic downturn on interdependent
buyer-supplier relationships”, Journal of Business Logistics, Vol. 35 No. 3, pp. 191-212.
IJPDLM Lapide, L. (2003), “Make the baseline forecast your trusted advisor”, The Journal of Business
Forecasting Methods & Systems, Vol. 22 No. 4, pp. 21-28.
46,9
Lapide, L. (2004a), “Sales and operations planning part I: the process”, The Journal of Business
Forecasting Methods & Systems, Vol. 23 No. 3, pp. 17-19.
Lapide, L. (2004b), “Sales and operations planning part II: enabling technology”, The Journal of
Business Forecasting Methods & Systems, Vol. 23 No. 4, pp. 18-20.
832 Lapide, L. (2005), “Sales and operations planning part III: a diagnostic model”, The Journal of
Business Forecasting Methods & Systems, Vol. 24 No. 1, pp. 13-16.
Ling, C.R. and Goddard, W.E. (1988), “Chapter 2: synchronizing with the marketplace”,
Scannell, D. and Bennett, S. (Eds), Orchestrating Success: Improve Control of the Business
with Sales and Operations Planning, John Wiley & Sons, Inc, New York, NY, pp. 11-36.
Lockamy, A. III and McCormack, K. (2004), “Linking SCOR planning practices to supply chain
performance”, International Journal of Operations and Production Management, Vol. 24
No. 12, pp. 1192 -1218.
Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis, Sage Publications, Inc,
Thousand Oaks, CA.
Milliken, A.L. (2008), “Sales & operations planning: building the foundation”, The Journal of
Business Forecasting Methods & Systems, Vol. 27 No. 3, pp. 4-12.
Naslund, D. (1999), “Towards bridging the gap between strategy and operations – a process
based framework”, Phd dissertation, Lund University, Lund.
Neely, A. (1998), Measuring Business Performance: Why, What and How, The Economist Books,
London.
Neely, A., Bourne, M. and Kennerley, M. (2000), “Performance measurement system design:
developing and testing a process-based approach”, International Journal of Operations &
Production Management, Vol. 20 No. 10, pp. 1119-1145.
Oliva, R. and Watson, N. (2011), “Cross-functional alignment in supply chain planning: a case study of
sales and operations planning”, Journal of Operations Management, Vol. 29 No. 5, pp. 434-448.
Shepherd, C. and Günter, H. (2006), “Measuring supply chain performance: current research and
future directions”, International Journal of Productivity and Performance Management,
Vol. 55 Nos 3/4, pp. 242-258.
Singh, M.K. (2010), “What makes a winning S&OP program”, Supply Chain Management Review,
Vol. 14 No. 3, pp. 22-27.
Thomé, A.M.T., Scavarda, L.F., Fernandez, N.S. and Scavarda, A.J. (2012a), “Sales and operations
planning: a research synthesis”, International Journal of Production Economics, Vol. 138
No. 1, pp. 1-13.
Thomé, A.M.T., Scavarda, L.F., Fernandez, N.S. and Scavarda, A.J. (2012b), “Sales and operations
planning and the firm performance”, International Journal of Productivity and Performance
Management, Vol. 61 No. 4, pp. 359-381.
Tohamy, N., Kohler, J., Pukkila, M. and Tarafdar, D. (2013), Toolkit: S&OP Maturity Self-
Assessment for Supply Chain Leaders, Gartner, Inc, Stamford, CT.
Tuomikangas, N. and Kaipia, R. (2014), “A coordination framework for sales and operations
planning (S&OP): syntheses from the literature”, International Journal of Production
Economics, Aug, Vol. 154, August, pp. 243-262.
Wagner, S.M., Ullrich, K.K.R. and Transchel, S. (2014), “The game plan for aligning the
organization”, Business Horizons, Vol. 57 No. 2, pp. 189-201.
Yin, R.K. (2009), Case Study Research: Design and Methods, 4th ed., Sage Publication, Inc.,
Thousand Oaks, CA.
Appendix 1
Areas of S&OP Demand related
performance measures measures Supply related measures
S&OP Process Forecast accuracy/ Delivery reliability, lead
Effectiveness variability time, speed, flexibility,
How does the S&OP New product variation in delivery
plan influence corporate development cycle Distribution costs
effectiveness and time and new (Godsell et al., 2010)
efficiency launches Inventory levels, turnover,
(Grimson and Pyke, obsolete inventory
2007) Labor productivity index
Customer perceived Materials quality
value of products (Chae, 2009)
(Burrows, 2007) Production, distribution
Expected responses costs
to promotions (Milliken, 2008)
(Wagner et al., 2014) Order fill rate
Adherence to sales (Boyer, 2009)
and marketing plans Customer order backlogs
(Lapide, 2004a, b) Deviations in actual and
Quality of data for planned inventory levels
demand planning vs capacity utilization
(Bower, 2005) (Wagner et al., 2014)
Production, lead time,
quality variation, costs
(Milliken, 2008;
Chae, 2009)
Capacity utilization,
shortage
(Grimson and Pyke, 2007)
Flexibility (mix, volumes)
(Gianesi, 1998)
Supplier lead time, fill rate,
variation in deliveries
(Chae, 2009; Singh, 2010)
Adherence to operations
plans (Lapide, 2004a, b)
S&OP Process Efficiency na na
How well is the S&OP
process managed
Framework
for measuring
performance
Other measures
Total sales vs demand
Contribution margins 833
(Milliken, 2008)
Customer service vs inventory; meeting
demand with reduced inventory
(Thomé et al., 2012b)
Flexibility vs SC costs
(Tuomikangas and Kaipia, 2014)
Baseline forecast vs budget
(Lapide, 2004a, b)
Cash to cash cycle time
(Chae, 2009)
Return on assets
(Keal and Hebert, 2010)
Gross profit return on inventory
(Harwell, 2006)
Company/product profitability
(Grimson and Pyke, 2007)
Expected revenue of plans vs financial
targets
(Oliva and Watson, 2011)
Integration of measures cross-functionally,
with business strategy and reward system
(Godsell et al., 2010)
Cross-functional integration of plans; supply
and demand planning in balance; planning
linked to execution; monitoring of actual
performance against S&OP metrics
Meeting efficiency; information preparation
and sharing, holistic view of supply and
demand to
(Bower, 2005)
Measure and communicate plans, revision Table AI.
of measures An overview of
(Grimson and Pyke, 2007) measures related to
Accountability for measures S&OP process
(Grimson and Pyke, 2007; Bower, 2005) performance
IJPDLM Appendix 2. Condensed version of the interview protocol
Background information
46,9 Company/Division/Industry:
Name of the informant/Job title/Years in position/with company:
Type of products:
Organization/Supply chain strategy:
S&OP process effectiveness – How does the S&OP plan influence corporate effectiveness
834 and efficiency?
What measures do you currently use to monitor the process steps and output?
• Please, indicate on a scale of 1 to 5 (1-strongly disagree, 5-strongly agree) how critical do
you consider the measures to be?
• Can you elaborate on why the measures are critical?
S&OP process efficiency – How well is the S&OP process managed?
Please, indicate on a scale of 1 to 5 (1-strongly disagree, 5-strongly agree) if the following
statements correspond to your current situation. Comment on why? How?
• Cross-functional integration of plans
– All functions are represented in the S&OP process?
– Compelling events are monitored (e.g. major product shortage, competitive market
threats)?
– Ability to respond to unplanned events in a timely manner is monitored?
– Gaps between financial plans and S&OP plans are monitored and corrective actions are
taken?
• Supply and demand planning in balance
– Constrained planning scenarios are evaluated during supply and demand balancing?
– Inventory levels are monitored within established tolerance?
– Sales forecast, production and inventory for each SKU/ product family are monitored?
• Planning linked to execution
– The S&OP metrics is regularly communicated across organization? (How often? Who
receives the information?)
– Cross-functional team monitors progress and guide the organization through plan
execution with weekly focused operational reviews?
– Slow and obsolete inventory is quickly identified and action plans are formulated in the
S&OP process?
• Measure and communicate plans
– High level reporting is designed for executive management?
– Daily performance against an S&OP metrics is monitored to be proactively alerted
when deviation occurs?
• Knowledge
– The S&OP team comprises of people that can make decision?
– The team possesses sufficient knowledge to perform the S&OP process?
– The process owner is established?
– The S&OP process responsibilities are clearly defined in a job description?
• Meeting efficiency
– Attendance of all S&OP team members is monitored at each S&OP meeting?
– The frequency of the review meetings is monitored?
– Pre-meeting work done on time is monitored?
– Re-planning frequency is monitored?
 • Information preparation and sharing Framework
– Availability of crucial KPIs and all planning data is monitored? for measuring
– External participants are integrated via inter-organizational information systems to performance
avoid redundant data entry?
– Support IT system is utilized to gather relevant performance measures and commu-
nicate them throughout the organization?
• Integration of measures cross-functionally, and alignment with strategy and reward system 835
– Current S&OP performance measurements are integrated cross-functionally? How?
– Current S&OP performance measurements are aligned with business strategy? How?
– Current S&OP performance measurements are aligned with reward system? How?

Desired measures
What S&OP related measures do you consider to be critical to introduce (add) or remove from the
current metrics? Why? What should be improved in the way the process is measured?

Appendix 3

Actions

Construct validity Peer researchers and external business executives review interview protocol
Multiple sources of evidence used (part of the case study database):
Multiple informants representing supply and demand side of the S&OP to
compare and contrast their responses
The terms of S&OP effectiveness measures and S&OP efficiency measures
were explained to informants prior to each interview to avoid
misunderstanding
Multiple sources of evidence (presentations, charts, reports, websites) to
triangulate informants responses and augment the data
Receiving regular feedback from peer researchers on case analysis, results
and tentative conclusions
The results were presented for informants and case companies
representatives familiar with the studied phenomenon to check for validity
Internal validity Pattern matching
Multiple informants respond identically on a same phenomenon
Visualize the data to enhance cross-case analysis
Apply different previous literature (supply chain performance measures,
S&OP process performance measures) to interpret cross-case findings
External validity Gathering rich data and a detailed case descriptions are provided so potential
relating to other contexts is possible
Reliability Case study protocol used:
Using an interview protocol for data collection across the cases
Developing an informants database Table AII.
Developing and continuously updating a case study database (including Case study
interview transcriptions, codes and memos) quality criteria

Corresponding author
Hana Hulthén can be contacted at: hana.hulthen@tlog.lth.se

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com
Reproduced with permission of copyright owner. Further
reproduction prohibited without permission.