Much of the international discussion about S&OP assumes that companies can balance demand and supply by improving forecasts, integrating data, and aligning departments. However, the reality is different in a small economy such as Croatia, particularly one that depends heavily on tourism, experiences extreme seasonality, and relies substantially on imported products.
To explore these challenges from a practitioner’s perspective, I spoke with Mirjam Kasapović, an experienced tourism professional who has worked in large Croatian tourism companies. Her observations reveal that supply chain planning in tourism is not only about forecasting and inventory. It is also about education, cooperation, institutional support, trust, and the ability of an entire supply network to respond to dramatic seasonal changes.
Seasonality affects the whole supply chain
Large tourism companies are generally in a relatively strong position when planning their annual requirements. Hotels and resorts can estimate how many guests they expect, how much food and beverage they will need, and when demand will reach its peak.
The greater challenge often lies on the supply side.
During the tourism season, suppliers must provide significantly larger quantities within a short period. To do so, they need additional employees, delivery vehicles, warehouses, refrigerated storage, and other resources. These capacities must be sufficient for the peak season, although they may remain underused during much of the rest of the year.
As Mirjam explains, this increases the cost of the entire supply process. Suppliers carry substantial capacity-related costs, while the shortage of qualified labour has become particularly serious in recent years.
For tourism companies, therefore, S&OP is not simply a matter of matching an internal sales forecast with an internal operations plan. It requires understanding whether suppliers can expand their capacity quickly enough, and at what cost.
A tourism-dependent economy is a vulnerable economy
Tourism is one of Croatia’s most important economic activities, but excessive dependence on one sector creates considerable risk. Tourism is highly sensitive to economic downturns, geopolitical instability, health crises, weather conditions, transportation disruptions, and changing consumer preferences.
At the same time, Croatia’s domestic production base remains relatively limited. This creates a structural imbalance between the strong seasonal demand generated by tourism and the quantities that domestic producers can supply.
The problem is particularly visible in agriculture. Tourism companies can often estimate their annual requirements for fruit, vegetables, meat, and other food products with considerable accuracy. In theory, this demand information could be shared with agricultural producers in advance. Farmers could coordinate production, aggregate their quantities, and grow products for which there is already a predictable market. Longer-term agreements could provide greater security to both producers and tourism companies.
In practice, however, this coordination rarely reaches its full potential.
Various working groups and initiatives have attempted to connect agriculture and tourism, but the results remain limited. Small producers frequently lack the knowledge, resources, administrative capacity, and bargaining power required to organize such cooperation independently. Institutions could act as coordinators, help aggregate supply, provide education, and co-finance production, but stronger continuity, expertise, and political commitment are needed.
This leads to one of the central lessons for S&OP in small economies: planning cannot succeed at the company level if the wider supply ecosystem remains fragmented.
Why local sourcing is more complicated than it appears
“Buy local” is an attractive objective, particularly in tourism. Visitors increasingly want authentic food, regional products, and experiences connected to the destination.
Nevertheless, local sourcing creates several operational and financial challenges. Small producers may not be able to guarantee the required quantities, continuity, product standardization, or delivery frequency. Tourism companies therefore need to combine local sourcing with larger backup suppliers. Yet the situation can also be reversed: some local producers can sell their products through other channels at higher prices and may have little incentive to accept the purchasing conditions offered by hotels or resorts.
Mirjam recalled situations in which local farmers were simply not interested in selling under the proposed commercial terms.
This does not necessarily mean that buying locally is uneconomical. A locally produced strawberry, peach, or watermelon may cost 20% more than an imported alternative but offer better quality, lower spoilage, higher usable yield, greater freshness, and a stronger story for hotel and restaurant guests.
The problem is that these benefits are not always visible in a conventional purchasing spreadsheet. If management evaluates the decision only through unit price, the imported product appears less expensive. If the analysis includes waste, quality, freshness, customer experience, environmental impact, and destination branding, the local product may create greater total value.
S&OP therefore requires managers who can interpret numbers within a broader business context. A spreadsheet can calculate cost, but it cannot independently recognize strategic value.
Small markets struggle with specialized and luxury products
Another challenge appears at the premium end of the tourism market.
Suppose a high-end Croatian restaurant wants to offer a selection of exceptional international cheeses. Demand for these products may exist, but it is distributed among a relatively small number of restaurants located across a long geographic area, from Istria and Zagreb to Dubrovnik.
For an importer, the market may be too small to justify maintaining a continuous supply. The products may also require temperature-controlled transportation and specialized storage, making direct deliveries from abroad expensive.
This is a clear example of supplier-led planning. The restaurant may know what it wants to offer, and demand may exist, but its plan is ultimately constrained by the supplier’s assortment, minimum quantities, delivery schedule, and commercial calculations.
Croatia’s EU membership has increased access to suppliers from countries such as Slovenia and Italy and introduced more competition into the market. Nevertheless, market size and geographic dispersion continue to limit the availability of specialized products.
In such circumstances, S&OP is less about optimizing an ideal plan and more about building the best possible plan within supply constraints.
Beyond food and beverages, import dependence becomes even greater
The same challenges extend beyond food and beverages. Hotels and tourism companies also need furniture, equipment, small operating inventory, construction materials, spare parts, and technology.
Domestic production in many of these categories is limited, meaning that a substantial share must be imported. These purchases can sometimes be easier to manage because they are made periodically rather than every day. Quantities can be calculated precisely, orders can be consolidated, and transportation can be organized in larger batches.
However, import dependence introduces other risks: longer lead times, cross-border transportation problems, exposure to geopolitical disruptions, and reliance on a limited number of external suppliers.
For a small country, even apparently domestic S&OP quickly becomes regional or international supply chain planning.
ESG can unintentionally exclude small suppliers
Environmental, social, and governance requirements are becoming increasingly important in European supply chains. Large companies are expected to understand their carbon footprint, reduce waste, collect sustainability data, and assess the practices of their suppliers.
These objectives are important, but their implementation can create an additional barrier for small producers.
When a small farmer or supplier receives a complex ESG questionnaire, the problem may not be unwillingness to operate responsibly. The supplier may lack the time, knowledge, systems, and administrative capacity needed to understand and complete it. Some producers have limited digital skills, employ no administrative personnel, and are already overwhelmed by reporting obligations.
As a result, an ESG questionnaire intended to improve the supply chain may become one more reason for a small producer to abandon cooperation with a large buyer.
If tourism companies genuinely want to integrate small local suppliers, they cannot simply transfer complex reporting requirements to them. They must also provide education, simplified tools, guidance, and practical support. Otherwise, sustainability requirements could unintentionally favor large suppliers and further marginalize the local producers they are supposed to support.
S&OP requires trust before it requires software
The coordination of small producers is not only an operational matter. It is also cultural.
In post-socialist societies, concepts such as cooperatives and collective organization may still carry negative historical associations. Some farmers fear losing their independence, while previous unsuccessful initiatives may have reduced trust in institutions and other producers.
Digital platforms can improve visibility, consolidate orders, and coordinate transportation. However, technology alone cannot resolve this problem. Producers must trust the platform, the buyer, the institutions, and one another. This is why S&OP requires trust before it requires software.
Successful cooperation must preserve the independence of individual producers while creating advantages through shared logistics, aggregated quantities, common quality standards, and improved access to larger buyers.
Everything begins and ends with education
Mirjam repeatedly returned to one central conclusion: education is the foundation of improvement.
Education is needed at every level. Producers need knowledge about planning, quality standards, pricing, logistics, digital tools, and ESG requirements. Purchasing professionals need to evaluate total value rather than only the lowest unit price. Managers need to understand the strategic benefits of local sourcing and supplier development. Institutions need the expertise to design and implement long-term coordination mechanisms. Policymakers need a better understanding of how agriculture, tourism, logistics, education, and regional development are interconnected.
Croatia has many intelligent and capable people, but formal qualifications do not always provide the specialized knowledge required to manage increasingly complex supply chains.
A broader lesson for global supply chains
The Croatian tourism example has relevance far beyond Croatia. Many small economies face similar conditions: fragmented producers, limited domestic production, dependence on imports, seasonal demand, weak bargaining power, workforce shortages, and insufficient institutional coordination.
These conditions challenge the conventional image of S&OP as a structured monthly process managed within a single organization. In reality, effective planning often depends on capabilities that exist outside the company, among suppliers, logistics providers, institutions, policymakers, and educational organizations.
The perspective of a small, tourism-dependent European economy reminds us that the quality of an S&OP plan depends not only on forecasts, software, and internal alignment, but also on the strength of the ecosystem in which the company operates.
For small economies, the real question is not simply, “How can we optimize the plan?”
It is: “How can we build the knowledge, trust, cooperation, and institutional capacity required to make a reliable plan possible?”