The 70% Enigma
I recently read a roundup of all the research Gartner Group has published around S&OP. I’m struck by the fact the research points to 70% of companies are at a maturity level of 2 or lower even after 30 years of S&OP chest beating by the supply chain industry.
You can’t help but ask the question, “Why are so many still struggling with S&OP after all this time and energy?”
It’s not just consultants and software companies shouting in the proverbial wilderness. End users are searching Google and downloading every bit of S&OP material they can get their hands on. It is clear, real companies and real supply chain professionals are genuinely concerned and trying their hardest to learn about and implement pieces of the S&OP puzzle.
So, where is the disconnect? What can we do to close the gap?
Part of the disconnect is the maturity curve. In looking deeper into the curve, I often ask, “Is too much emphasis put on the higher levels of maturity? Can anyone really define how much value comes from each level or how much effort is involved to take each step?” With 70% of companies stuck at step 1 are levels 3 and 4 even theoretically measureable or actionable?
How do we pull value out of this gap?
Like all good coaches I’m going to advise you to refocus on the basics. Master the basics and you will position yourself to capture the higher levels of value.
The good news is that as I read through all the research and case studies there is a clear direction as to what basic elements of supply chain you need to focus on mastering to glean the highest value. These are the things, that across the board, practitioners and consultants alike will agree are actionable and provide big value to companies striving to move up the S&OP maturity curve.
1. Master Demand Planning
All sources agree that one of the first steps to prepare for a successful journey up the S&OP maturity curve is mastery of demand. This means really mastering the process and technology of forecasting demand, shaping demand and integrating the demand stream into the global planning process.
Can you truly say that your processes, systems and organization represent a mastery of demand? If no then stop worrying about maturity curves and master demand!
2. Master Supply Planning
The next basic capability that follows close on the heels of Demand Management is Supply Planning. Have you mastered supply planning? Do you have systems, processes and organization in place that can give you a realistic supply plan? Can you visualize the supply chain network? Can you plan for the real-life constraints across the supply network? As a part of this have you integrated and mastered the manufacturing planning processes? Do you know where your inventory is in this network? Do you know why you are holding that inventory?
If you cant tell today what your supply plan is across your global supply process, then here is another basic area of mastery that needs attention before the ship of S&OP gets too far from the port.
3. Visibility to the Balance of Supply and Demand
Youve got the basics of demand and supply planning in place. Now you need to shine the spotlight of organizational visibility on it. Can you see the supply and demand plan in one place? This is a simple and basic concept and capability, yet most companies struggle with it. Get your supply and demand plans on the same page and the gaps will leap out at you. Then you can start closing those gaps whether organizational, process and/or system. This is basic and actionable.
4. Turn the Dials with Scenarios
Now that you’ve got your demand and supply plan on the same sheet you can begin to play the scenario game. The simple ability to make very basic changes in demand and supply and see the results! This is how we steer the ship. Ask questions around supply and demand and get usable answers.
Beat the Odds
Guess what? If you can do these 4 simple things you have now joined the 30% of successful and mature S&OP companies. You did it by focusing on mastering the basics, not obsessing about maturity levels.
It is simple. It is basic. Maybe that’s why 70% of the supply chain world can’t figure it out.
Fifteen years ago, I worked for a company that embraced Lean 6 Sigma as a core operating fundamental. Just about every member of the management team w