Getting to S&OP Success
Our oldest child recently graduated from college with dual undergraduate degrees in Biology and Music Performance. He worked hard to accomplish this in 4 years with a high GPA and we look forward to celebrating his future successes. He was successful, in part, by establishing a reachable goal. Sales and Operations Planning (S&OP), first introduced more than 30 years ago, has many documented examples of success. However, many companies still struggle to master the basics and get to a successful, repeatable S&OP process. Maybe part of the reason so many companies continue to struggle is that we have done a poor job setting reachable goals and celebrating our successes. No one would expect a child to go from pre-school to graduate school in one-step. Reaching higher levels of S&OP maturity is similar to the path to higher education with numerous consecutive goals to reach.
A short list of foundational issues exists that can keep companies from getting to S&OP success. Possibly the best approach to tackling these issues is to set reachable improvement goals for each and check them off as each are reached.
1. Lack of executive involvement
Executives must internalize the S&OP process so that they “own” it. Best-in-class S&OP processes have full support and active involvement starting at the top.
Goal: Socialize the “why” and “how” of S&OP. Clearly communicate the value of S&OP and educate the entire team (especially executives). Take on the role of change agent and be the force that pushes S&OP forward in the organization.
2. Lack of cross-functional alignment
This is a reward structure issue. The way functions are measured and rewarded must be addressed to ensure everyone is marching toward the same objective.
Goal: Adapt the measurement structure to promote cross-functional collaboration.
3. No “quick fix”
You can’t buy an S&OP process off the shelf and nail it up in six months. Your business is unique and so too will the process you implement to balance supply and demand and align your company’s financial strategy.
Goal: Develop and embrace a long-term strategy (roadmap) that empowers you to muscle past sticking points and reach a mature, best-in-class process.
4. Spreadsheets (and packaged databases)
92% of companies report their S&OP technology is desktop spreadsheet and database solutions.
Goal: Eliminate any reliance on tools that have proven to be universally error-prone and undermine the cross-functional integration of processes and data. Remember, many companies are experiencing a significant growth in the volume of data they manage, be sure your S&OP tools can keep up.
5. Lack of a technology roadmap
Companies that achieve best-in-class S&OP success are more likely to use tools tailored specifically to S&OP.
Goal: Establish a technology roadmap that matches the maturity phases of the S&OP journey and includes a plan to implement an S&OP technology platform specifically designed to facilitate and support your S&OP process goals both now and into the future.
6. Inability to execute
If a plan can’t be translated to how a product is produced and sold, it can’t be executed and won’t be used. Demand and supply plan convergence is enabled by an integrated technology platform that lets everyone work from the same playbook while addressing planning challenges.
Goal: Rather than whipping up high-level aggregate plans, create playbooks that translate the plan at the detailed execution level that adheres to actual production, procurement, and distribution constraints.
S&OP, the decision process used to profitably match demand to supply and align supply chain plans to business strategy, consistently ranks as one of the top three priorities for management teams. Research shows that it takes three to five years of continuous effort with many steps along the way to reach a mid-level of S&OP maturity. As with educating our children, maybe the best approach to reaching S&OP success is to set reachable goals, celebrate when the goal is obtained, and most importantly always establish that next goal.
Where is your company in its S&OP journey? What short and longer-term goals has your company established to mature its S&OP capabilities?