A Little S&OP Clarity
By Patrick Bower
Every so often my head hurts. This typically happens while listening to sales and operations planning (S&OP) critics drone on about the need for executive engagement, reading about how short-armed the planning horizon is, or overhearing people complain about the lack of cross-functional engagement. Hogwash!
No doubt, engaging cross-functional executives in a long-horizon planning process is an optimal S&OP practice. But such comments are nothing more than generic, clichéd excuses for a low-level of process maturity. S&OP is a straightforward process, but practitioners too often make it out to be tougher and more complex than it really is — or should be.
Maybe the real problem is us, not some collective “them,” failing to help us evolve the process. I wonder: Are we engaging our stakeholders correctly?
As supply chain professionals and S&OP leads, we seem to whine a lot. We complain about the things we don’t have, rather than push forward and make the best of what we do have. Add to this a latent sense of insecurity about the relative quality of our processes, which is fostered by an army of software and consulting companies that have led us to believe that every organization should climb the S&OP maturity ladder to a nirvana-like level.
Such thinking is irrational. Many companies function quite well with midrange levels of process maturity and thus have no need — and no desire — to expand. Many of the industry’s talking heads advocate an expansive approach to S&OP. They endorse all sorts of bells and whistles, even though the reality of most S&OP implementations is a narrow, simple model.
Recently, I read a LinkedIn post that illustrated the point clearly. A supply chain consultant named Mark Holloway distilled S&OP down to four simple questions:
How much am I going to sell, and does that match my expectations?
Do I have the capacity and capability to make enough?
How can I sell or make more?
What is the financial impact of all of the above?
When I read this, I responded with a simple, “Amen.” Holloway also recommends a two-track path: First, educate colleagues about why S&OP is important. Second, explain what’s in it for the stakeholders and why they should actively participate — in other words, how S&OP will make their jobs easier.
As a practitioner, I don’t complain about a lack of executive engagement. I ask for it, and if I’m denied, I go out of my way to make sure the next meeting is crucial enough that executives will feel compelled to attend. And if that doesn’t do the trick, I consider that the process maturity may be stunted and weigh additional steps I could take to get buy-in. I work through the maturity gaps one by one, methodically and patiently. Like Rome, S&OP was not built in a day.
To attain executive engagement, I recommend the following steps. First, constantly reeducate stakeholders about the value of the process. At least once per year, I meet with the executive S&OP team and describe how far we have come by using S&OP. I highlight how it has improved forecast accuracy, fill rates and customer service metrics while reducing stockouts, obsolete inventory expenses and the risk of exposure to our working capital. I restate the value proposition — over and over again.
Second, educate new people. I jokingly refer to this as “preemptive S&OP brainwashing.” Every time a new stakeholder comes into our company, I walk them through the process. I show them the steps and provide them with ways in which my group can help them understand supply and demand. I give everyone the same message and description, which provides consistency in terminology and process adherence.
Third, create a connection between the process and the business strategy. At Combe, I align S&OP process steps and meetings with corporate innovation strategies, cost-reduction goals, Walmart on-time-in-full measures, working capital utilization and predictable outcomes. I supplement this with the occasional deep dive into a strategic subject area, adding metrics aligned to the year’s strategy statement or asking the executive S&OP team how they want to track progress. Do not assume that simply having the senior leadership team in the room will make the discussion more strategic. Prompt the conversation. This makes meetings more interesting and relevant to executives.
Finally, I am a strong believer that an S&OP lead should be the process persuader-in-chief. Good persuaders know how to gain and leverage the small intellectual footholds necessary to advance their companies’ S&OP processes toward higher maturity.
Holloway’s straightforward questions should be a guide for all S&OP leads. Use them to focus on the basics and move processes toward the appropriate end state. Persistence and patience are S&OP virtues, and acting (rather than whining) is the only way forward.
Patrick Bower is senior director of global supply chain planning and customer service for Combe. He is responsible for the company’s sales and operations planning process, order management, and third-party logistics management. Bower may be contacted at email@example.com.