Dilbert explains the value of S&OP.

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Well, not actually.  But this Dilbert cartoon, despite referring to the budgeting process, definitely brings out the biggest challenges of S&OP, namely collaboration and alignment.  Because S&OP is a cross functional business process, it is natural that getting alignment is one of the most difficult, but most valuable, outcomes of S&OP. Often, collaboration will result in alignment, but if the trust level is very low, you may need to address alignment first.

Tom Wallace in a recent blog titled “Cross-functional collaboration is not a pre-requisite for successful S&OP: it’s a result” states that:

Improved teamwork is a natural by-product of  S&OP. I tell people that if they’ve implemented S&OP and have not seen an improvement in teamwork, they didn’t do it right. It’s that simple. Enhanced teamwork follows successful S&OP just as day follows night.

Of course it isn’t that everyone is a liar as in the Dilbert cartoon, but rather that frequently the objectives and performance measures of individual functions are not aligned, preventing what Tom Wallace calls teamwork. All too often the VP of Operations is measured on asset utilization and the VP of Sales is measured on revenue or margin increase.  These are often in conflict because satisfying the most demand often means doing so ineffectively from an asset utilization perspective, especially inventory.  Conversely, the most efficient asset utilization often does not lead to the most effective demand capture because the tendency is to have long production runs to reduce change-overs, leading to high inventory levels and a product mix that may not match market demand. But we have to get beyond having meetings at which conflicts are discussed, to a process in which different functions can explore alternative what-if scenarios collaboratively.  They need to have immediate feedback on the effect their decisions have not only on their own metrics, but also on the corporate metrics and other functions’ metrics.  When people can compare what-if scenarios side-by-side and understand the broader consequences of their decisions they will often behave in a less parochial manner. I recently I presented at the Sales and Operations Planning Summit 2011. My session was on ‘Continuous S&OP for high-tech/ electronics manufacturers.’ We just posted the PPT deck and recording from my presentation. Make sure to check it out! Video recording: http://www.kinaxis.com/campaign/continous-sop-for-high-tech-electronics/ PPT Deck: http://www.kinaxis.com/downloads/pdf/Kinaxis-Continuous-Collaborative-SOP-2011-01-27.pdf

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