In talking with a number of companies, sales and operations planning seems to be the hot topic. Why is there a such focus today on changing the S&OP processes of yesterday? Much has changed since the early days of S&OP. It seems that overnight the unexpected can throw your demand and supply plan out of complete alignment.
Global economies, unpredictable demands and interrupted supply are much more pronounced today versus when current, outdated S&OP processes were pieced together. Although S&OP processes may vary from company to company, there seems to be some commonality around the complaints of current processes and what people are looking for in the future.
Integration One description I heard was “Silo-based” S&OP. The silos described by the companies we talked to exists between S&OP participants, functions, sites and divisions. People are looking for one place to see a global view of demand, supply and financial data however all of this data rarely exists in one source. Today’s challenge is getting this data to a state where it can be useful. This seems to be the biggest cause of frustration with current S&OP processes. It also the reason why most S&OP process cycle times are measured in weeks and not days or hours.
Collaboration The second request most often heard is that all participants collaborate in the process. Companies have described their process as being linear. Those responsible for demand, shape and develop the demand plan and then pass it over the fence for supply rationalization which could include passing it to manufacturing or outsourcing partners often in different locations. Somewhere in there is a financial review but many times this linear process leads to decisions based on “gut feel”. This is part of the “Black Hole” in supply chain Lora Cecere describes. One person said it takes weeks to get the wrong answer. Those responsible for S&OP all need to be sitting at the same table including sales, marketing, demand and supply planners and your financial team.
Quick Evaluation With the current data challenges this makes it difficult to quickly re-evaluate demand plans rationalize supply and review optimal inventory targets to support growth and margins. This is also why S&OP participants tend to look after their piece and then pass it along rather than collaborating on strategy and direction. Being able to go to one place for all elements of S&OP will also enable you to develop exception based action plans. Conducting “what-if’s” with all participants around the table will enable a process that delivers a clearer vision of the future. It’s not that you will run the S&OP process every day, but when you need to run it, you can do it. You don’t have to wait for the next monthly planning cycle. Going to one place for all S&OP data elements, collaborating with all participants and quickly making sense of information to develop your S&OP strategy are three key requests often heard when launching an S&OP project.
What else would you add?