I recently saw twitter post which linked to an article by Steve Banker at Logistics Viewpoints titled “S&OP is not about Technology. Wrong!”. This position clearly aligns with my thinking about the place of technology in S&OP. There was once a time when everyone believed that S&OP could be done in Excel. In fact, some S&OP guru’s still believe that S&OP can and should be a process that is detached from the planning and execution system. Proof is starting to accumulate that this thinking is clearly misguided. Ok, sure…if you are a small manufacturer with a simple supply chain (wait…is there such a thing as a simple supply chain???), you can probably get away with doing S&OP in Excel. Heck, you are probably doing your detailed planning in Excel anyway. But once your business grows to any size of consequence, you will need more than basic tools to be effective in S&OP. Steve raises three key points in his post describing why a manufacturer needs technology to achieve a robust S&OP process;
- A strong S&OP process requires collaboration. This requires that all parties need to be able to see and modify a common set of data. Not an easy process to manage with basic tools like Excel.
- You need to be able to see potential misalignments between the plan and defined goals. When those misalignments exist, you must be able to try different resolutions like promotions, while ensuring that you have the manufacturing ability to back it up. This means being able to identify and resolve issues at the mix level even when planning at the volume level.
- Your supply chain operates in units, but your executives operates in dollars. Your S&OP tool must be able to easily move from units to dollars and dollars to units.
I’ll add to this by saying that having managed an Excel based S&OP processes in a past life, S&OP cycle time is another reason why advanced technology is required. It typically took two weeks to pull together an S&OP plan (which actually wasn’t too bad. I’ve talked to one company where it took 6 WEEKS to put together the MONTHLY S&OP plan.) Traditional S&OP tools simply don’t allow you to react fast enough when you need an S&OP level decision very quickly. Now, don’t get me wrong. I’ll never say that technology alone will make for a robust S&OP process. I’ve written on this before in my post Is Excel the right tool for S&OP. In it, I identified the three pillars of S&OP; Process, Executive Commitment and Effective S&OP tools. An S&OP project that ignores any of these pillars will fail. The best tools without process will not work. The best tools and the best process without executive commitment will result in great answers that are ignored. An effective process and executive commitment without proper tools will result in sub-optimal performance and frustration amongst the team. I’ll say it again. You need all three elements for effective S&OP; Process, Executive Commitment and Effective S&OP tools. Your thoughts, as always, are welcome.