How to orchestrate your S&OP: Move from cacophony to harmony

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View of symphony orchestra performing from sheet musicThere is much I have learned as a business professional from being a musician. I started playing the flute when I was ten, was performing with a professional orchestra as a teenager and completed a bachelor’s degree in Music. One of the most famous pieces of music is “Ode to Joy” from Ludwig van Beethoven’s Ninth symphony, a masterpiece where the entire orchestra performs with a choir for the finale. To prepare for a performance, each person practices their parts individually – the violins, the cellos, trumpets, percussion – but Beethoven’s Ninth does not reveal the overarching melodies and intermingling harmonies until each person and section comes together under the direction of a conductor.

Perfect harmony is how a well-executed S&OP process could work for organizations but rarely does. In my career in supply chain consulting, I observe the challenges faced by functional leaders in bringing planners together with marketing and finance to make effective decisions for their supply chains. During a typical monthly S&OP cycle, a demand review occurs, is passed off to supply for a review, an integrated reconciliation is attempted in the third week of the month and is finally evaluated by senior business management. While the intent is for each function to work collaboratively to make decisions, the orchestra often fails to perform as one. Business processes remain misaligned and siloes stay entrenched due to lack of cohesive metrics. Harmonized handoffs between processes and end-to-end supply chain visibility do not exist.

Highly functional silos

Organizations often operate in highly functional silos. Like a violin section in an orchestra, each function (demand planning, manufacturing, logistics) is optimized but rarely effectively evaluated across the network. In most monthly S&OP cycles I have observed, each function evaluates its own plans, which it simply passes down the line to the next link in the chain. Too often teams don’t do the hard work to evaluate conflicting plans or negotiate tough decisions on to how to respond to changes in demand and supply. Integrated reconciliation meetings are often poorly attended or simply ineffective when decisions are unable to be made due to misaligned KPIs, insufficient visibility to data and siloed mentalities. Imagine the chorus for “Ode to Joy” coming in at the beginning of the final movement of Beethoven’s Ninth, rather than at the end.

Technology and data developments over the last decade are enabling companies to increase visibility across these silos, but visibility alone rarely breaks down the barriers to truly perform as an orchestra. The individual sections remain. S&OP leaders to try to promote cross-silo decision making during the monthly cycles but often fail because each silo is determined to look after their own metrics. A high-tech manufacturer I work with is excellent at demand planning, but the process falls flat when punted to supply planning for execution. KPIs are misaligned, with no understanding of constraints on either side, and the monthly S&OP cycle is essentially stopped. In a situation like this, the orchestra is not performing cohesively.

[Read more: S&OP + S&OE: The key to driving supply chain agility]

Orchestrating in slow motion

Supply chains work in similar ways to an orchestra. No part is complete without its whole. Raw materials must be sourced and manufactured into the end product. Deliveries must be arranged and prioritized, and customer trends understood and incorporated into long-range planning. This concept is often lost on functional leadership, which is focused on delivering on their own objectives.

However, successful orchestration does exist. I worked with an aerospace manufacturer that carefully defined its S&OP process and how each function’s processes and metrics aligned to one another, and then developed a plan to make trade-off decisions. But it took time, and the process to gather the data was manual. Visibility across functions was limited, the ability to evaluate scenarios to make trade-off decisions took time, and by the time the analysis was complete, it was almost always too late for its customers. The orchestra was playing cohesively but the piece was taking too long to perform. The audience was asleep.

Learning to listen and respond together

For decades, the foundation of supply chain transformation has been people, processes and technology, and more recently data has been added as a key factor. These elements are the levers organizations can use to varying degrees to perform better as an orchestra. Leadership is also important. The conductor of a supply chain orchestra can enable people across silos to listen and create a constructive decision-making environment enabled by data and technology.

Having a mature S&OP process, like the aerospace manufacturer playing in slow motion, will only go so far. Ultimately, this organization implemented concurrent planning technology to harmonize the data across their supply chain and provide transparency across silos. This transparency went beyond having simple visibility to the flow materials in their supply chain and emphasized how their data was used, by whom and when. Not only did this more than quadruple the speed of their S&OP cycles, it enabled real-time scenario planning where planners and executives could make better decisions ahead of their customers. With these changes the orchestra was perfectly in sync and the audience wide awake! Learning to orchestrate an effective S&OP process takes an organizational commitment to listen to each function, align processes and metrics, and if needed, implement technology to gain transparency across the organization. With these elements a supply chain can make beautiful, harmonized music becoming the “Ode to Joy” for organizations.

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