Avoiding the pitfalls of Sales & Operations Planning (S&OP) process

S&OP processes have really evolved with recent advances in technology and computing. Key aspects of any S&OP process were visibility, collaboration and shared insights. Data and analytics tools and technologies have acted as enablers to help S&OP managers successfully deliver these aspects of S&OP process.

However, technology is always an enabler, not a solution in itself. There are some key pitfalls that you still need to keep in mind when you are trying to implement S&OP process in your organization. The list below is not exhaustive but some of the most frequent ones:

Lack of executive team involvement: The most significant barrier to S&OP performance is the executive team’s understanding of supply chains as complex systems. Mature S&OP processes and teams spend most of their time on education and alignment of their executive teams. Before starting S&OP engagement, spend plenty of time planning on figuring out the best way to educate and bring the executive team on board.

Make sure you don’t ask for their involvement without educating them first on the intricacies and benefits of the process.

Forgetting the importance of agility and alignment: Agility and alignment improve with S&OP maturity, but only if you build with the goal in mind. Consciously craft the organizational map for improvement with a clear definition of process impacts and technology evolution as the goal changes. Each step requires a redefinition of  process and technology.

Ignoring the complexity of Supply chains: Supply chains  are becoming increasingly complex and as you know, highly cross functional. Make sure you work cross functionally with a set of consistent metrics like forecast accuracy, customer service, inventory levels (days of inventory or inventory terms), profitability and revenue growth/market share. Focus on organization gain an understanding of systems.

Continuing to use spreadsheets: Trade offs of Supply chains CAN NOT be modeled in a spreadsheet. Period. One of the best candidates for leveraging analytics applications (customized or off-the shelf) is the S&OP process. Exploit the advances in technology and computing and invest in a S&OP solution.

Continuing to manage metrics in silos: One of the great benefits of an effective S&OP process is the management of organizational trade-offs. However, as you train the members of the team, help them to understand the trade-offs between metrics for your organization and to never manage metrics as single entities in the absence of a total systems approach.

Not defining clear governance structure: You may have defined a robust process and may have implemented a world class S&OP solution but if you don’t have a clearly defined governance structure in place, the chaos that the process was supposed to eliminate will still prevail. Make sure all parties across all regions clearly understand their oles and also have a good understanding of interfaces/contact points in other functions who are involved in the S&OP process.

 

 

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