The Top 4 Actions You Can Take to Accelerate S&OP Effectiveness

Why, after more than 20 years, does S&OP still top so many executives’ lists as an area of great opportunity for supply chain improvement?

The truth is that most companies have plateaued with the return on their efforts, yet they expect more from such a promising collaborative process.

We decided to examine these missed expectations and create a webinar to provide four tips for taking immediate action to elevate from the plateau and accelerate S&OP effectiveness.

Here are the four tips we offered in our recent live webinar:

Get the Data – Trust but Verify
First and foremost, you need to critically assess the quality and timeliness of the data upon which you base your decision making. Process and planning are based on information – which is based on data. Are you confident in the data that feeds your knowledge? Look closely at the source, timeliness, and completeness of each source of your data. Can you still commit with confidence based on your findings?

Widen Your Sphere of Influence
You need to more directly involve your suppliers and your customers in your S&OP process.  Here’s the plateau we see companies typically stuck on: they’ve done well getting Finance, Sales, and Supply Chain on one enterprise plan on a periodic – say quarterly or monthly – basis but once they walk out the door of that meeting and execute, their worlds’ fall apart into misalignment. Suppliers can’t do what the S&OP plan assumes. Customer demand changed after they submitted their forecast for the meeting. By involving your partners up front, you’ll get a real-time dose of reality to break the plan earlier and repair it much earlier in the cycle - and faster - for better returns over the planning period.

It helps to assess your S&OP maturity now, and target what you would like to achieve moving forward:

• Level I: Departmental planning

• Level II: Co-planning between departments

• Level III: Enterprise S&OP – Most companies seem to be here, with all three teams uniting on a single, enterprise plan.

• Level IV: Extended S&OP – By extending to Level IV and involving key partners, you’ll proactively, collaboratively plan and compress the planning cycle.

• Level V: Network S&OP – By extending to Level V and collaborating with your suppliers’ suppliers and your customers, you’ll unite as one to manage the supply chain. The good news is that opposed to other maturity models, Level V: Network S&OP is truly achievable by most companies and their trading partners.

The challenge is that this happy picture breaks down quickly when you return to the reality of today’s supply chains: Your departments and your partners work on a LOT of different systems. Systems that don’t talk to each other. Since they don’t talk to each other, the dirty secret of supply chain is that the world is run on email, faxes, and many, many spreadsheets to knit this hairball of data together. The result is fragmented, asynchronous data. If you make decisions based on flawed data, your assumptions are flawed and therefore your results will not achieve your plan.

If the maturity model prescribes Network S&OP, then the world needs a Business Network, in the cloud, to unite planning, processes, and a network that enables all the participants to collaboratively plan and execute.  

Mind the Gap
We believe there’s been an imbalance of effort spent on S&OP, when the reality is that the real action happens in the time between periodic S&OP meetings – in execution. To get beyond the plateau, companies must focus more attention on Sales & Operations Execution (S&OE). You need to determine how your enterprise departments, your supplier partners, and your customers can team and manage the intra-S&OP phase. You need to determine how you can create the periodic feasible S&OP plan then integrate S&OE teams to align, collaboratively re-plan, and execute to manage sales orders and manage commitments and shipments to support the plan.

Achieve the Plan
To make “the Plan”, companies need to monitor network process execution and continuously course correct based on changes/disruptions and according to your strategic priorities.