Myth: “You Don’t Need Software to Operate your S&OP Process”
Implementing a repeatable S&OP process that delivers results is not simple. If it was supply chain professionals would not still struggle with this process some 30 years after it was first introduced.
This myth has been partially perpetuated by a few S&OP consultants who advocate that an effective S&OP process can be managed using spreadsheets or a spreadsheet-based tool. If all you have is a hammer everything looks like a nail.
The use of spreadsheets could support a pilot S&OP process and might even work for a very small, relatively simple business. However, spreadsheets were not designed to provide the flexibility and functionality required to operate a typical S&OP process.
Reality: “Lack of a Robust Planning Solution Leads to Disappointment”
While a limited scope S&OP pilot process can be adequately managed using simple tools like spreadsheets, email, and PowerPoint a high-value S&OP rollout cannot be achieved without implementing a dedicated solution designed to facilitate the S&OP process. (See also: Is the Crisis in Demand Management Being Exacerbated by Spreadsheet Dependency?)
Aberdeen reported that 65% of the time spent on a S&OP process run on spreadsheets is spent on gathering data. It is probably even worse than that because there is also significant time spent collating that data, manually analyzing it and then creating graphs and tables that are used in presentations and reports.
It is very difficult to conduct multiple “what-if” scenarios using spreadsheets and if you do they would be very basic and most likely unconstrained from a supply standpoint.
Another time intensive component of running a S&OP process is the facilitation of the process itself, sharing data in the right format, aggregation, units for each key user, getting feedback back from each user in a timely fashion, and running the series of coordination and consensus meetings required to get to a balanced and aligned plan.
Spreadsheets can’t help facilitate the process and using email is very cumbersome. Whereas a dedicated S&OP solution can streamline and automate the process through embedded collaborative workflow and rules-based exception messaging.
The checklist below highlights the critical solution capabilities required to support a comprehensive high-value S&OP process. You would be hard pressed to associate these capabilities with a spreadsheet.
S&OP / IBP Solution Capabilities Checklist:
- Integrate S&OP and Long-range strategic planning under one comprehensive planning platform
- Perform fast simulations, comparisons and What-if scenarios
- Compare actual performance to plan
- Develop financial and volumetric plans with multiple currencies
- Plan across global, regional and multi-divisional organizations
- Assess timing, impact and risk of new product introductions
- Visualize operational risk and develop risk management plans
- Assess risks around key components and vendor capacity
- Model multiple scenarios over multiple time horizons
- Translate between detailed and aggregate plans easily
- Support alternate product aggregations
- Include transportation plans and costs
- Build on existing planning and execution systems
What myths or untruths have you heard about S&OP?
Related: Sales and Operations Planning Myths - Part 3