Guest Author: Steven Walter, Sr. Manager, Consulting at enVista
Sales and operations planning (S&OP) is not just a process implementation, it is often a significant cultural shift, requiring considerable time and investment to execute successfully. As interdepartmental, intercompany integration and external collaboration have become critical to success in today’s supply chains, many companies have rightfully turned to S&OP. However, rushing into the new process without proper preparation could lead to missed deadlines, project budget overruns, ineffective processes and in some cases, process failure. Before jumping into S&OP, consider taking a detailed look at five key areas of your organization to ensure they are properly prepared to start your S&OP journey.
Change Readiness
For most organizations, S&OP is a massive change for most stakeholders with new and moving responsibilities, shifting thought processes on goals and decision-making – and sometimes substantial changes to the organizational structure itself. A study from Supply Chain Insights showed that four of the top 10 reasons companies named for S&OP challenges were change management related. Taking an honest, unbiased view of your organization’s readiness to change is necessary to develop the change management strategy needed to drive acceptance and understanding of this powerful, but intrusive new process.
Demand Planning
As with most supply chain-related processes, S&OP really starts with demand planning & forecasting. Like any process or system, the phrase “Garbage in, Garbage out” rings true here. An inaccurate, unvetted demand plan will typically drive a return to siloed decision-making downstream and create a lack of trust in the “official numbers”. It is critical to evaluate your demand planning and forecasting people, processes, and technology to ensure you have the foundation in place to run an effective S&OP process. If identified early enough, tools can be put in place to cover the gaps, but if left unaddressed, these gaps can lead to failure in your S&OP process before you even begin, and a reversion to every department having its own forecast.
Supply Planning
In many organizations, supply planning is the one that has the largest shift in responsibilities/decision-making process. Supply teams are asked to collaborate with the rest of the organization, step back from execution and think long-term, and consider all costs/benefits before making decisions. If the team is not ready for these changes/does not see the benefits, they could reject the process and become more passive participants. Assessing your team before implementation will not only allow you to find any process gaps that need to be addressed, but it will also give you an opportunity to highlight pain points for the team that will be improved by S&OP and begin the groundwork of change management.
However, it also means that sales or commercial leaders cannot just exert their will on the supply side teams. Are the supply teams prepared with data and facts to push back on knee-jerk reactions?
Data Availability
In the Supply Chain Insights survey mentioned earlier, the number one challenge companies named in S&OP implementation was availability and accuracy of data. S&OP at its core is a data-driven process, you must have correct and trusted data available on time to drive each step in the process. We have seen many implementations drag on for months longer than needed because data was not available, or data was proven to be inaccurate after several cycles of the S&OP pilot were already completed. Overlooking foundational steps and preparation such as this ultimately leads to dysfunction, extended timelines and wasted time, unnecessary rework, and ultimately disengagement from the team. Assessing and validating data in an assessment will function as a dry run for your team to ensure the required data is readily available, at the right level of detail, for the proper time window. Hitting the ground running with validated data will set you up for long-term success in your S&OP journey.
Organization Structure
S&OP focuses on driving organizational alignment but is predicated on the fact that your organization is structured to support healthy collaboration. Assessing your current organizational structure will help you figure out the “people” gaps to S&OP success. In this step, you will be able to show and/or hire S&OP process leaders and sponsors which are critical to successful implementation and process acceptance. You will also be able to evaluate the skill sets currently on your team to be sure you will be able to manage the analysis and strategic thinking needed for effective S&OP.
S&OP is a well-defined process, but it is not meant to be “one size fits all.” Each company should develop and run their S&OP process slightly differently to best fit their business needs & goals. Assessing your current state and designing a process and implementation strategy to best fit your company’s reality is the best way to set your S&OP process up for long-term success.
After this quick checkup, you are ready to move forward with a full implementation under the coaching of the seasoned S&OP experts at enVista. Reach out, and let’s have a conversation.®
