S&OP: Closing the Gap between People and Processes – Part 2

Part 1 of this series of blogs may be found here. Part 2 continues herein.

The origins of S&OP are not well documented. It seems to have emerged gradually with the introduction and evolution Materials Resource Planning (MRP). The Oliver Wight Company was the first on the scene in the 1980s to offer training and consulting focused around MRP at first, then evolving into the precursor of S&OP. The time phased planning of MRP is at the heart of S&OP.

Since then two factors have made for the very real promise of S&OP:

1. The evolution and prevalence of ERP systems with 
   • Right information in the all the right places at the same time 
   • Sophisticated demand, production, and transportation planning functionality 
2. The formal S&OP process based on a monthly operating cycle 

Many organizations have these things in place. Yet, their S&OP process does not live up to their expectations. There are countless articles, books, and seminars on S&OP focused on implementing it and then make it work. Our contention at DemandCaster is that it is not the S&OP process or the systems available to coordinate and manage the data. These are necessary but not sufficient conditions for S&OP. The real challenge is to get the people part of the process right. The real challenge is viewing S&OP as a Socio-Technical Process and then working diligently to improve the Process. In a sense this is the Mother of All Continuous Improvement Projects. Overall, implementing S&OP, on the macro level, is a two step process:

1. Get it up and running. This actually is the easy part. 
   • You can hire a consultant to help. You should assign a key mid-level manager or director to run it. 
   • The management team should approve the process.
   • The key however is to get started. Get it soundly organized and initiated. 
   • This part of the process is 3 – 9 months depending on the current level of planning in the organization. That is 3 – 9 months from management’s decision to implement until the day it goes live. 
2. Continuously improve every aspect of it. 
   • This is the harder part of the process.
   • This is where the commitment and dedication of the management team to make it happen is critical. There are no short cuts in this area. 
   • This part of the process is never ending and is best measured in years. 

Years? Yes, years.

This comes from companies that are deemed best-in-class at S&OP. The people in these companies that run S&OP believe it is all about Continuous Improvement, constantly getting better in every aspect bit by bit, sub-process by sub-process, month by month.

Consider why this is the case:

1. S&OP touches every part of, well, sales and operations. This includes the entire Supply Chain from Purchasing to Manufacturing to Logistics. This includes Sales and Marketing or is often referred to as the Demand Chain. It includes finance who need to evaluate the collaborative plans in S&OP against the budget. 
2. It is about getting these organizations that are not often for cooperation and collaborative planning to indeed cooperate and collaboratively plan. This is no small task. 
3. Ultimately, it includes the management team. They are the only ones through their “ownership” of the process and by their review of S&OP each and every month can encourage, cajole, and demand (when necessary) that all the functions mentioned in the first bullet actually cooperate and collaboratively plan to the drumbeat schedule of the monthly S&OP cycle.

Based on the above, there are a lot of moving parts in the S&OP process.  Beyond that there are inter-department and functional, let us call them, “intricacies” that are embedded in the culture.  These intricacies do not automatically disappear with the launch of S&OP.  It takes both a firm resolution to make S&OP work and a dedication to the Continuous Improvement thereof to make it work.

More to come in part 3.