How to effectively implement an S&OP process? How do you lead your organization to a new planning process? Sales & Operations Planning is a global standard.
However, its implementation in many cases is quite a challenge. Therefore, the lasttime when I wrote about Sales & Operations Planning I focused on how to overcome the typical difficulties of implementation.
After the publication of that text, however, I received several questions about sharing good practices of conducting the S&OP process. So, to meet the expectations I present the positive standards that I recommend to use in every organization.
All the recommendations are based both on my own practice and on the conclusions from the experience of people professionally involved in supply chain planning in companies where the process actually works.
I have divided the recommendations into three areas: process, organization, as well as tools and data. Read and think – what else is missing from your own S&OP process?
- Establish a formal, regular, meeting cycle
- Work on one common demand plan for the entire organization
- Adopt a minimum 12-month planning horizon (even if your lead times are short)
- Establish a culture of planning not only demand but also production, distribution, and operations that does not stigmatize discussion of constraints
- Involvement of Sales, Marketing, Operations, and Finance representatives in the S&OP
- Taking responsibility for both the results and the process at board or senior management level
- Assigning formal goals to each participant of the process and reliable metrics of their performance
- Discipline within the organization – strict adherence to the findings of the S&OP meetings
SYSTEMS & DATA SETS
- Implementation of automated reporting of the KPIs used
- Maintenance of demand, production, distribution, and sales support plans in information systems connected to the applied reporting system
- Possibility to compare demand and production plans at the level of planning node details (SKULP – Stock Keeping Unit in Location and Period)
- Selection of tools enabling automated “what if” analyses in relation to demand and supply plan parameters
WHERE TO GET IDEAS FOR IMPROVING THE S&OP PROCESS?
These recommendations add up to a simple recipe for an effective Sales & Operations Planning process. However, “simple” does not mean “easy” to apply.
Introducing an S&OP process in an organization represents a cultural change. A change comparable to starting a healthy lifestyle. I think everyone will agree how “simple” it is to live a healthy life. Just eat regularly, have a balanced diet, exercise…
Seemingly simple and obvious. However, it is difficult for many people. Where to find the time and strength for all this? Where to get motivation and ideas from?
Analogically to entering a healthy lifestyle, introducing S&OP means a change in many dimensions. It requires a change in the way people in many areas of the company work.
So it starts with a change in mindset. Many times, as in the case of losing weight and modeling your figure, the method of visualizing the chosen target state and the gradual way of getting there works well.
It is worth to start with small steps method. Go to a conference. For example, the annual Pulse of Business planning conference.
Search for non-competitive companies actively conducting S&OP. Ask for a reference visit and learn about their process.
Finally, find an experienced expert who has implemented Sales & Operations Planning in other organizations and arrange for an audit of their Supply Chain Planning processes. Most importantly to finally just start the conversations within your company.
If after reading this post you feel the need to talk about any of the practices presented – don’t hesitate, contact me – I’m always happy to talk about your situation.
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I assure you that it’s worth signing up. You’ll always be up to date on how to effectively manage the Supply Chain and you’ll get an addendum to this article – Sample Meeting Scenarios for the S&OP Process.
In the meantime, I wish you the best of luck in implementing processes that increase your company’s profitability!