Hijacking sales and operations planning
It happened to lean and also to advanced planning and scheduling before that. Now it has happened to sales and operations planning (S&OP). Some of the firms that are offering implementation advice or technological solutions have hijacked S&OP. They have grown the approach into a potentially gigantic project. Businesses are consequently invited to focus on the bells and whistles, and thereby lose sight of the core ingredients.
All the publicity around S&OP to make companies aware of this powerful planning process is great. However, the concept has reached a size that makes it extremely difficult to understand, let alone implement. I challenge you to summarise its essence.
Jointly agreed and integrated demand, resource and supply plans; planning over 12 to 18 months for better visibility; cross-functional decisions backed by contingencies; formal decision-making and communication processes that focus on optimising the whole business, not just individual parts. This is my attempt at a summary.
I have seen so-called S&OP processes that were extremely elaborate. But at their heart, people still struggled to look beyond three or four months and often forgot about plan B or C. So as soon as reality hit, they reverted to fire fighting.
If you are launching a new product or running a promotion and if sales, marketing, production and purchasing have jointly agreed how to 'open or close the supply chain tap' effectively, then you have cracked it! This is the kind of mindset that true S&OP requires.
Do this all the time, every time and you have an S&OP process. Only then should you start growing the process and involve clients and suppliers. Only then should you venture into complex exchanges of data. Mind you, that's when you will need another shift in mindset because you'll be looking to optimise the whole supply chain and make money.
Hugh Williams is founder of supply chain planning specialist Hughenden.
