Sales and Operations Planning (S&OP) – How to Stay the Course

I came across this blog on sales and operations planning (S&OP) from the Institute of Business Forecasting and Planning (IBF) the other day. The article, S&OP and Culture Change: How to Stay the Course, written by Kathleen Winter, describes how corporate culture can derail an otherwise successful S&OP implementation. Interestingly, it also describes the warning signs to look for if your S&OP process has fallen off the tracks. I suggest reviewing the blog to get a more detailed explanation of the warning signs, and what you can do to counter each, but I’ll summarize things here.

S&OP Warning Signs

1. Meetings are occurring outside of the S&OP process and alternative supply and demand plans are being discussed.
2. People are trying to eliminate relevant data, shorten meetings (or get rid of them altogether!) and find shortcuts to achieving solutions. S&OP participants are complaining there isn’t enough time to plan.
3.  There’s a lack of accountability, with meetings ending without ownership for actions or results. Winter describes scenarios where the forecast is far above the outcome, the productivity is far below plan, and customer service levels far below expectations.

These are all clear signs that corporate culture is impacting your S&OP implementation, but let’s not stop there. Here are some additional indications your S&OP process may be in serious trouble:

Leadership not in attendance – The S&OP meeting is primarily about setting the course for the company, but if key executives are missing, it could spell trouble down the line when those same executives review the decisions and decide to overturn them. Almost as bad are meetings where the leadership group’s representative doesn’t actually have the authority to make necessary decisions, meaning organization-wide buy-in can’t be achieved.

Data isn’t believed – There are a number of ways this can happen. In situations where Excel is used to model the S&OP planning process, there can be errors in the workbook, errors in the data extract and data import errors. I’ve also seen situations where different groups involved in the S&OP process each bring their own versions of the Excel workbook. Each is modified slightly, providing different results, when they should be uniform. A couple of meetings like that and it won’t be long until users have no faith in the data used to run the business.

Plan performance isn’t monitored – A plan is useless if it gets created then ignored. The best way to ensure a plan is followed is to track performance and let everyone know the plan is being monitored. While looking at performance plans as part of initial S&OP meetings is good and should be done, evaluating performance mid-cycle is critical. By monitoring performance mid-cycle, you can catch issues earlier, creating a better chance of resolving the issue before it becomes a crisis that impacts your bottom line.

So, do any of these S&OP warning signs look familiar? Do you have suggestions on how to counter these issues? Comment back and let us know!

Additional Resources

• S&OP frequently asked questions