Creating a Worldwide S&OP Model at Elanco

Tracy Cherba

Tracy Cherba

S&OP is such a basic concept, yet so difficult to implement effectively across the globe.  It’s hard enough trying to get one S&OP process created, but how do you go about creating a process that works together across time zones, language barriers and cultural differences?  It’s a journey that takes time, patience and consistency.

Elanco is a world leader in developing products and services that enhance animal health, wellness and performance across the globe.  In order to make sure that everyone understands the impacts of demand and supply decisions around the world, we had to develop a process that would facilitate the communication and decision making process and make sure that the right conversations were taking place at the right time.

I was brought into the role of S&OP Global Leader with the assignment to create a process that would enhance our level of communication, create a consistent process that could be replicated across 5 geographic regions and provide tools / training that would work for all levels of the organization. S&OP is not a new concept to Elanco and has evolved over the years to mean many different things to different people within the company.   The key is working with all of the S&OP levels (Executive, Affiliate, Site, External Manufacturers, etc.) and S&OP participants (SC, Marketing, Finance, Quality, etc) to come up with a process that can work for everyone!

The first thing I did was ask for S&OP packets across the different areas of the organization – examples from a manufacturing site, a sales affiliate and an external manufacturing hub.  Who knew that this request would produce so many inconsistencies?  And in some cases it proved to be impossible to locate the packets at all.  Those packets I did locate, didn’t necessarily tell anyone what needed to be done next but included numerous amounts of slides.  Many of the meetings were long, didn’t include the right people and really didn’t have concrete actions coming out of them.  There were some examples where the S&OP processes were very good and could be replicated to other areas.  Developing a set of tools and training to facilitate the S&OP meetings was a necessary first step.  This includes setting expectations on what metrics will be reviewed, who will participate, what information will be communicated and the timing of the meetings.  It can’t just be left to up to those with “Supply Chain” in their title!

The Elanco S&OP structure includes an Executive level, 5 regions, sales affiliates located all over the world, 5 manufacturing sites and 5 external manufacturing hubs. If we didn’t have the right people in the room with a clear understanding of what the goals were – this was never going to work!  We couldn’t have “part-time” players…  and we HAD to have leadership support throughout all levels of the S&OP structure.

We’ve learned a lot along the way…  The S&OP rollout continues to be a journey that evolves as we learn more.  We’ve learned a valuable lesson along the way that one size does not necessarily fit all.  We’ve also learned that the global nature of this effort means that patience and flexibility need to be your friend!  While S&OP may be a basic concept – creating an S&OP process that people across the globe feel is valuable isn’t so basic!

I will also be elaborating on our Global S&OP Journey at IBF’s Supply Chain Forecasting & Planning Conference, February 24-26, 2013.  Hopefully, we’ll see you there.

Tracy Cherba
Supply Chain Global Leader – S&OP/OSSCE
Elanco Animal Health/ Eli Lilly & Co.

One Response to Creating a Worldwide S&OP Model at Elanco

  1. Hi Tracy,

    I liked your comments regarding rolling out S&OP globally.

    As you mentioned, this is a simple process in concept, but seems to be extremely difficult to implement, particularly, on a global basis. The good news is everyone is implementing S&OP. However, the not so good news is everyone is doing S&OP differently. In fact, some companies actually have multiple S&OP processes and all are different within their company.

    In research for our new book “Bricks Matter: The Role of Supply Chains in Building Market-Driven Differentiation” my co-author (Lora Cecere) and I interviewed 75 supply chain executives. In almost every case they said that there are two key fundamental ingredients for a successful S&OP process, 1) the commercial side (sales/marketing) need to participate in the process, and 2) there also needs to be a common set of performance metrics that everyone in the process shares. The biggest gap in their S&OP processes was convincing the commercial side of their business that they need to participate.

    I also recently submitted an article to the Journal of Business Forecasting (JBF) that will appear in the Spring 2013 issued entitled, “Putting “M”arketing Back in the S&OP Process”. If sales/marketing are not participating in your S&OP process then you are not doing S&OP, just “OP”. Most companies are really doing “OP” not really S&OP. Before you can truly get the process right you need a commitment from the sales/marketing departments to participate. In order to get their commitment you need to explain the value to them. In other words, what’s in it for them? Finally, you need to match supply to demand, not demand to supply. Sales/marketing are responsible for demand generation, and as such, should be responsible for the unconstrained demand forecast.

    The Finance department should hold sales/marketing responsible for creating the most profitable demand response, and also, hold operations planning/manufacturing responsible for creating an efficient supply response. By the way, the one number forecast doesn’t work in my experience. The financial plan is what it is, a plan not a forecast. The consensus forecast should be between sales/marketing only. No need for another financial input that essentially says, roll this month’s miss forward to next month and hold to the annual plan (also known as “Hold-N-Roll”). Operations planning should not be entering a forecast at all, as they are too fall removed from the customer, and they are not responsible for demand generation. They are responsible for meeting demand with the most efficient supply response.

    As you can see I do have a passion for this topic. I hope my response is helpful?

    Charles Chase

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