S&OP is an incredibly powerful, and effective business planning & execution process. It has seen a resurgence in interest over the past 12 months as so many businesses emerge from what history may eventually coin as the ‘Great Recession’. So why the talk about “kryptonite” (Superman’s weakness if you don’t remember) to S&OP? We’ll get to that.
In today’s business climate, it has become so important that businesses focus on three imperatives:
1) Get business planning right the first time, as much as possible
2) Build stronger business teams
3) Start linking current operations to long-term growth strategies
S&OP is a ready-made solution to address these challenges head-on. With its structured processes, organization and procedures, S&OP can bring a strong sense of direction and order to our businesses.
Generically speaking, though, there is variance from business to business as to what S&OP looks like on the surface. Underneath its core, there are basically 5 individual phases. These sequential phases are designed to gather information for building a proposed business plan, perform supply checks, and reconcile Demand / Supply gaps that may surface. Then, finally, the process culminates in two levels of S&OP meetings. The entire process is designed to garnish participation in developing, and alignment on the proposed go-forward Business Plan by key players and executives alike in Sales, Marketing and Operations.
Other aspects of S&OP’s structure are its monthly, very predictable cycle. S&OP also integrates at the Business Planning phase that includes critical business issues such as Innovation Pipeline opportunities (NPI/NPL), promotions planning, information from Category Management (if available), and other Business Intelligence sources. Additionally, the 2 levels of S&OP meetings serve as important open forums for discussion, and decision-making on key business issues. Quite literally, from stem to stern, S&OP serves as a business-centric process, which could almost, after the passage of time, become self-steering.
While the structure and ordered processes may be the strength of S&OP, reliance on these alone as a strategy to drive for success in your business could possibly expose a weak point the “Kryptonite” to S&OP. How can this be? How can a business-centric process that is so vital to the planning of our business activities over a long time horizon (18+ months) be so strong, but at the same time become vulnerable to a possible internal weakness?
Please consider this. S&OP actually has two sides, the first is very recognizable as discussed above– it is the sum total of its strengths as derived from its structure, ordered processes, and its cyclical nature. It is true, that you can’t even get out of the “starting block” unless you have the structure of S&OP. Make no mistake, structure is the foundation. But the other side of S&OP – its Drivers are equally important, perhaps even more so.
The Drivers of S&OP are the culture of the organization, the behavior of its employees, and values…those aspects of the organization which are most important to us as individuals, we value them above all else.
I will interject here with a question. Which organization below, in your opinion, will be more successful on a sustainable basis?
ORGANIZATION #1: An organization in which everyone participates, provides input and analysis, one in which everyone attends the meeting? Things are precise in this organization, but, perhaps, things sound sort of routine here.
ORGANIZATION #2: An organization in which there is extraordinary engagement by all, collaboration and consensus decision-making flourish, teamwork is viewed as the only way to work, and more specifically, there is an undercurrent of passion to win and succeed, coupled with inspirational leadership.
I submit that you better not get in the way of Organization #2 type of Super-charged S&OP. Better yet, you should probably hope and pray that your competitors don’t bottle this either.
So, what about the “kryptonite”, the weakness of S&OP notion? Well, I submit, if you allow your S&OP to just move along, if you rely on its structure alone to control the pace of your business then you may just be tempting exposure of its weakness.
Now, how do you get around and beyond this weak point? Try this on for size…Lead by example, your employees will emulate. If you want engagement, then become the most engaged. If you want teamwork to be the only way of working amongst your employees, then first make sure your executive team operates this way–knock down functional barriers, and before anything else, collaborate and increasingly utilize decision by consensus as a way to bring about wining solutions. And try a little passion, not the red-faced yelling type of passion. But, I mean the type of passion you see when nothing else matters, full speed ahead, the, “I am all in” type of passion – show your employees that you will be passionate at helping them win and succeed.
Your comments are welcome.
Richard P. Kerivan