I recently led the successful deployment of global S&OP in a top 10 pharmaceutical company. It covered all business units and regions in this $40 billion turnover organisation and lasted 3 years. During that time we learned a lot – and boy, there are some things I wish I’d known at the start.
1. Most Expert Advisers Cannot Engage Commercial Leaders in S&OP
I took on the leadership of the project with a background of 20 years’ experience as a senior commercial leader, not an S&OP expert. I was therefore relying on the subject matter experts to help me energize and engage my commercial colleagues (and others outside the supply chain) in S&OP.
However, when asking the simple question ‘why should a General Manager support and lead S&OP?’ I found that most experts would either;
(a) list all the supply chain parameters that would be improved (forecast accuracy, plant utilization or OEE, adherence to plan etc) – most of which the GM had never heard of, much less cared about day-to-day, or;
(b) list a series of very high level statements on improving revenue, margin and growth without explaining how S&OP could shift company performance on such major fundamentals.
This immediately creates a credibility gap and the critical engagement of commercial stakeholders can be lost at the first interaction. The learning for me was clear – S&OP process is an enterprise-wide process and the deployment team must have the genuine capability to connect and engage cross-functionally with credibility.
2. It Doesn’t Need to be Perfect
There is no shortage of advice on process design for S&OP. The basic concepts were established over 30 years ago and a Google search on ‘sales and operations planning’ yields 25 million results. Creating and documenting the S&OP process is relatively straightforward but process descriptions tend to be very detailed, and I found that there was often a desire to deploy the detailed process across all business units and regions as rapidly as possible.
This leads to excessive expectation and at the same time overstretched both the deployment and business-as-usual teams engaged in the process. This, in turn, meant that initial expectations were at risk of not being fulfilled and at a time when engagement and sustainability was still fragile.
The learning here is that the process does not need to be perfect and all-encompassing from day 1. The chances of success can be greatly improved by;
- Identifying key business areas in which to start deployment (and these could be specific brands, a business unit or a geography) and focusing attention and quick wins only on these
- Focusing on specific aspects of the overall S&OP process to address first (e.g. starting with the demand forecasting and review process)
3. It Takes Longer To Embed & Stabilize S&OP Than You Expect
The initial plan was to train and coach the key stakeholders (e.g. General Managers, Demand Planners, Supply Planners, and Financial Controllers etc.) in the new process over a period of 3 monthly cycles. Following ‘classroom’ training on the process, hands-on coaching and practical support was tailored to the role and level of each key participant. The degree of coaching was gradually reduced over time so that ownership, backed by the key capabilities to deliver it, was built up in each individual.
In some cases, this worked perfectly, in other cases further cycles of support were necessary (for example 5-6 months, rather than the planned 3 months). However, the quality and stability of each individual S&OP activity (e.g. a Demand Review Meeting, or DRM) was greatly enhanced by this extended support. This had a disproportionately important impact as the shortfalls of a sub-optimal DRM, for example, had a knock-on effect through the rest of the monthly S&OP cycle and could quickly affect confidence and commitment to change.
4. Eliminating Duplicate Processes Is As Important as Deploying The New S&OP Process
The natural focus on most S&OP deployment initiatives is to create and execute the new S&OP process. However, the impact of allowing duplicative processes to continue operating in parallel to S&OP is not always recognized (e.g. a business unit performance or financial review or elements of the corporate financial planning and forecasting processes). In my recent deployment, there were many pre-existing local or function-specific processes to fill the gaps that existed before S&OP was adopted. These were often locally developed, and were changed whenever a new leader took over a business area or team as their own personal preferences were adopted in their teams.
In the early stages of deploying the new S&OP process it was critical to deliver incremental value, but also to secure and sustain the engagement to maintain the new standard process. Where the goals and outputs of the new S&OP process were duplicated in other processes, then leaders started to make choices on which process they would favor and support. The lack of commitment to the corporate standard and losing management focus became clearer as the deployment progressed.
I learnt it is critical to establish the corporate governance of the new process in the initial stages of deployment and to ensure that there is sufficient senior management commitment to eliminate parallel processes.
5. Senior Leaders Need Help, but May Not Ask For It
Most S&OP deployment programmes readily recognise the importance of senior leader engagement. However, engaging and working with senior leaders is often not well targeted to achieve an impactful and sustained contribution from them. Furthermore, these individuals may not recognize the support they need to lead and sponsor the process effectively. My experience was that, as a programme team, we initially invested time in 1:1 meetings with senior stakeholders to explain the overall flow of the S&OP process, its benefits and the key inputs required from them in the monthly cycle (e.g. sign off of a demand forecast).
These leaders frequently did not have the personal experience to support the process in the same way they would in their own functional area. This was especially true for commercial leaders who had not been involved in S&OP before. Supporting these people by providing tips and tools on how to execute the leadership role was very well-received – even if not explicitly requested in the first place.
My specific learning in this topic is that there are several areas of support that senior leaders found useful;
- A cheat sheet to ask what process metrics and behaviors he/she should ask about when on a visit to a business unit
- Contracting with the leader to observe and provide feedback on the execution of their S&OP meetings
- Having access to peer support networks, for example by connecting a GM to a peer in another region where the team have made positive progress and the leader has established good practice in their process leadership
The successful deployment and sustainability of S&OP is undoubtedly a tough cross-functional challenge. I believe that combining the learnings above with the widely available information on S&OP process design will give you a head start for a successful deployment – good luck!