I recently asked an open question to the 12 people on our monthly S&OP Demand Planning call, “So, does anyone have any inputs on events, promotions, new or lost business… anything my team should incorporate into the forecast?…”
I had talked for the last 50 minutes, reviewing monthly reports on forecasted sales volume, actual sales in prior month, inventory, and planned production. We looked at current year compared to prior year, and current projections compared to the annual sales plan. All the data was in case quantities because I needed to use this forecast to drive distribution and production plans.
“Do we have a plan for closing the gap between Forecast and Plan in the next four months to hit the annual target?” the VP of Sales Finance chimed in to try to help draw something out of the people on the call. I appreciated the effort. He had been a strong advocate of the monthly Demand Meeting idea from the start, but his objective at the moment was the complete opposite of mine. He could see the gap in the forecast and plan we were reviewing and he wanted to know whether we were going to hit our annual revenue goals several months from now, while I was probing for details in case quantities of any efforts that were likely to impact our statistical forecast over the next few weeks. In 5 days I would be meeting with Manufacturing and Logistics for the Operations portion of our S&OP process, and they were concerned about the volumes, shifts and days they were going to asked to run for the rest of this month, so they could plan crews and overtime.
As the senior ranking member of the Channel Sales Team on the call, the VP probably felt compelled to speak. It didn’t really concern her that her team had declined to offer me any specific detail, probably because the only time they seemed to review case quantities was on my call. But the Channel VP knew when she was being called out by the Sales Finance VP on plans in dollars. “Well, I think the muffin forecast is probably 10% too low. We had some service issues two months ago, and we probably haven’t fully recovered yet. We sold more than you are forecasting last year, and we have several deals we’re getting ready to close.”
Another awkward silence.
Shortly after that the meeting ended in a stalemate. I explained that we couldn’t just add a 10% lift to the forecast across all muffin items, and build inventory for all items as a result, without a real plan for selling more of everything. The Channel VP was not ready to commit to the specific items and locations where she really expected more sales to materialize, but she was confident she would hit her goals. We exchanged pleasantries and parted ways. Next month’s meeting was already canceled as we were about to lose reporting for a month while we integrated a recently purchased company into SAP.
I didn’t know it at the time but in the coming years forecast accuracy would improve, inventory would be controlled more effectively, and the production schedule would become more stable. And it would be the last traditional monthly S&OP meeting we would have.
Senior Director, Sales & Operations Planning
Hear Steve speak on saying goodbye to traditional S&OP at IBF’S Business Planning & Forecasting: Best Practices Conference in Orlando Florida, November 4-6, 2013