We have all read, discussed and used the famous quote from Peter Drucker, “Culture eats strategy for breakfast” and S&OP is definitely a strategic approach to managing business outcomes that can get derailed in a culture clash.
For those of us in the supply chain world we all know the value proposition of Sales and Operations Planning. Through the S&OP process, customer and shareholder commitments are integrated in operations plan to simply and transparently align the resources (people, inventory, equipment) to attain the goals. The S&OP process becomes the CEO’s and the team’s agreement on business goals and aligns accountability to gives functional leaders clarity on resource requirements.
But what happens to S&OP when the culture of an organization slowly derails the planning process? There are three signs this phenomenon is happening and some suggestions to consider implementing to keep S&OP on track.
Meetings Outside the S&OP Process
What does it look like? Are there unnecessary meetings outside the S&OP process where a demand and supply forecast is discussed? These meetings are not the pre-S&OP meetings where sales and operations discuss the customer market, forecast, capacity or whiteboard planning scenarios on market disruptions. These are meetings where there is a separate set of forecast assumptions not aligned with S&OP and strategic decisions are being made contrary to the current S&OP executive alignment. Meetings outside the process happen in a culture that lacks accountability and transparency.
What can you do? Discuss with the Executive S&OP champion. My experience has been they are probably aware of the sidebars and they are struggling with how to influence. This is a culture dynamic that doesn’t change rapidly. Stick to the S&OP process and keep the accountability. Follow the approved agenda and ask questions to reconfirm the goals in the Executive meetings. As the business failures become evident, there will be over time a refocus to only one plan or further divisions will occur. Herb Kelleher is quoted as saying, “Culture is what people do when no one is looking”…so keep looking!
Diluted S&OP Process
What does it look like? Is there a push to eliminate relevant data, combine process steps, shorten meeting times or skip cycles? In today’s business, people continuously say there isn’t enough time, especially to plan. We all agree we should be looking for ways to streamline processes and eliminate waste, that is a given. But how many of us have spent hours in meetings when a key customer threatened to leave because of service levels or the sales department is saying there is insufficient inventory to meet demand or low productivity is causing service issues?
What can you do? Hold firm on the process steps and educate the naysayers on the value of each step. Leadership is about developing others and meeting people where they are. I’ve found that most people don’t’ understand S&OP and my role as a listener and teacher was valued. Be willing to use the process failure meetings as a teaching opportunity to help the team connect the dots between service disruptions and the S&OP document. Help your team to understand that “Failing to plan is planning to fail” (Ben Franklin) and none of them are failures!
Lack of Accountability
What does it look like? It is apparent when there is no accountability or an absence of ownership for the strategic plan. You will lead the S&OP process but the discussions in each meeting will be without ownership for the results and the forecast. The S&OP document will show a sales forecast far above outcome, productivity far below plan, customer service levels below plan and excessive resources in place. You will hear the discussions revert to the early stages of S&OP data trauma of “This data can’t be right.” No decisions will be made on how to change the business outcome, and there will be a sense of “one more meeting completed, check the box.”
Shareholders and investors are looking for a financial return. The concept is a simple one. As the CEO, the shareholders/investors give you a $1 to manage and they expect $1.25 after expenses in return. Yes, there can be market disruptions, acts of God, and a struggling economy but the CEO has been hired to secure and lead a team that delivers the $1.25.
What can you do? A culture that doesn’t have accountability in its DNA is a major challenge, not only for its employees but also for the S&OP process. As the S&OP leader this type of culture provides a great training ground for you as a professional and leader. Keep your focus on maintaining the formal S&OP process in place. Because even a small shift in accountability can make a difference so be an educator and resource for others in developing their business acumen and seek out like-minded peers to stay abreast of planning trends. Peter Drucker said, “Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you’ve got.”
Sales and Operations Planning can be a game changer for an organization if the culture simply embraces it and its simplistic transparency and accountability…and when it does, the return will far exceed expectations.
Kathleen Winter will be presenting at the 2015 IBF Supply Chain Forecasting & Planning Conference in Scottsdale, Arizona. Kathleen Winter has over twenty five years experience in life sciences, manufacturing and distribution as a finance business partner and supply chain leader for world class operations at organizations such as Miraca Life Sciences, Dell, NIKE, Lucite and Thomas and Betts. Her leadership and experience along with her financial and operational business acumen serve as her keys to helping teams deliver exceptional results. In 2012, Kathleen has also been featured in Supply Chain World magazine in 2014 for her innovative supply chain strategy developed for Miraca Life Sciences.