I have been writing and talking about S&OP for the past 20 years, and one of they key reasons I have focused on it over other Supply Chain Management processes is that S&OP is the most prevalent cross-functional process that bridges a team of customer-facing managers from Sales, Marketing, and Customer Services with Finance and supply-facing managers from Manufacturing, Operations, Logistics, and Supply Chain.

My career experiences have been on both sides of this process bridge. While most know me as a supply-side professional, the reality is that the first part of my career was spent on the customer-facing side—as a manager and consultant in marketing and sales research, as well as in program marketing and demand forecasting. Throughout my experience, I have learned that it is very difficult to align the goals and views of demand and supply facing managers so they can agree when making joint decisions. This makes S&OP a “work-in-progress” since the personalities of the participants frequently get in the way of developing consensus-based plans, often resulting in a dysfunctional cross-functional team. At times, the so called “S&OP bridge” blows up.

Because I have been on both sides of the bridge, I believe that if a company can get its S&OP process to work well, there are substantial benefits to be obtained from jointly optimized decisions made by S&OP team members. The major roadblock to this seems to be team dynamics. A while back, I never had a formal way to think about how to leverage different personalities engaged in an S&OP team until I met Dr. Shalom Saada Saar, a senior fellow at Harvard University’s Center for Public Leadership. He had been teaching leadership to our graduate students in MIT’s Master’s of Engineering in Logistics program for some time.

Understanding Mindsets

I ran a Demand Management Symposium at MIT in September 2006 and invited Dr. Saar to lead a closing session entitled “Critical Success Factors for Bridge Building in Demand Management.” His session was well received by the participants who were largely supply chain managers. As I watched him run that session, I realized he had a structured approach to addressing the S&OP dilemma. He described corporate research from the 1970s that had identified 220 different mindsets among managers. He went on to describe how all these mindsets can be distilled into the following three color-coded types of people. (See Figure 1)


Blue Mindset: These people are very focused on “doing what is right.” They tend to be decisive because, based on their historical perspective, they inherently “know” what the right thing to do is. Of course, they also tend to be judgmental and have little patience for the people who don’t get it.

Red Mindset: People of a red mindset aim for “doing what is true.” They are the analytical types who rely only on numbers and facts to make decisions. Moreover, they do not want to make decisions until they can get the most recent data to support them.

Green Mindset: These people are into “doing what is new.” They are futuristic in their thinking and can imagine all the possibilities and opportunities of the future. They tend to be the dreamers and creative types who don’t let the facts get in the way of a good story. They also tend to consider the other mindsets to be too rigid in their thinking. People of a green mindset like to think and stay outside the box.

While most managers have mindsets that are multi-colored, they usually have a dominant color that draws them to a specific functional discipline. It is what makes them good at what they do. However, when you have a cross-functional process, such as S&OP, which requires a team of Sales, Marketing, Supply Chain, Operations, Logistics, and Finance managers to engage in joint planning, the process can get out of hand when the views diverge.

Varied thinking and perceptions can quickly make the team dysfunctional if the team members don’t understand, value and leverage the strengths that each teammate brings to the table. Leveraging these strengths involves recognizing that there are natural roles each functional area can play during the S&OP process.

Natural Roles In S&OP

In order for an S&OP process to be successful, the strengths of all three mindsets must be leveraged. If just “blue” managers drive the process, it will lead to plans totally rooted in the past because, to them, that is “what is right.” It could also lead to chaos if team members have divergent views of what right is. Similarly, if all members of the team are “red” managers, it will lead to plans that must be based only on today’s reality, which can lead to analysis paralysis and indecisiveness, particularly if all the so-called necessary facts are not available or if “the facts are too old.”

Lastly, if all the team members are “green” managers, it can lead to plans rooted only in possibilities and dreams, with little relation to reality. Recognizing that all types of mind-set managers need to play a role in the S&OP process, a key question arises, “What are those roles?” I offer the following recommended roles that I believe to be natural and logical, based on the color-coded mindset structure shown in Figure 2.

Operations and Logistics: Managers in these areas tend to have red mindsets because they are largely analytical and focused on getting facts to make decisions. Their responsibility and natural role is to develop supply plans that are predicated on demand plans and forecasts provided to them. These managers are very comfortable when they are systematically developing manufacturing, inventory, logistics, and procurement plans based on what is provided to them.

Supply Chain: Managers in this area tend to be a combination of red and blue mindsets. They are analytical, yet they also recognize that their job is to coordinate and harmonize all the plans on behalf of the whole company. They need to ensure that demand and supply chain activities are synchronized. While this is difficult to do, they know it is the right thing to do. These managers are naturals for moderating a disciplined and collaborative S&OP process.

Marketing: These managers tend to be a combination of red and green mindsets. They are analytical in that they rely on facts and figures, gleaned from market research, sales, and competitive analyses, to develop demand plans— including future pricing, promotional, and new product launch activities designed to shape and create demand. The green in them allows them to create new types of demand plans needed to stay competitive.

Sales: Managers in this area tend to be pure green. They are steeped in optimistic thoughts about opportunities and the possibility of windfall sales in the future. They are the best at developing sales plans that identify the sales possibilities and future market conditions. One mistake others on the S&OP team can make when dealing with their green teammates is to try to get these green people to be analytical and quantify the possibilities. In doing so, other S&OP team members usually wind up being frustrated by them.

Finance: These managers are pure red. For them, it is all about what is true— “just the numbers, please.” Their natural role in the S&OP process is to monetize the demand and supply plans developed by others, so that everyone can see the future financial picture vis-à-vis the financial plans and budgets in place. If S&OP team members are given the roles that I’ve recommended above, the process stands a good chance of working well. (By its nature, a functioning S&OP process must be contentious, to an extent!). It is important to have each S&OP team member recognize the roles played by others, as well as their own, to avoid infringing on each other’s. This approach can avoid a dysfunctional S&OP team with a great deal of discord. Moreover, in the final analysis, it can lead to consensus-based demand and supply plans that are accurate and attainable.

The Forecasting Role

Demand forecasters will note that I left out the important role they play in the S&OP process. Simply put, this role is to quantify the unconstrained demand that would be generated by the demand plans put in place. Doing this requires a red mindset that can produce an information-based forecast predicated on historical demand, the demand plans, and the assumptions about future market conditions and sales possibilities. Thus, the role of forecasting can be taken on by any of the disciplines that have significantly red mindsets—even by those members of Sales who might be somewhat red-minded.

However, the managers who take on the forecasting responsibilities should be aware that incorporating all the information into the forecast is easy once there is a consensus on the demand plans and assumptions. Heated discussion, however, is likely to occur once other S&OP team members see the demand implications in hard numbers. Because some will disagree with the numbers, a forecaster’s only recourse is to stay red-minded and get them focused on the facts, figures and assumptions that were incorporated in the forecast, rather than on the numbers themselves. After all, you are the expert at quantification and forecasting; and your forecasts are only as good as the information used to develop them.

This article was originally published in the Journal of Business Forecasting, Summer 2019. Become an IBF member and get full access to the Journal, and have it delivered to your door quarterly.