Based on IBF research, 12% – 16% of people reading this are starting a new S&OP process. Whether it’s because a company started an S&OP process, stalled, and then relaunched, or is doing it for the first time, many organizations are taking the first steps right now. Does this apply to you? Then read on!
Whether you’re new to S&OP or a seasoned expert I hope this article will provide some insight on where to begin.
In my last article I began this discussion from a ‘People’ perspective addressing 4 steps regarding people to help kick-start the process. Today we will review a similar 4 steps in regard to ‘Process’, including the process design you should develop before your first meeting.
Even if you’re in the 84% that already have an S&OP process, I know many of you that are stuck or have a process that’s not living up to its full potential. You may find some tips that will enable you to reinvigorate and improve your process too.
To level set your expectations, there is a long road ahead of you. On average there is anywhere from 2 to 4 months of design and pilot work before the first review or meeting. Research indicates that you will start seeing some results after about 3 monthly S&OP cycles. This means for most organizations results will not begin to flow until approximately 7 months or more after you start the first design step.
In regards to determining the ROI of S&OP, research shows it takes about 18 months to see the full impact of the process in most organizations. A lot of that success depends on your planning and design now.
Activities in the initiation phase may include the following:
• Identify What S&OP Will Improve: You are not creating an S&OP process just for reporting or for the sake of checking a box and saying you have a process. You have an S&OP process to help enable decision making and to help solve planning problems. Identify the recurring issues you want to solve and the information or types of collaboration that will help enable decision making. This may relate to demand plans but it could also relate to channel strategies or product management. There are a thousand decisions being made daily in your business – figure out which ones you want S&OP to standardize and improve.
• Design a Pilot: Start with something easy to manage. By all means think BIG (I encourage it), but start small and build on success. The best place to start is to meet the company where it is now. Find the starting point that matches the strengths already present in the organization. It might take some time to figure out which function or people are best placed to handle S&OP. This can be by business unit, product group, or geography.
• Map the Process: You have your monthly objective of your initial pilot so now consider what it will take to achieve this. Identify the process steps, the information you need to bring to these steps, and the people you need to involve to gain consensus. Once you’ve mapped this out, consider which KPIs you will use to measure performance and foster continuous improvement.
• Be Flexible and Adaptable: Nothing is static and needs change as well. No matter how hard you try to make things run exactly like the textbooks say it should, there will be anomalies for every single S&OP process. So, it’s important that you and your organization are capable of responding quickly to both internal and external changes. The biggest lesson I have learned after implementing multiple S&OP processes is that while there are universal ‘truths’ in every successful S&OP/IBP implementation, the path to get there varies. The biggest thing is to commit to starting and, once it begins, provide oversight and support to key participants. Then, with persistence, it will gain traction and move forward.
I will be speaking at IBF’s Global S&OP & IBP Best Practices Conference in Chicago from June 15-17. You’ll learn the ingredients of effective planning, whether you’re just getting started or are finetuning an existing process. Early Bird Pricing now open – more details here.
