Maybe you just had a poor quarter with your forecast not aligning to operations or business plans. Maybe there was a series of bad product launches, or you’re not getting the cross-functional collaboration you need. Maybe you went to an IBF conference came to the conclusion that S&OP would be a real competitive advantage for the company. Whatever the reason, something has triggered the need to implement a new S&OP process.
[This is the first in a 2-part series about setting up a new S&OP process. This first part focuses on the ‘People’ aspect. Stay tuned for part-2 which focuses on ‘Process’.]
Now comes the most difficult step in all S&OP/IBP journeys – the first one.
Where do we start? What elements comprise an effective process? How long will it take? Who should be involved? How do we get the right functions on board?
There is a plethora of questions you must answer before you start, and many variables that will shape your organization’s S&OP. In the immortal words from the cover of the Hitchhiker’s Guide to the Galaxy – don’t panic! The key is to build a process that responds to business needs and that works over time.
Keep in mind first:
S&OP is not a project or overnight activity; instead, it is driven by continuous incremental improvements where the goal is to keep getting better.
Start where you are and build for where you want to be, and never be satisfied with where you get. This is the S&OP journey and maturity process.
Now that we’ve those 2 guiding principles, we should take time before the first meeting even occurs to do as much as possible to set the process up for success. The start-up of a new S&OP process is similar to the start-up of a new organization in that success depends on groundwork being laid long before launch. In this preparation phase, the vision is defined and decisions are made regarding People, Process, and Technology.
Questions to be answered and activities in the initiation phase may include the following:
1. Find The Right Sponsor
The sponsor will be a senior executive in a corporation who is responsible for the success of the process. While he or she may not be involved in the day-to-day operations of the process design, they are the senior champion of the S&OP/IBP process and biggest cheerleader. This is the executive that the initial S&OP team may turn to for support and to help break down potential barriers. It is someone high up that has your back and may be able to authorize resources or garner additional support.
This person need not be your direct authority and I have seen many times this role filled by a leader from another function. The most important quality is that they believe in S&OP, are willing to assist in winning over stakeholders, can authorize decisions, and be an advocate for the process.
2. Appoint An Owner Of The Process
Ultimately, this person sets senior management expectations, leads the monthly S&OP planning process, manages conflict, and guides the S&OP teams toward success. Far too often I see someone with another role adding the responsibility of S&OP to their existing tasks. While this can work (I have been that person myself) it is far better to have a S&OP manager or owner solely dedicated to the process start-up.
This role has significant responsibility pertaining to communication, managing the process, diffusing conflict, and leading change management – all of this requires time and focus. With all this in mind you need “a” owner and person that drives the process forward without their time being split between another role.
Another reason for having a dedicated S&OP manager is that S&OP is a cross functional, end-to-end process and needs a liaison that bridges all departments without bring the bias of their function.
3. Decide Who Needs To Be Involved
The answer, paradoxically, is most likely “everyone and a select few”. S&OP done right will impact every function and change the way business decisions are made. Your core team on the other hand may not be that large, rather a strategic, cross-functional group. This core team may include Finance, Demand Planning, Operations, Commercial, and IT. Initially, try to keep the core team light but do not lose sight of everyone else that you may need buy in from or who will be impacted by the S&OP process.
4. Level Setting & Educating
Change management is one of the most important and overlooked parts of a new S&OP process. People are fine with change until what they do day-to-day is disrupted. S&OP touches everyone and it is always best to educate and elevate all participants. Training helps to get everyone talking the same language to and provides a foundation of knowledge to accelerate adoption and acceptance of a new process.
Training also helps with fears of the unknown and provides vison and direction for what you want to accomplish, further facilitating adoption. This may be a 3-day workshop or in-house training but the key thing is to reveal what S&OP means for the organization and individuals involved, and to instill best practices.