In the last 30 years S&OP improved performance in many businesses. However, S&OP has not yet substantially delivered on its ultimate promise of enterprise wide resource management, rolling financial forecasting and strategy deployment. Whatever maturity model or consultancy support companies use, S&OP seems to get stuck. Worse, overall S&OP development and progress seems to have stalled. It sometimes seems like S&OP is stuck in a time warp, where the same old things as 30 years ago are being discussed. On top of this we can see examples of marketing driven service providers that very doubtfully brand their product S&OP, or make up new names for existing S&OP processes. My S&OP Pulse Check 2015 suggests S&OP practitioners are left behind in confusion:
- 62% of respondents think there is not enough innovation in S&OP systems
- 64% think there is not enough coordinated innovation in S&OP processes
- 68% think behaviours are not addressed enough in S&OP implementations
- 71% think we need more industry standards around S&OP
Where to go from here for S&OP?
To get some answers for S&OP practitioners, Niels van Hove founder of Supply Chain Trend, interviewed a group of S&OP leaders. These leaders all have 20+ years S&OP experience and published books, whitepapers and articles in renowned magazines. A group, eligible to comment on the current state of S&OP. A group, that has shown passion to improve S&OP and a willingness to provide ideas for the future. For the next 6 weeks Supply Chain Trend will publish a weekly Q&A with these S&OP leaders.
In this week’s interview: Jim Biel
Jim is a “ FOOD, BEVERAGE, CONSUMER PRODUCT GOODS (CPG) Management Professional (Retail and B-to-B Foodservice). Focus: Supply Chain and Financial Management; Expertise in S&OP / IBP / IBF – “A Thought / Solution Leader.” A Business Conference Speaker on S&OP-related topics.
S&OP, a vision for the future interview
Supply Chain Trend: Can you describe your first involvement in S&OP?
Jim: My first involvement with S&OP started in the late 1990’s, while working for a large commercial US bakery, a division of a large multi-brand consumer goods company in Chicago. A Senior Leader brought the concept/idea to my division from another division he had previously led. Oliver Wight process consultants were brought in, and I was selected to be on the initial design and roll-out team, which ended up being a 4-5 year stint. During this exercise I was hand-picked to develop and lead the Demand Planning Team for the largest of the two operating divisions. This implementation was a “white board / bootstrap” exercise; we totally designed and changed our processes to adopt much of the standard Oliver Wight methodologies and processes, which included extensive education and workshops to start, and then full implementation. Prior to this experience, I never heard of S&OP or Oliver Wight. After this initial comprehensive implementation of S&OP, I have been part of other S&OP work teams, including “retrofit” implementations, where you take some existing processes, and try to apply the core S&OP concepts, sometimes referred to as “S&OP Light” (not optimal, but sometimes practical, and better than what was originally in place.)
Supply Chain Trend: How would you describe your personal passion for S&OP?
Jim: I grew to see how S&OP, (subsequently re-named IBF, IBP, SOIP, etc. – really all the same thing in core concept), made sense for how business should operate and execute. As I saw and understood the concepts and flows, I saw this was really the only way any enterprise should operate, linking and integrating core functions and flows of demand, supply, financials, and leadership. As I worked for and was involved with various enterprises over my career, some manufacturing, some service related, retail, etc. I saw how core S&OP concepts could be applied in various types of businesses, outside of the traditional legacy industries where S&OP was initially applied (manufacturing businesses). Any enterprise with constrained, limited resources, needing to match supply to demand, needing integration within and between various functions could benefit from S&OP concepts as a core operating business model. When I ask others, if you don’t use the core concepts of S&OP, what do you do or should do? I usually get blank stares. Please find a short You Tube video from a few years ago, where I articulate my core views of S&OP and all the various naming conventions that have been developed,
As I have mentioned to others, S&OP really has an “identity crisis”, S&OP, IBF, IBP, SOIP, etc. Yikes. Really all the same in core concept.
SCT: According to most maturity models, S&OP stalls or even fails. Why do you think this is?
Jim: Some S&OP practitioners, and consultants are to blame for some of the issues, having over promised, under educated, not completing their due diligence, and core education on what S&OP is and isn’t. Many times S&OP implementations are not well planned out of the gate, not well staffed, with little recognition of life cycle management management. Life cycle management related to S&OP suggests that the process will mature over time, and similar to a product life cycle, one needs to be aware of a similar concept for a key process like S&OP, it will go through various stages of maturity, and one needs to anticipate and manage through the various stages of development, this is not a static process, should be very dynamic. Once in place the process needs to be improved, staffed well, resourced well, and really become the primary way a business operates. S&OP can sometimes be viewed as a stand-alone project, outside of the core flow of a business. If this is the case, S&OP is doomed.
SCT: What do you believe can be done about that?
Jim: Practitioners, companies and individuals wanting to venture down the full S&OP journey and path need to do due diligence. Know what you are entering in to, learn from past mistakes of others, and plan well. Use internal resources as much as possible with appropriate coaches and consultants. Assure Senior Leadership is bought in to the idea, and will support it. Without senior leadership shepherding, S&OP can struggle to effectively launch and stay in place.
SCT: What else significant is missing in the current state of S&OP?
Jim: Basic clarity, so many webinars, so many LinkedIn groups, so many consultants, so many white papers, has really muddied the waters of a fairly simple concept. It’s all about the culture, change management, and the desire to make this a core way to run a business. It takes consistency, and repetition, month on month execution to make S&OP stick. Also, resourcing it correctly, minimizing the gaggle of spreadsheets, by bringing in the right reporting and analytical tools. Make your internal S&OP resources analysts, not spreadsheet generators. Also, building in S&OP process metrics, not just business operating metrics is critical to success. How is the S&OP process performing? This will help with continuously improving the core underlying process, which helps the reason you do S&OP, to have a more optimally performing business, through both easy and challenging times for the business.
SCT: What do think are some of the fallacies about S&OP?
Jim: One of the biggest fallacies is that you can put it on auto-pilot and let it go after initial implementation. If an organization is really serious about making this the primary way they plan, manage, and execute their business, the organization needs to staff and resource the process well throughout the life cycle of the implementation and on-going execution. Also, to make the process work best, the organization needs to utilize a continuous improvement mentality, identifying process metrics to assure that S&OP is functioning well. S&OP itself should really be transparent to most in the organization; it is the underlying process that is in the background to help manage the business.
SCT: How would you describe your future vision for S&OP?
Jim: I see a day when most organizations see the simple value of integration and collaboration that S&OP ultimately tries to provide. Seek out its simplicity; work on the planning and implementation of the process and supporting value, focusing on the month on month, week on week, day on day execution of the process. S&OP should be seen as a simple, obvious way to run any type and size of business, where resources are constrained, and choices need to be made to plan, manage, and balance the business flow. S&OP concepts should and could be adopted in both inventory intensive, manufacturing businesses, and pure service related businesses, and where resources are constrained and / or strategic choices need to be made.
SCT: What needs to be done to reach that vision?
Jim: Clarity, and a good independent clearinghouse of thought could be a start. Similar to what you are trying to do with this endeavour. Good, facilitated discussion groups would be helpful, with output published through a thought portal. Creating a simple blueprint, and then fed by clear, simple content to help individuals in the various stages of implementation, from pre-start-up to maturity. The question is, who can determine what is relevant, etc. Maybe this thought leadership group you are pulling together here could be the start, a grass roots catalyst for that type of vision. Keep the messaging simple, categorize resources, consultants, technologies, etc., have a good facilitated discussion, leverage the perspectives of various key thought leaders. Keep the core message simple, and build around it for those who need or want more. Could we create this type of independent clearinghouse? Really, this stuff is not rocket science, its common sense. And I agree with Niels conclusions that it appears S&OP is stuck in a 30 year time warp, where we seem to discuss the same topics over and over. S&OP’s reputation has been tarnished a bit over the decades for a number of reasons, but its core message and simplicity should win out if packaged right by those of us who want to take on the challenge of communicating the simple, logical truth that S&OP contains. I’m interested in trying.
SCT: How could S&OP integrate with the rest of the business? Is this a stand-alone process, or part of the core management process map (the way we run the business)?
Jim: This is a classic process, system, people, metrics opportunity/challenge. One can make S&OP the core anchor process how a business plans, manages, executes, measures themselves. If you don’t adopt the core principles that S&OP defines, how else do you / should you run and manage a business? What else is there? All types of businesses can adopt much of the core principles espoused by S&OP, even hyper-perishable businesses, and service related businesses. There may be a very short-term need to be hyper-reactive for some businesses, but all businesses have some elements and a need to look at the long view of the business over a 12, 18, 24, 36 month time horizon, which is where S&OP can excel. Also, S&OP can be viewed, utilized and leveraged as the primary way a business plans and forecasts their business, including the quarterly re-forecasts, the annual operating plan, all the way through to the strategic planning process. Use the monthly rolling forecast output from S&OP as the basis for these various forecasting and planning time frames.
Please see a graphic below showing the linkage of the various planning outcomes and how S&OP can be the lynch pin for these processes.
SCT: What is your message for S&OP practitioners, who are struggling to make progress, or who are looking for guidance?
Jim: I would seek out certain key resources, books, etc. to help guide your thinking and approach. Educate yourself and talk to peer companies and other professionals to get their perspective on the good, the bad, and the ugly of S&OP, and what learnings they gleaned from their implementations. Initially look for a sample of core, multiple sources to gain your own core understanding, and best/good practices to help in the planning and implementation of S&OP in an organization.
Also, do not underestimate the change management component and people side of implementing S&OP in an organization. Don’t just focus on the process, tools, systems, etc., be very cognizant and purposeful in managing the change management. For S&OP to work best, it must become part of a companies’ DNA, the core way they plan and manage their business.
A Tip: One great simple old-school resource to begin the journey is “Sales & Operations Planning, The Executive’s Guide”, written in 2006, by Tom Wallace and Robert Stahl. New bells, whistles, systems, have been discussed over time, but the core concepts in this short book seem simple, timeless, relevant, and practical.
SCT: Thanks a lot for your contribution Jim.
Jim Biel can be contacted at:
- E: email@example.com
- LinkedIn: linkedin.com/in/jimbiel
- Twitter: https://twitter.com/jimbiel
- SlideShare (mostly S&OP content)
- Introduction / Elevator Speech Video (from Vimeo)
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