S&OP, so what?

How to make it a success?

We – the Supply Chain Community – almost all believe deeply in S&OP. Why wouldn’t we? It’s a process (we love processes!) that brings stability and predictability (we also love those!!) and even it is does not run smoothly, the investment in time, resources and systems of the organization still our life easier,  improving our forecasting and bringing clarity.

In fact, we love it so much, that we can not understand why the rest of the organization does not jump at the idea of implementing S&OP or improving the current process. We cannot understand why they do not see S&OP as a core business process that will help the business achieve its ambitions. In stead they see it as a supply chain process, that takes up their valuable time.

Does this mean we should stop using S&OP? Or that we try to find a better alternative? I believe that is not the case, however, I do believe that we– the Supply Chain Community – need to make a few small, yet powerful changes in how we discuss S&OP in our organizations:

1.      Realize our role

We need to realize what Supply Chain’s role is in the organization. It is there to support the topline team to drive the business and to support the operations team to increase efficiency. This places the Supply Chain team smack bang in the center of the organization. Our added value is to connect the other functions and make them perform better. This means S&OP is by definition THE method for doing  that. It also means that it is just that: a method.

2.      Supporting Topline

If our role and that of ‘our’ process is there to support topline to perform better, we need to make sure that the success of the S&OP process is not defined in improvements of Supply Chain KPI’s (Servicelevel, Days On Hand, Forecast Accuracy) nor should it be defined as a number on a maturity scale. It should be defined in things that matter to topline. This means target setting with the topline teams, selecting KPI’s that are in balance for the organization and in support of the main priorities. Target differentiation is a great way to ensure topline expresses what they really want and to allow the supply chain team to drive for the right discussions.

3.      Bring Business value

The topline team is not the only function we need to be able to connect to. The general manager and finance are equally important, as they are driven by delivering shareholder value. What they therefore really want is predictability. They want to be confident in setting ambitions and as certain as possible that these ambitions will be met. If there is any function in the organization that can bring rigor to the forward picture, it’s Supply Chain. But the value we bring is not that we offer the most accurate picture every cycle; the real value is that we bring insight in the elements this picture is composed from and in the risks and opportunities that can influence this picture. With this event- and scenario thinking we give the decision makers not just a vivid image of the future but a solid basis for decision making, risk mitigation and opportunity reaping. And that is something every General Manager wants!

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