How do you execute effective S&OP
? Just move through the phases and make all the right decisions. Simple, right? Not so much. There’s more to this puzzle, and the pieces often don’t fit together on the first try. But that’s no reason to give up—with the right strategies in place, you can lead the way to innovative S&OP. To thrive in today’s market, innovation is a must.
First, let’s define the term. S&OP is a monthly integrated business management process that empowers leadership to focus on key supply chain management drivers, including sales, marketing, demand management, inventory management, and new product introduction. S&OP helps your executives make the right decisions quickly and consistently.
So what’s the problem with the old way of S&OP? Why is this next generation essential? Here’s the bottom line. The old way of S&OP is slow, spreadsheet-driven, disconnected, and can’t adjust quickly enough to keep up with today’s fast-shifting market. When a brand’s popularity can skyrocket because of a celebrity’s tweet and an entire supply chain must be reorganized overnight because of a natural disaster, you have to be ready to respond at a moment’s notice. Strong connections and speed lead to confidence.
Traditionally, S&OP is divided up into these phases: product, demand, supply, and finance reviews, and then pre-S&OP and executive S&OP. Not everyone agrees on the exact order in which they should be performed, but every phase is necessary for the entire process to thrive. If you’re interested in digging into each phase in more detail, start here. Although it’s important to get the details of each phase just right, there’s more to it than just moving step to step. Let’s explore four keys to unlocking next-generation S&OP.
Don’t put garbage in (or you’ll get garbage out)
You’ll have a hard time making wise decisions based on corrupt or outdated data. It’s nearly impossible to make accurate, well-informed decisions without real-time, accurate data at your fingertips. S&OP decisions have an affect across many parts of the business, so you don’t want to make them based on a cornerstone of sketchy data. Try this three-step approach to data due diligence first:
- Find out what data is available
- Discover where it lives
- Determine who owns it
Once you’ve worked through these steps, focus on getting that data into presentable dashboards and let it lead to you to discover what data may be missing. With clean data going in, you can have confidence in your decisions knowing the cornerstone is trustworthy.
Be wise with your metrics
Sometimes, organizations have too many metrics or they’re inconsistently defined. It’s easy to get buried in debates on the meaning of data or sit through torturous meetings that are only report-outs sans insight. To break free of this unproductive environment, start by defining your levels of metrics. For example, some metrics should live on executive dashboards (high-level forecasts), others belong in an end-to-end view of the supply chain (detailed supply and demand forecasts) and others describe functions (such as sourcing, manufacturing, or logistics). Next, seek alignment among the levels and work toward driving action and improvement through that alignment. Metrics don’t have to be a pile of dry numbers—they have a story to tell!
Find a champion
The supply chain leader of the future isn’t a lone ranger. It’s someone who understands the importance of cross-functional collaboration and that collaboration is essential to next-generation S&OP. To keep your S&OP process moving smoothly, find an internal champion who can play “stakeholder herder” with patience and a base of knowledge that inspires credibility as they work with all the departments involved.
Ask “what-if” for value-based decisions
Traditional supply chain planning is designed to make volume-based decisions (inventory levels, days of supply, on-time delivery, turns, etc.). Imagine running “what-if” scenarios with up-to-date financial data connected, to make value-based decisions that are best for the company’s bottom-line. Adding this level of ownership and sophistication to S&OP elevates the significance of the process and improves the overall effectiveness of the supply chain.
For more insights on becoming a standard-setter for S&OP, dig into our new whitepaper: “The keys to mobilizing next-generation S&OP.”
|The keys to mobilizing next-generation S&OP