This is the final blog in a series about sales and operations planning (S&OP), written by Ed Lewis, S&OP expert and Valizant CEO.
The benefits of an effective S&OP process include improvements in delivery, inventory, costs, and downtime—so it’s easy to see why most companies have begun an S&OP journey of their own. But too many companies fail to realize the full S&OP potential due to gaps in their S&OP foundation. As discussed in “S&OP vital signs to survive and thrive,” a check of your process can determine if any foundational elements are missing and help drive the corrective action needed to close the gaps. This blog will discuss the fourth vital sign, which may indicate an opportunity to improve S&OP performance.
But first, a quick recap of the S&OP vital signs:
S&OP vital signs
- Executive support and participation in the S&OP process (read more)
- Fully cross-functional S&OP scope (read more)
- Practicing constructive issue resolution (read more)
- Minimal process compromise imposed by technology
Vital sign 4: Minimal process compromise
Each company conducts its business operations in a unique way based on a variety of factors that include industry, markets, culture, practices, and leadership. These factors continuously change and affect each company differently. No two companies operate or evolve in the same way. Accordingly, each S&OP process is unique since it reflects a company’s business operations.
Companies on the S&OP journey eventually require S&OP technology for continued performance improvement. This often happens after the initial value of S&OP has been demonstrated through improved alignment and collaboration across functions. For companies at this stage, most of the planning cycle may be spent collecting, assembling, and validating functional data. Little time is left to explore options for better results, which requires significant manual effort and would be outdated by the time it’s complete. While S&OP stakeholders are confident that significant additional improvement is possible, the patchwork of Excel sheets and existing systems stands in the way.
S&OP technology solutions can help companies achieve the next level of performance by establishing a single, cross-functional planning environment based on shared data. Plans are naturally aligned since they originate from the same data source. Scenario planning capability enables fast, fact-based decision-making. Data collection, assembly, and validation are automated, allowing S&OP stakeholders to spend more time improving results.
Confirming the right S&OP solution fit
The selection of an S&OP solution typically includes an initial evaluation of functional and technical criteria to determine what the solution does and whether it fits company requirements. More difficult to evaluate, but equally important, is the question of how a solution works and how it fits with a company’s unique business operations. Does the solution go beyond abstract functional requirements and provide decision support and information sharing in a way that enables a company’s unique processes? Or would the solution require unwanted changes in business operations to match the way the solution works? This is a key point of the evaluation because the success of an S&OP solution depends on its ability to enable rather than dictate business operations. A forced-fit solution typically results in low adoption and ultimately jeopardizes S&OP program success.
Solutions with the best fit to company requirements move to the next stage in the selection process and undergo deeper evaluations. The objective of this stage is to increase fit confidence and reduce the risk of a mismatch, often through a custom presentation that demonstrates key functions using customer data.
Software engineers required
It can be difficult to establish confidence in solutions that require software engineers for implementation, whether hosted in the cloud or on premise. These solutions are expensive to set up because the software code must be changed for the demo and run through quality assurance (QA). It’s a time-consuming and costly effort. Understandably, the provider will prefer to narrow the demo scope. As a result, users may be left uncertain about the solution’s fit, and lack the confidence to make a selection. It’s unfortunate, but all too often the search for a solution ends with no action taken.
For some solutions in this category, functionality is predefined and the ability to adapt to company-specific requirements may be limited—a fact that is difficult to evaluate even with a custom demo. For companies with more time, a 90-day pilot is an effective way to more fully evaluate solutions of this type.
Business user self-service
Confidence is more quickly established in solutions that are modeled by business users in a live cloud application. The ease of use and high level of control are similar to other cloud-based applications such as Office 365, Salesforce.com, and Google Apps. Custom demos, including adaptations to source data, are provided quickly and include live modeling changes to illustrate solution flexibility. Model builders can implement the behavior required by a company’s S&OP process and quickly evaluate the impact. Solutions that enable self-service modeling can be managed by business users instead of software engineers and, as a result, are significantly more economical to adapt to future changes.
Consider these five points when evaluating S&OP solutions
- Process compromise. Place high priority on the solution’s fit to your business operations. Depending on the solution type, more time (and in some cases, a pilot) may be required for fit confirmation.
- Ease of deployment. Longer implementation times increase the risk that the solution will be outdated upon completion because of changing business conditions or opportunities. Minimize time to value in both the solution selection and project planning phases. Plan for demonstrable value in 8–12 weeks. Avoid anything longer.
- Ease of change. Change is inevitable. Technology must flex with the business or it becomes a friction point and slows the business down. Be cautious if minor modifications require more than an hour to get into production. Avoid those that take more than a day.
- Business-user administration. Modern solutions can be administered by a business user without significant support from IT. This is a welcome development since most IT departments operate at capacity. Avoid a solution if technical resources are needed for application administration.
- No change orders. Business user self-service eliminates the need for change orders to the technology provider or system integrator. Change orders are expensive and time consuming, and place a formal project justification and approval process between you and flexibility.
In short, compromising your business processes in order to adopt S&OP technology is no longer required. Protect the practices that reflect your company’s business model and adopt those that improve performance. Chose a solution that enables both and provides adaptability to your changing conditions.
This five-part blog series has covered each of the four S&OP vital signs and provided practical suggestions for improvement. Be sure to read the entire series (linked above) and while you consider improvements in your S&OP process, you can see Anaplan in action in a live demo.