Yesterday, I gave you a list of 5 reasons you should be doing Sales and Operations Planning; allow me to finish my top 10 list…
2. Decision Making
4. Finance Integration
5. New Product Introduction
6. Responsiveness – Responsiveness you ask? Sales and ops is a monthly process (usually). How can a monthly process help me be more responsive? There are two answers to that question. First of all, S&OP typically deals with longer term concerns; procuring equipment, adding capacity, updating of outsourcing strategies. That being said, these activities typically have longer lead times. If you have visibility to planned demand changes and can position yourself to be ready for them, you will be able to better respond when they happen. The other side of responsiveness is asking…why does S&OP need to be monthly? If there is a significant change that requires a change to the agreed S&OP plan, why wait for the next month? With traditional tools like Excel, monthly S&OP plans were almost a requirement because it took so long to put together a plan. With better, more integrated tools, a new Sales and Operations plan can be completed in hours. Imagine being able to react to a change, with the entire company in alignment within hours.
7. Monitoring – A big part of the S&OP agenda is reviewing the key corporate metrics in order to identify and resolve poor performance or preferably to reverse negative trends. This is a key meeting where all the stakeholders are present. When performance issues are raised, this is the team that can get things resolved. I’ve sat in meetings where a product line manager was called to task for quality metrics that were trending downwards. You can well imagine that immediately after that meeting, changes were made to address quality issues.
Once a Sales and Operations plan is set, many companies have difficulty monitoring performance to that plan until after the period is finished and the monthly metrics are posted. Imagine being able to monitor current and planned performance to your current S&OP plan. Imaging seeing mid-month that your demand plan wasn’t going to happen the way you planned. Going back to my comments about responsiveness above, what if you could identify the issue and re-cast the plan mid-month?
8. Risk Management – Risk management is an issue that many companies are starting to deal with (and all companies SHOULD be dealing with). The problem is that many times a company will identify their risks, put together a mitigation strategy, wipe their collective hands and says “we’re done!”. You’re NOT done. The risks are continually changing; world politics, outsourcing strategies; product design; markets all are changing and with those changes, the associated risks change as well. Any risk management process needs a regular review that evaluates the risk management strategy in light of new demand plans, new supply plans and new product introductions. Seems a good fit for S&OP, no?
9. Accountability – When you make commitments at the S&OP meeting, you are making a promise to your peers and to your boss. Your commitment is recorded and is reviewed at the next meeting. Guaranteed, you will do whatever you possibly can to make sure your team comes through. If you don’t meet your commitment, you make sure your reasons are documented and that you have a recovery plan in place before the next meeting.
10. Teamwork – This may not become apparent until the team has been meeting for a while. However, as the team works together, as they learn that they can trust one another. As they figure out that they all need to be pulling in the same direction, teamwork will improve. This improvement in teamwork will manifest itself outside of the S&OP meeting as well. Paths of communication will open that were not there before. Problems will get resolved, things will get done.
So…what are you waiting for? Get busy…start doing S&OP!
Already have an S&OP process in place? Reply back and let people know what benefits you are seeing from your S&OP processes.