It is the main theme of 2014. Again. Books, magazines, blogs, opinion and expert articles, advertisements galore! But how often do you happen to bump into something really new? When was the last time that you were surprised by a truly original view?
It seems so logical. A process in which the plans of the different business functions are aligned. “One set of numbers”, “alignment”, “Demand Driven Supply Chain, “Integrated Business Planning”, who can be against that? However, I see more failures than success stories. This may have something to do with my profession, but still. That many? Too many companies discover that in practice, it is not all that easy to let S&OP really work for them.
The cause
Fortunately, the source of all these failures is always blatantly obvious: Sales does not really feel like contributing and nor does Marketing. They prefer to spend their valuable time and energy on building their customer relationships and brands respectively, rather than on answering difficult questions from Supply Chain. Ridiculous, right?
In a recent discussion with a large German multinational company, I was asked to explain it to Sales once again. The effect of hierarchical pressure had dissipated all too soon, so all hopes therefore had been put on external input. Sometimes it takes a fresh pair of eyes to put things into proper perspective, right? Some further probing revealed that this European S&OP manager had not really got to the raison d’être of his own process. It followed all the textbook principles, but its main objectives were not 100% clear. A lot of short term supply chain questions. 80% looking back and sharing of information, or explaining that last week’s issues had again been caused by higher sales than forecast. Strange that Sales did not want to prioritise this type of meetings, right?
The classical trap
Like many others, this company had fallen into the classical trap: S&OP as and objective rather than as a means to an end. The assumption was that by putting the implementation in the personal targets of some of the top supply chain managers, they would do anything to make S&OP into a success. Until they found themselves at a dead end, since they were not able to obtain true buy-in and commitment of Marketing and Sales. Surprising? Unfortunately not. An exception? On the contrary. Without crystal clear business objectives, well chosen aggregation levels, the right participants, KPIs, preparations and last but not least, clearly spelled out what’s in it for our commercial colleagues, S&OP will always remain a difficult story. Because then Sales will rather spend their time and energy talking with their customers. Rightly so.
A good start
Having a hard time implementing S&OP? Let’s first make sure then to become even better at asking the right questions. Because with clearly defined business objectives and a corresponding process design, the required commitment will follow in due course. Even from Sales.
