In his brilliant book ‘Leading without Commanding’, Filip Vandendriessche describes how managers often create their own problems. By managing on input rather than output, they create resistance rather than buy-in. This simple observation also holds important lessons for S&OP.
No input management
In a process where people make the difference, input management kills creativity and commitment. S&OP practitioners generally are middle to senior managers that are more than capable of figuring out how to get things done. By micro-managing them, the organisation risks losing their drive, valuable input and, over time, their participation in the process.
How should it be done?
S&OP/IBP is a process that requires vision and inspiration more than explanation. Easier said than done, but fortunately Vandendriessche gives us some useful recommendations:
- Ensure consensus about the problem. Why does your organisation need S&OP or IBP and what problems should it address? What is the business value and what’s in it for all participants?
- Make an explicit distinction between input and output. Then manage on output and leave the “how” to the practitioners. If they ask for guidance on how to run an effective S&OP/IBP process, the S&OP manager should obviously listen and support wherever possible.
- Define goals and objectives that are verifiable.
- Ensure that incentives are aligned with these objectives. “An organisation does not achieve what it wants, but what it rewards.”
- Keep asking the question whether the business performance is acceptable and whether the current S&OP/IBP process is still effective in addressing sub-standard performance. Adjust the process and participation when necessary.
Business processes
S&OP/IBP is a business, not a supply chain process. Ideally the commercial functions should own and drive it, right? That is indeed what the theory tells us, but practice shows that in virtually all companies, S&OP and even IBP are owned and driven by supply chain, not by sales. In fact, getting non-supply chain functions truly engaged proves to be the main challenge in all but a few instances. Surely, sales managers on average have less focus on internal processes than supply chain managers. But it may also have something to do with supply chain’s process bias when talking about S&OP. By trying to input-manage sales, supply chain probably reduces sales’ buy-in to the process. In other words: by focusing on their “solution” rather than on the intended output, supply chain may very well create their own problem!
