Huge step to achieve collaboration within S&OP

The step required to transition from anticipating to collaborating within Sales & Operations Planning is a large one. That was the conclusion drawn from a local session organised by analysts Gartner in Amsterdam, The Netherlands, on 15th November 2011, where Tim Payne, Research Director at Gartner, presented the various stages of maturity of an S&OP process.

In what Gartner calls – to use the military term – a ‘VUCA world’ (volatility, uncertainty, complexity, ambiguity), there is no process more fundamental to drive predictable earnings than S&OP. “S&OP may not be new, but neither is it easy. Three decades later, process and cultural barriers still impede progress. A lack of transparency is still standing in the way of progress for many companies,” says Payne. “Another issue is the use of technology in support of S&OP. No one tool is available today that supports the total needs of a mature S&OP process.”

Huge step
To illustrate the different stages of maturity, Gartner developed a model comprising four stages, from tactical to strategic. Stage 1 is the development of an operational plan: drawing up a demand forecast and plan. In stage 2, companies try to anticipate as well as they can: how can they meet the expected level of demand? The third stage includes consideration of the financial impact of any decisions: the financial planning is integrated with the supply chain planning. In the final stage of maturity, a company works with various scenarios: what is likely to happen if…?

Using a list of questions on Gartner.com, companies can determine at which stage of the model they are. Payne: “It is a linear model. You have to pass through each stage in turn – no-one enters in stage 3. However, in practice, not all the steps up are of equal size. Most companies find moving from stage 2 to stage 3 to be a huge step.”

Payne concluded by talking about sustaining maturity. He offered a number of tips, including creating the right kind of culture. However, the tips remained somewhat theoretical. Payne referred to a series of research that Gartner had produced. But the session unfortunately failed to conclusively answer the question regarding what companies can do in practice to take the step from stage 2 to stage 3, and to ensure that they don’t fall back down to a previous stage.

http://www.gartnerinfo.com/SupplyChainSOP/index.html