Mind Map Sales & Operations Planning (S&OP)
As a result of increasing volatility in demand many companies are busy implementing Sales & Operations Planning. They try to get beyond balancing forecasted demand and manufacturing volumes and incorporate financial budgets and business scenario. What should companies consider to get to a next level in S&OP? Supply chain consultancy Involvation and Supply Chain Movement created a comprehensive mindmap to give a practical overview of all the aspects to consider for improving S&OP.
S&OP to the next level
The central questions are whether and how to bring S&OP within your organisation to the next level. An S&OP journey can be triggered by significant internal or external changes or by increased pressure and performance requirements. We believe in a growth model where the necessity of the next step is always driven by the added value of the next maturity level.
S&OP as a mindset
Why is S&OP so popular at the moment? Is it hype? S&OP is not new, but there are valid reasons for the increased interest for it. E.g., the financial crisis put more pressure on working capital. Many companies found out though, that aligning activities for structurally freeing up capital proved much more difficult than expected. Is S&OP the solution? Partly, because it drives the required alignment within your company. A solid S&OP process is therefore an ongoing requirement. The right process, data and tools therefore are important, but the overriding prerequisite is an S&OP mindset. Once S&OP is a common and shared mindset, you will have created fertile ground for sustainable and cross-functional alignment.
Biggest challenge in S&OP maturity
Why are so many companies struggling with S&OP? Looking at the different maturity phases, we observe that the step from level 2 (demand-supply matching) to level 3 (profitability) is the most difficult one. Many companies stumble and S&OP remains a supply chain driven process with non-committed stakeholders and non-binding agreements. Valuable but not optimal. Why is getting to level 3 so difficult? Firstly, the owner needs to change from supply chain to the P&L owner. Supply chain has to “let go” and the P&L owner must take accountability. Secondly, the focus has to shift from volume to value and to financial business drivers. Finance must be involved and should claim a key role. Good preparations and finding the right allies can reduce the jump from 2 to 3 to a feasible step…
The critical resource: people…
Do we need new tools? Maybe. Very often however, there is already a gap between the systems in place and the people using them. Advanced tools can create extra problems instead of solving them, unless people are brought up to the challenge. Only the right balance between implementing advanced tools and developing professional people will give real added value by reaching the next S&OP maturity level.