S&OP football season

Companies can learn a lot from football, including from the point of view of sales & operations planning (S&OP). When giving presentations, I often illustrate the company structure as a ‘football formation’: marketing, sales and customer service as the strikers; operations, supply chain management and purchasing in midfield; IT, R&D, finance and HR in defence; and the legal department in the goal. The CEO is the coach on the sidelines who – ideally – has discussed the match tactics in detail with the team in advance.

The football metaphor not only applies to the company strategy in general, but also to the business-critical decision-making process that is S&OP. In a previous column I’ve referred to Bob Sutton, a professor at Stanford University, who says that effective decision-making primarily depends on the number of people around the table. He believes that the right number for important decisions is four or five people – the same number as in a five-a-side football team: Marketing, Sales, Production and Finance, with Supply Chain as a midfielder.

Each player makes their own specific contribution to the regular S&OP meetings. Marketing explains about the plans for products to be phased out and new ones to be launched; Sales forecasts customer demand; Production provides solutions to any bottlenecks; Finance translates any changes into a potential gap in the budget, and Supply Chain ensures that all the players provide the necessary input to enable important decisions to be made.

A marketing manager at a large multinational recently told me that she only has a passive role in their S&OP process, which really surprised me. Moreover, she said that Sales was going it alone on a portfolio analysis, which caused me to wonder whether they had enough information about the margin per product. After all, the allocation of supply chain costs to individual stock keeping units (SKUs) is often a problem, and makes it virtually impossible to adequately evaluate which SKUs should be kept.

Many companies still work with a short S&OP horizon of a couple of months. That’s like a football team focusing only on the next match. Successful football clubs view the season as a whole, with their eye not only on the national competition but also on the UEFA Champions League in between, and carefully plan the buying and selling of players. S&OP only truly adds value when a company constantly thinks 12 months ahead.

Martijn Lofvers, Publishing Director & Editor-in-Chief Supply Chain Movement
martijn.lofvers@supplychainmedia.nl