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RR1. Who typically "owns" the S&OP process?

Ideally it should be the CEO.  Even if the CEO does not attend an executive S&OP meeting, as sometimes occurs in very large companies, the CEO should be supportive and insistent that the process be maintained and executed well, since it can have such a dramatic effect on achieving business objectives.  But some companies appoint an “owner”, who isn't a senior executive, but rather a management level person whose job it is to ensure that the process is followed, does not degrade, and ideally is constantly improving.  This person could be from any function, but often comes from manufacturing planning or marketing, since those functions play the largest role and have the greatest stake in a good S&OP process.

 

RR2. How do you change behaviors in support of S&OP?

By a clearly communicated top management support and insistence on the specific behaviors that are defined as needing change.  These should be supported by conceptual education and process training, with occasional refreshers.  It should be monitored by setting specific, quantifiable, where possible, targets or goals, and then monitoring them with KPI’s that are reviewed in the S&OP process.  What's key is that people see the potential personal and organizational gain from these changed behaviors.  But what is often also necessary, and sometimes equally effective, is a clear understanding of the “pain” that will occur if the behaviors don’t change.  That pain could be continued business problems, missed targets, etc. or it could be continued negative attention from management because the behaviors have not changed.

 

RR3. Are there cross-functional teams with joint/shared metrics like forecast accuracy, inventory turns, etc.?

By its very nature, the S&OP process brings cross-functional teams together to jointly review metrics.  However most companies assign primary responsibility to a single function, for each metric.  It's important to understand that multiple functions can have an effect on each metric.  For example, late launch of new products or production shortfalls could inhibit sales and cause forecast inaccuracy.  The two metrics that have the most equal cross-functional responsibility are customer service and inventory, since both of them can be equally affected by the supply side, the demand side, and sometimes product development.

 

RR4. Who facilitates the S&OP meetings?  How is ownership shared?

Usually there should be a single appointed facilitator for both the Partnership and Executive meetings.  This person is typically a "champion" of the S&OP process, and often may play a role in monitoring and facilitating the collection and updating of data for the process.  Often this is a supply-chain management, materials management or planning person.  Occasionally it can be a manufacturing or marketing person.  Sometimes the same person does it for both meetings, ensuring continuity.  In rare cases, this is a floating responsibility shared by different people in the meeting either monthly or on some less frequent rotation.   

Ownership needs to be shared for the process by ensuring that each function has clearly defined, documented and accepted responsibilities.  This would include specific KPI 's, specific plans or data within the meeting (for instance, sales and marketing owning the forecast, manufacturing the production plan, etc.) and any specific assigned action items coming out of the process.  Then management from the CEO, down to the VP's, etc. must hold the specific people responsible for performance, and explanation of shortfalls and root cause problems.    

This emphasizes the ownership.  Management must also insist upon consensus based decisions,  holding the key functions responsible for reaching mutually acceptable alternative approaches to problems.  As for many things, it comes down to management holding people's feet to the fire.

 

RR5. Would you please comment on how (in your past experiences considered) you have ensured companies have the correct participation and active participation of all groups (Marketing, Sales, Field Support, etc) required for a successful S&OP program.

Use the carrot and the stick approach. 

The carrot is explaining to sales people how an effective S&OP process will result in higher customer service, and the possible resultant increase in sales and profitability.  In an environment where there are a lot of late shipments, it can also save sales a lot of time having to communicate new promises and explain missed deliveries to the customer.  A streamlined demand planning or forecasting approach should be developed that minimizes the administrative effort required of sales, while still gathering their vital market and customer information to help form the most accurate forecast possible.  Once this is done, the time that sales spends during the monthly cycle, should be minutes or at most a few hours for a couple of key individuals,  which may be more than offset by the time wasted in responding to missed sales opportunities, delayed answers to customer questions, and late deliveries.

The stick is senior management.  They must be convinced of the benefits of S&OP, which can support the achievement of business, financial, customer and cost objectives.  Once convinced, they must understand that S&OP can be effective only with the proper participation of sales and marketing, providing the proper input to establish the most accurate sales plans and the execution thereof.  Then senior management, including the top executives in both sales and marketing, must insist upon, monitor and ensure the proper monthly inputs and participation of the designated representatives of sales and marketing in the S&OP process.

 

RR6. For a company which has multiple DCs, can the S&OP process be conducted (lead by) one of the DCs? Or should be conducted by the plant?

Typically an S&OP process is focusing top-down, on families of products which are sold across multiple geographic regions and possibly stocked in multiple warehouses or distribution centers. Further each product could be manufactured in a single location or across multiple locations in very large, high-volume businesses. 

What's critical is that the process looks at all regional demands, all geographic inventories, and all supply sources, so it should encompass the participation of people from each of these areas. Different individuals may lead different parts of the S&OP process such as demand planning, supply planning and partnership meetings. 

In very large, complex organizations, it's possible that there may be regional portions of the process that could be led by people from a specific DC or plant. And indeed any of these people could lead the entire global process, as long as their viewpoint and scope of responsibility encompassed all sources of demand and supply. We most often see people from supply chain management or planning functions oversee the entire process, but occasionally people from marketing or finance may play that role in an individual company.

 

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If you have specific questions about this or want to discuss it with us, call John Dougherty at 1 603 528-0840.

The Partners for Excellence specialize in helping companies set up comprehensive measurement programs and improving overall resource management performance.  Contact us at 1 603 528-0840 or email This email address is being protected from spambots. You need JavaScript enabled to view it..