Managing organizational issues is the key for a successful S&OP
Sales & Operations Planning (S&OP) is an integral component of an organization’s planning process that drives both revenue enhancement and cost control. Although it is not new to the industry, its deployment in the true sense varies, with only a very few organizations which have implemented this in practice to achieve full benefits. Companies usually face lots of challenges while S&OP is being deployed that can be bucketed under Process-Technology-Organization dimensions. Although we may follow any list that captures the critical Dos and Don’ts of a successful S&OP implementation, I feel the real challenges lie under the “Organization” bucket and need the top most priority since all the other challenges are directly or indirectly connected to one or more organizational issue/s.
The complexity increases with the nature, size and scale of the company’s operations that in turn involves various stakeholders and managing their expectations to a fair extent is extremely difficult. Each of the stakeholders with their teams brings their own agenda to the table which is not only target-focused but also ‘politically driven’. The head of the dominant function enjoys his/her position by molding or aligning the S&OP deployment based on his/her team’s interests. There are also operational issues that make things worse. For example, in reality, business users are supposed to follow a checklist of set of activities as per S&OP process guidelines. Due to paucity of time and lack of sufficient knowledge, they tend to look for a via media to complete these activities and compromise on the quality. One simple example to corroborate this point is as follows: Usually sales forecasting is a consensus process with a tight deadline that involves high participation from sales teams. Most of the times, sales folks don’t even contribute for a variety of reasons but the subsequent activities are carried out just to close the process in time and avoid any under-performance due to non adherence. Since such practices disseminate very quickly in the company, the ultimate impact is a sub-optimal realization of S&OP benefits.
There are no clear cut solutions to all these human related issues, but it is very important to be cognizant of them. We can provide a bit of structure to few of them by, say for example, defining the roles & responsibilities at various levels for each process, aligning performance targets to business objectives and involving top management for guidance & oversight. The best way could be to apply these structured solutions to a limited extent but maintain the habit of tackling such issues in a contextual & piecemeal approach based on one’s experiences and learning.
