Sometimes driving S&OP towards decision making is challenging, with meetings often focused more on the here and now than looking forward, especially when the economic environment is so uncertain.

The pandemic highlighted the importance of collaboration, consensus and transparency in this process and, if we weren’t aware before, the criticality of using S&OP to make timely and effective decisions. So, how do we optimize S&OP for decision making?

The Challenges of Planning in the Current Environment 

I have been involved in S&OP since 2005 and am currently implementing S&OP at DS Smith, a global packaging company. S&OP is all too often an update forum where we talk about previous performance and a one number plan. With the challenges presented by COVID and the Ukraine war scenario planning is critical, so a business has a response to factors that may become reality. This reduces the all too common firefighting loop that businesses find themselves in. I have seen, however, that functions don’t always like giving up their power of decision making to a collaborative, cross-functional forum, partly because they feel that they alone have the depth of knowledge to make decision relating to their functions, and partly because they can make decisions quicker if they operate outside the S&OP cycle.

In my world, the focus is now much more short term as well as on assumptions for the longer term horizon as we’re unclear as to what the next year to 18 months will look like. Selling patterns are different to pre-pandemic and what I’m finding now is that we need a very good S&OE (Sales & Operations Execution) process running alongside S&OP.

Where to Make Decisions, S&OP or S&OE?

With that, it’s important to define where we take decisions – in the shorter-term S&OE or in the longer term, more strategic S&OP process? Having very defined S&OE and S&OP processes stops people from ‘going rogue’ and making siloed decisions.

In the packaging world linked to FMCG, volumes have reduced compared to pre-pandemic. As a result, we’ve had to make some very quick decisions. Do we stock build, turn off capacity for example? If so, we can’t wait for the S&OP cycle. Tactical decisions, tackling the next month’s view, are then taken care of. This reassures people across functions that the key tactical decisions are being taken in a timely manner, and thus stops them going ‘off-piste’. Communication of these decisions is also a critical part of ensuring alignment across the business.

You may well find that maintaining your existing S&OP cycle in this current environment is having negative impacts on your business. If I see an upturn in demand, I want us to be ready for it so we don’t miss out on sales – S&OE helps with that.

Don’t Make S&OP More Tactical, That’s What S&OE is for

I find that data is the challenge at the moment; things are changing so much that we can make a decision one week, and by next week the assumptions behind that data have changed and don’t support that decision anymore. Assumptions behind market behavior are changing with us coming out of COVID, people coming back to work, inflation, and the war in Ukraine. All of that creates demand volatility.

We need to be on top of all these fluctuations, increasing the importance of shorter term decision taking, but leaving the S&OP process intact so we’re not constantly changing the longer-term strategy based on tactical decisions.

You have to keep the shorter and longer-term planning approaches separate. I caution against making S&OP more tactical – it’s not designed to be agile. It’s about identifying gaps. So, regardless of whatever is happening in the short-term we don’t change our targets and budgets, and so we shouldn’t change our S&OP.

Tips for Keeping S&OP Meetings Focused On Decision Making

Constant reinforcement of what S&OP is for is key to keeping focused on decision making. At DS Smith we do the ‘what-ifs’ – what are the realistic likely scenarios that we need to model that executives need to make decisions on, when would these decisions need to be taken, and what are the financial implications of those scenarios? It’s about coming back to the gaps and closing them in good time. For me it’s about discussing how we use inventory, how we use our capacity so there are no surprises relative to the plan.

Identifying best and worst-case scenarios allows us to close the gaps ahead of time so we don’t have to make tactical decisions. This helps delineate S&OP and S&OE, keeping the right level of decision making in the right forum. If we do need shorter term, and tactical decision making then we take that to S&OE.

S&OP stakeholders don’t always read the meeting pre-reads so if there are decisions that need to be made coming out of the next S&OP meeting, I’ll meet the main participants individually ahead of time and walk them through the desired outcomes. In week 4 before S&OP, I might book an hour with the key people which can then be canceled if not needed.

This is harder with remote working – gone are the days of going up to somebody in the office for a quick chat and setting expectations ahead of meetings. With remote working I find people’s diaries are completely full, so arranging a Zoom call is difficult. Going back to just phoning people as and when helps rather than trying to book peoples’ time.

Educating S&OP Stakeholders for S&OP Maturity

Driving S&OP as a powerful decision-making process requires constant improvement and education. As an S&OP lead, I always keep an eye on our S&OP maturity and where we are in our evolution. I sometimes engage consulting firms to gain a clear picture of where we are and what it’ll take to progress to the next step. Every step needs some education – there’s no shame in bringing in outside experts; after all, some messages are better delivered from the outside than in.

From my point of view, as someone responsible for this education, it is just a case of getting the budget to do it. I always follow a change management approach where we do the initial education with coaching and hand holding, then we run the process, then we have a review. For example, last year with DS Smith we launched S&OP in April, then in October we had a ‘what’s working and what to improve’ review. This helps with the buy in of those involved in the process, and helps me understand what they need as an outcome of S&OP.

The Bottom Line

To conclude, it’s worth remembering the key elements of successful S&OP. Keeping focus on the below will facilitate the decision making it is designed to achieve:

Collaboration: Bringing cross-functional teams together to drive a one-number attitude with clear timings for decisions based on scenarios coming to life

Transparency: Explaining on what you know and what you don’t across functions and extending that attitude to your trading partners

Consensus: Making decisions together that benefit the business as a whole

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Rachel Stafford

I imagine we’ve all been in situations where we are trying to implement a change of some sort for the good of the business, and those around us just don’t seem to get it! Frustration builds up on both sides and momentum can be lost.

Involving the people affected by the change is key to moving forward; from those pressing the button to those owning the process itself. Managing all stakeholders is critical, and ultimately defines the level of success of the Sales and Operations Planning (S&OP) process. It is important to remember that change is personal for people, and if not fully on board, they can spend forever in the stages of denial and resistance!

So, how do we engage our stakeholders, you may ask? Starting with the sponsors is a good start, as they are ultimately the business controllers. And understanding where they are in achieving company goals, what’s important to them and then how to close that gap. The key phrase for all stakeholders to understand is, “What’s in it for me?”, or put simply “WIIFM?”. Relating your communication and change to their requirements will gain a move in the right direction. Gaining the support of key individuals who are influential in the business, or “allies”, will help support your arguments and help you to gain traction. This is especially beneficial if they are the line manager of the end users making the change. Education is another trick in the book, particularly using a business case methodology to advising people of the reasons behind change. For example, we can say, here’s where we are now and our issues, and here’s the ideal. So why wouldn’t we want to change?

Ultimately the Sales and Operations Planning process needs to add value to the business in order for it to be a success. To do this requires change in each stage of the implementation; in process, structure, and roles and responsibilities, all of which will make people feel uncomfortable at the beginning. However, the diverse skills of the S&OP Leader need to be able to overcome any barriers to change in order for the Sales and Operations Planning process to succeed.

Your comments and questions are welcome. I’ll be sharing more on the role of change management in S&OP at the APICS & IBF Best of the Best S&OP Conference taking place in Amsterdam, 15-16 May. Perhaps, we’ll see you there.

Rachel Stafford, CPF
Head of Demand Planning
Norgine