Research carried out by EY in 2019 suggested that more than 90% of senior executives were making or planning to make risk management and Business Continuity Planning key pillars of their businesses, and that 70% already had begun to. Following COVID, which struck in early 2020, these findings have not aged particularly well. 

COVID or not, we know that a majority of companies lack an effective planning process. It raises the question, why do we so frequently invest substantial time and effort into implementing corporate planning without seeing it through to completion?

Applied behavioral economics can help answer his question. This discipline examines the social, psychological, and emotional factors in organizational behavior and decision-making, and an understanding of its core concepts can shed some insight on what we can do to maximize the chances of success when implementing a planning initiative. 

Concept 1: The Isolation Effect

In simple terms, the Isolation Effect describes how people are not good at making complex judgements, and therefore prefer to break down integrative processes into isolated components. In a strategic context, the people responsible for implementing strategy usually aren’t thinking about the overall organizational picture; they’re concerned with their own part in it, because that is a level of complexity that people can readily understand and act upon. 

The result, as we have all seen, is that departments devolve into siloed thinking, focusing only on how a strategy or initiative impacts them, and not the business as a whole. 

When teams consider only their own tasks, it is unlikely that the overall strategy will come to fruition

The problem here is that organizational strategy is usually holistic and integrative, and requires considerable mutual interdependence across functions. When teams only consider their own role and tasks, it is extremely unlikely that the overall strategy will ever fully come to fruition. 

Some management frameworks such as S&OP and IBP attempt to address the resulting siloes by (theoretically) connecting every part of the enterprise to a core set of objectives and metrics, but without explicitly making a call to action these processes frequently become mere rote recitations. 

Concept 2: The Status Quo Effect

In essence, we respond to the Isolation Effect by pushing the strategy to all levels of the organization and setting up communication between the groups involved. Putting aside the practical issues with such an approach, this generally leads to an unintended outcome that is even more pernicious. 

When faced with considerable complexity and/or uncertainty around a task or decision, people tend to avoid making any sort of commitment to a path and stick to what they have already been doing. This is commonly known as the Status Quo Effect. 

Attempts to push an integrated strategic plan down through an organization frequently fail

Between issues of isolation thinking and status quo responses, it is unsurprising that attempts to push an integrated strategic plan down through an organization frequently fail. 

Connecting Individuals to Enterprise Objectives

As both the Status Quo and Isolation Effects arise both from an individual’s disconnection from overall objectives and the misapprehension that many leaders have about the power of their dictates to influence behaviors, we must clearly articulate the reason for the enterprise’s strategies and goals.

It is insufficient to tell a team that “the plan for next fiscal year is 10% revenue growth”. This may be fine as a target, but makes no reference to a plan or strategy, nor does it provide the many stakeholders with sufficient context or purpose to make clear what specific action is required of them.

Leaders often fail to take the time to explain why each of the steps or actions are necessary

Similarly, while S&OP and IBP processes make a valiant effort at connecting corporate strategy with individual departmental plans, their leaders often fail to take the time to explain why each of the steps or actions are necessary, and why the corporate goals and plans are what they are. Thus, in both cases, although a high-level plan may have been communicated, the complexity which challenges human judgment remains unaddressed. Where questions persist, inactivity invariably arises.

Define Explain Enterprise Targets & Goals

To address the psychological root causes of this inaction, effective communication not only of the plans and the reason for those plans, but also of the specific expectations of action for every stakeholder is key. In practice this can take several forms. In the case of Annual Operating Plans, an explanation of the rationale supporting targets – e.g. why did we choose 10% growth, and not 20% or 5%? – and a requirement from stakeholders to provide a qualitative statement describing how their department will help achieve the corporate plan prior to submitting a departmental action plan and KPIs can help clarify what steps are necessary to advance the plan.

In the case of S&OP or IBP, there are several initiatives which can be useful at addressing inaction. First, a clear statement of purpose at the outset of each meeting, tying the intended objectives and outcomes of that meeting to the overall corporate plan. In the case of a Portfolio Review, that might look like: 

“Our meeting objectives are to review New Product Introductions, End of Life Products, and review portfolio performance over our strategic planning horizon. By ensuring we consistently have a healthy pipeline of new products and space for them to grow by culling underperforming products, we can achieve our objective of 20% contribution of the overall growth target of 8%.”

Asymmetries between executive goal setting and employee tasks inevitably create ambiguity and uncertainty

Provide a clear line of sight on every slide in a meeting presentation to the decision or action that is expected. Going so far as to explicitly write it out on the footer of each slide keeps content creation aimed at this critical objective, but also keeps meeting participants laser-focused on action, as is the intent.

The Bottom Line

It is tempting when planning at the highest level to expect that the reasons for plans or paths to goals are as immediately obvious to everyone as they are to those formulating the plans, but the frequent gap between planning and execution makes it clear that this isn’t the case. 

Asymmetries between executive goal setting and employee tasks inevitably create ambiguity and uncertainty, and the extent to which we struggle to make judgments and plans under uncertainty in complex environments should not be underestimated. Therefore, to increase the chances of successfully implementing any strategic initiative like S&OP or IBP, leaders must be mindful of the root causes of inaction and both overcommunicate the context and purpose of corporate plans and make explicit the paths to action for key stakeholders. 

Jonathon Karelse will be speaking at IBF’s Business Planning, Forecasting & S&OP/IBP Conference in Amsterdam from November 16-18. With dozens of workshop sessions, panel discussions and networking opportunities, it’s the biggest and best event of its kind nf Europe. Click here for more details.

Based on IBF research, 12% – 16% of people reading this are starting a new S&OP process. Whether it’s because a company started an S&OP process, stalled, and then relaunched, or is doing it for the first time, many organizations are taking the first steps right now. Does this apply to you? Then read on!

Whether you’re new to S&OP or a seasoned expert I hope this article will provide some insight on where to begin.

In my last article I began this discussion from a ‘People’ perspective addressing 4 steps regarding people to help kick-start the process. Today we will review a similar 4 steps in regard to ‘Process’, including the process design you should develop before your first meeting.

Even if you’re in the 84% that already have an S&OP process, I know many of you that are stuck or have a process that’s not living up to its full potential. You may find some tips that will enable you to reinvigorate and improve your process too.

To level set your expectations, there is a long road ahead of you. On average there is anywhere from 2 to 4 months of design and pilot work before the first review or meeting. Research indicates that you will start seeing some results after about 3 monthly S&OP cycles. This means for most organizations results will not begin to flow until approximately 7 months or more after you start the first design step.

In regards to determining the ROI of S&OP, research shows it takes about 18 months to see the full impact of the process in most organizations. A lot of that success depends on your planning and design now.

Activities in the initiation phase may include the following:

• Identify What S&OP Will Improve: You are not creating an S&OP process just for reporting or for the sake of checking a box and saying you have a process. You have an S&OP process to help enable decision making and to help solve planning problems. Identify the recurring issues you want to solve and the information or types of collaboration that will help enable decision making. This may relate to demand plans but it could also relate to channel strategies or product management. There are a thousand decisions being made daily in your business – figure out which ones you want S&OP to standardize and improve.

• Design a Pilot: Start with something easy to manage. By all means think BIG (I encourage it), but start small and build on success. The best place to start is to meet the company where it is now. Find the starting point that matches the strengths already present in the organization. It might take some time to figure out which function or people are best placed to handle S&OP. This can be by business unit, product group, or geography.

• Map the Process: You have your monthly objective of your initial pilot so now consider what it will take to achieve this. Identify the process steps, the information you need to bring to these steps, and the people you need to involve to gain consensus. Once you’ve mapped this out, consider which KPIs you will use to measure performance and foster continuous improvement.

• Be Flexible and Adaptable: Nothing is static and needs change as well. No matter how hard you try to make things run exactly like the textbooks say it should, there will be anomalies for every single S&OP process. So, it’s important that you and your organization are capable of responding quickly to both internal and external changes. The biggest lesson I have learned after implementing multiple S&OP processes is that while there are universal ‘truths’ in every successful S&OP/IBP implementation, the path to get there varies. The biggest thing is to commit to starting and, once it begins, provide oversight and support to key participants. Then, with persistence, it will gain traction and move forward.

I  will be speaking at IBF’s Global S&OP & IBP Best Practices Conference in Chicago from June 15-17. You’ll learn the ingredients of effective planning, whether you’re just getting started or are finetuning an existing process. Early Bird Pricing now open – more details here.

Successful S&OP implementation is not a law set in stone; each business is unique and has its own dynamics. Getting started can be one of the biggest challenges and knowing where to begin may be overwhelming.

How do we segregate the business and do we start with a certain geography or product line? Which meeting or process step should we focus on first and do we need all of them out of the gate? Like the answer to so many things – it depends.

There are a few options and each has pros and cons. Traditionally, you’d start with a volume forecast for a family or group of product families as a pilot. This involves all of the functions and provides a good baseline for S&OP process. From here, consensus is built, supply plans are developed and resource reviews adopted – these are the fundamentals of an end-to-end S&OP monthly process. We then add on other families and other elements as the S&OP process continues to mature.

But this is only one way it can be done. The following are starting points to launch an S&OP process. Which one you choose depends on the particular dynamics of your organization.

By Company, Business Unit Or Profit Center

One logical approach is to align to the P&L which is generally structured by business unit. Here you may have multiple business divisions or profit centers that roll up to the parent organization but each strategic business unit produces revenue and is responsible for its own costs.

Many times, each business unit has unique missions and objectives and planning is done separately from the parent organization. Starting in one of these divisions allows you to align a new S&OP process to the goals and structure of the unit at hand. Starting at a division/unit level provides a manageable first step.

By Hierarchy, Product, Brands, Geography Or Channels

Another very common way is to look at your current planning hierarchies and take a subset of one or more of them. Aggregation generally occurs over product, location, and customer and a good starting point may be one or any combination of those that fit strategically. If you go by product you may want to use four or five different item families. This can be done by choosing a brand and planning for the families under that brand.

For location, your company may be separated by geography and it may make sense to start in a single region then expand into others as you go. For channels, some businesses may be separated out by types of customers or the way they go to market. Starting with a subset of any of these allows you to get quick wins in planning and show value to other areas of the business.

Business Functions Or Processes

It is not always necessary that you start with a demand review and build from there. S&OP is a cross-functional process that will in time integrate everyone to a unified set of assumptions for coordinated decision making.

As a starting point, you may find an ally in one of them to get the ball rolling and build a process. Instead of a business unit or specific product you may find it advantageous to begin with a product review or help solve for a recurring planning gap for another function. When I worked with one organization that was very product centric and had strong product development, it made sense to begin with a product review that captured the key players and improved their ability to go to market.

Use An S&OP Maturity Model Before You Start

To get a sense of where your S&OP is at and the gaps you need to fill to progress to the next stage of S&OP maturity, use IBF’s S&OP Maturity Model Self-Assessment for free. It’ll give you practical recommendations to improve your planning and valuable resources to facilitate advancement.

Think Big, Start Small

Start with something easy to manage. It is generally much better to go ahead and think big, but start small and build on success. Many companies are overly ambitious at the start: their priority is a comprehensive S&OP process with all the bells and whistles. But when their expectations aren’t met, people are disappointed and pull out. Think big but start small!

For more insight into forecasting and planning best practices, join me at IBF’s Business Forecasting, Planning & S&OP Conference in Orlando, held from October 19-22 at the Wyndham Orlando Resort. The biggest and best event of it’s kind, it’s your opportunity to learn best practices in S&OP, demand planning and forecasting, and network and socialize in a fantastic setting. See here for details.

In the previous article we talked about the essential requirements for people and processes to ensure successful S&OP. In this second part, we will talk about the initial business decisions that must take place before the implementation process begins.

Understanding The Business

Rather than implementing a methodology that involves a cycle of meetings with key people, S&OP leaders and their teams need to understand the business they are in, and understand their products, competitors and trends. Benchmarking data is highly valuable when it comes to staying current with how your products and processes should be performing. [Ed: IBF members get access to world-leading S&OP,  forecasting and planning benchmark data.]

I have seen poorly-aligned S&OP processes that have not only failed to deliver wide strategic goals, but cost the company a lot of money in the process

Strategic Planning

A mature S&OP process supports the delivery of the strategic plan. With this in mind, it is necessary that S&OP’s objectives are 100% aligned with the business strategy. I have seen poorly-aligned S&OP processes that have not only failed to deliver wide strategic goals, but cost the company a lot of money in the process. I was recently in a situation where a new S&OP team at a midsize company was focused on reducing inventory without analyzing the risk of stockouts on the business. This was a major problem because the company’s strategy was to grow exponentially in almost all product categories. All teams were working towards this goal (including Marketing who were pushing the products aggressively) apart from S&OP. With the strategic misalignment of the S&OP team, many products were unavailable, causing a non-recoverable loss to the business that year.

Swot Analysis

The S&OP team needs to be clear about the Swot analysis of the business that will be covered in the S&OP process, primarily to tackle the Opportunities and improve the Weaknesses. One recommendation is to have a discussion with key managers to raise these already-known opportunities and pain points and prioritize those to be helped by the S&OP process. With this clarity and prioritization, results from the S&OP will happen faster.

Planning Horizon

This planning horizon depends on the type of business but as we are talking about an immature S&OP process, the shorter the planning planing horizon the better – when we start out, we want the process to be manageable and that means not looking too far ahead. Some businesses, however, do not allow for a short planning horizon – you’ll need to decide on what is most appropriate at the outset.

Set up KPIs so you can monitor how the implementation process is evolving and make any necessary adjustments

Key Performance Indicators

Another point that often ends up being an afterthought are key performance indicators. It is important that these are defined and set up so you can monitor how the implementation process is evolving. This way we can see if we’re on track and make any necessary adjustments. 

You should measure the performance of the following:

Strategies: Service Level (OTIF) , Working Capital, Growth Revenue, Margin, P&L. (Measure by Region, sales channel, product categories, etc.)

Sales: MAPE (Mean absolute percentage error) or Sales Forecast Accuracy, Bias. (Measure by Region, sales channel, product categories, etc.)

Operations: Accuracy of plans: production, materials, transfer of products to warehouses, revenues.

Inventories: Inventory days, inventory turn, inventory health.

Projections: Storage, % use of head count, % use of the industrial park.

S&OP Maturity: If the company already has an S&OP initiative in place, the recommendation is to measure the current maturity of the S&OP process using a maturity model. 

Everything you are planning needs to be measured so that adjustments are made exactly where you need them. If the company does not have a KPI process in place, the recommendation is to carry out performance measurements afterwards. This way you can identify what level of maturity the team has managed to achieve, and put together a plan for further improvement.

The purpose of this article is to make clear the essential requirements for sustainable S&OP process implementation. S&OP implementation has a high failure rate, with most initiatives not actually delivering any value and doing nothing to improve the balance between demand and supply. Using this S&OP kick-off guide, the chances of failure are much reduced, increasing your chances of leveraging S&OP as a growth driver that provides a real competitive edge.

Often the S&OP Process implementation initiative is carried out in a poorly structured way, especially when the implementation decision is made from the bottom up without executive sponsorship. The managers involved in this type of implementation end up not following the methodology completely, leaving out the essential pillars that are required to sustain the process. This means creating more work further down the line, day-to-day difficulties in the S&OP process, and, sometimes, damaging the credibility of the process which can result it its death. Haste and lack of capacity building are usually the key factors in the demise of the S&OP. S&OP is like building a house – it needs a strong foundation, and if the proper work is not carried out at the beginning, problems down the line can cause irrevocable damage. Here are some helpful pointers that will guide a successful S&OP, regardless of whether it is a top down or bottom up initiative.

Sponsor: This is the person who will provide the necessary support before, during and after the implementation of the S&OP process. This person must have great influence within the company, have knowledge of the process, and be able to carry out all the necessary alignments and approvals with the main managers. This person needs the necessary position and communication skills to open doors that may have been locked for years.  

S&OP in the hierarchy: Normally the S&OP area is created within the Supply Chain, however, when the process leaves stage 1 maturity it is important that the S&OP area reports to a neutral entity (free of department specific interests) in the company, for example: Finance or a senior executive. S&OP and its management need to maintain the collective interest with focus on the best result for the overall business.  

S&OP Leader: This person needs to have solid experience and knowledge in Supply Chain, as they will lead a wide range of different activities. In addition to the experience and technical expertise in the field, the S&OP leader will need to have great energy and discipline to meet the schedule, and a willingness to move people around and change processes to ensure integration. Ability to communicate at different levels is necessary.. Involvement of the human resources area is critical at this stage to find the right candidate. When choosing the right person for S&OP Leader, a junior profile will not cut it.

S&OP Team: As we are dealing with a total integration process, we absolutely must involve all areas, even if we have to demand it. An S&OP Committee is recommended for the initial phase, with all parties committing to collaboration and support of the implementation project. Choosing the right people and their backups is key to starting the process as well as maintaining it later on.

Roles and Responsibilities: Each S&OP member must have a clear role and defined responsibilities within the S&OP process. They need to be trained to contribute properly in the process – both inside and outside meetings – as facilitators and process owners. I recommend you use a matrix of responsibilities, train those involved and record all activities.

S&OP Meetings: All meetings must have: an objective, a duration, participants, inputs, discussions, outputs, attendance list, and a list of required actions. Participants at each meeting will need to be trained to ensure an effective meeting.

Meeting Schedule: All S&OP monthly and weekly cycle meetings need to be set in advance. In order for people to attend the meetings, invitations need to be sent as soon as possible. One recommendation is to keep the invitations sent for the next 3 months of meetings. It is necessary to pay attention to special dates like holidays and events that could affect attendance.

Documentation: The S&OP process must be formalized through documents like process flowcharts, procedures and operational instructions to ensure the decentralization of information and the survival of the process when a team member leaves. The is important in assisting standardization and proper management of S&OP documents. One of the most important documents is the S&OP policy which details S&OPs’ involvement in the business. In addition to containing all the requirements to establish and maintain the process, this document codifies the agreements and hierarchy of decision-making. It is a living document that must be kept up-to-date by the managers of the S&OP process.

Process Auditing: After a few monthly S&OP cycles, an S&OP audit process has to be defined to ensure that everything that was planned has been implemented in practice. This must be carried out by an independent team, who will have to be trained in S&OP to audit the process. In some companies this department already exists.

[Ed: These are the essential criteria for successful S&OP, that will both facilitate its implementation and sustainability. Only 1/3 of S&OP initiatives end up actually adding any value –  make sure you lay the appropriate foundations to ensure yours is a real growth driver.]

It’s your first day at a new company and you’re tasked with implementing S&OP. What’s the first thing you do?  The best starting point is to figure where to get the data for your forecast, and how you’re going to prepare it for input.

When we start with S&OP implementation it is essential to have the support of senior management and key people in each function to put all the pieces together. We’re talking Sales, Operations, Finance, Logistics and Purchasing. This collaboration is crucial for many reasons but primarily because this is how we get data, and without data, you don’t have an S&OP process.

The S&OP process must be aligned with Finance, making sure data inputs for both forecasts come from the same source. But before you start thinking of preparing your forecast, it is necessary to understand the following:

1. Know The Financial Performance Of The Company

The income statement of the company provides insight into what is really going on in the company. I consider it highly advisable to spend some time studying these statements and talking with the Finance people to identify the burning issues of the moment that are driving the decision-making process. Never lose sight of the fact that the S&OP process is a decision-making tool that directly impacts the income statement. Work to build the trust of senior management to reinforce this idea.

2. Know How Finance Uses Financial Statements

If Finance is using this information to plan for demand, the company will almost inevitably have planning problems. Using only this information is limiting because it is simply sales, dispatches and credit and debit notes applied to the account of each client. Dispatches and sales are not enough to plan effectively. It may happen that the difference between billing and dispatches is minimal, but either way, we need to know what the difference is in order to align the objectives of the business with those of Supply Chain and Operations.

3. Use Finance’s Data For Your Forecast Input

Use the same dispatch/sales information used by the Finance team as the input for your forecast. Why? Because we must use the same data if our forecasts (and subsequently plans) are to align. In every S&OP process, shipments to customers valued in USD is the first information we get from Finance. Use this data as the main input for your sales forecasts. If we skip this step and use Sales’ data for our capacity planning, we can end up Production not having the required resources, because Finance has developed the budget using completely different assumptions.

Once we have covered these 3 points, we can move onto data management.

Data Management

1. Look At The Data In Different Ways

Breakdown the data by client, by product, by production plant etc. This allows us to identify customers and their buying patterns. We can manually check for quirks that, if not picked-up on, can create errors in the forecast. One such quirk is a customer who used to buy products from one of your production plants, for but for whatever reason now buys from another. It can look like two different customers in two different locations, but in reality is the same customer. Another example is a customer changing its business name – it looks like two different customers but is again the same customer. Statistical forecasting without this manual override will not identify these quirks and will result in forecast error that is easily avoidable.

This bit of the process is repetitive and, frankly dull, but it’s important at the beginning because we need to cleanse our data that goes into the forecast. The old adage of garbage in, garbage out applies.

2. Look At product Mix

Looking at product mix is valuable because it allows use to identify changes in consumer behaviour, drops in demand of a particular product, changes in a specific customer’s behaviour etc. We can gain insight into what customers are doing and why, relating their behavior to specific demand influencing factors.

3. See If New Products Will Be Released

The S&OP process pays special attention to new products. Why? Because there is no historic demand to help us understand how many we’ll sell. We have very little idea how it’ll perform until it’s released into the market, by which time the initial planning phase is already completed. This means we must leverage the S&OP process, with its benefit of cross-functional collaboration, to gather as much qualitative insight as we can. We may not have hard data, but this knowledge can help us predict how it’ll perform.

With these steps completed we can start our forecasting process and arrive at numbers we can take into the pre-meeting. In the pre-meeting you’ll sit down with representatives from the Sales team and gain their input into short term demand and another factors that may influence demand that salespeople have unique insight into. This qualitative knowledge will help us refine our statistical forecasts. We’ll then be ready to go to develop a one number forecast all functions will work from. And when we have done that, we will have achieved the core component of S&OP – the creation of an integrated approach to understanding and fulfilling demand.

One of my favorite authors in this world we call S&OP is Tom Wallace, who co-wrote “Sales & Operations Planning, The How-to Handbook”. It’s one of the definitive texts on S&OP, in large part because it is both easy to understand and includes insight not found in traditional S&OP theory. It helped me understand what really matters in S&OP implementation, and I have used a lot of the ideas for this quick guide, which is designed to help you hit the ground running with your own implementation project. 

For those venturing into the implementation and leadership role of this process, something that will be fundamental to your success is knowing that the process depends on more than just the statistical, process and knowledge elements. The Pareto rule applies here – in the S&OP process (both in its implementation and in its leadership) that 80% of  success in S&OP depends on the people involved, 15% of the data and 5% of the hardware or software used. People then, are what will make S&OP happen – the data and hardware are secondary.

80% of  success in S&OP depends on the people involved

Let’s take a look at the above and see how we can use it to our advantage. So, 80% of the success in S&OP depends on the people involved, but what do we mean exactly by “people”? It goes without saying that relationships play a fundamental role. When we occupy cross-functional and cross-leadership positions (positions where teamwork with different areas is the basis of the work itself), the way we communicate directly affects the outcome of the process. Communication and collaboration, therefore, are key in S&OP.

80%: The Human Element Of S&OP

One of the main challenges of the S&OP leader is to interact with different areas, speaking the language that each of them uses; with production I will talk about production volumes, frequency of maintenance, man hours required for each production step, production capacity meetings etc. With sales, I talk about sales volume, prices, market share, forecasts and forecast accuracy, and forecast validation meetings etc. When the process reaches maturity, we will talk to Finance, using such terms as sales budget, billing, profit margin, EBITDA, etc. All of this  provides an advantage if the person in charge of S&OP knows the business fully. I do not mean necessarily that this person must be an expert in the business, but they should at least know enough so that meetings and discussions are consistent with company goals.

Have a systemic vision of the process and avoid the silo mentality

Have a systemic vision of the process and avoid the silo mentality, where everyone defends their own work area. The S&OP leader works as a conductor by aligning each point with the strategic plan with the operation, so they must be a person with good verbal communication skills and, importantly, courage. Courage is crucial because there will times when this person needs to “show their teeth” to get things done. Establishing requirements between areas without conflict is also key. After all, the S&OP process is central to the company-wide decision- making process, so all interested parties should be active participants in it. The S&OP leader must motivate that behavior.

Quantitative data is only the beginning because there are a lot of details that only the heads of departments know

15%: The Data & Where To Get It

15% of success in S&OP depends on the data. Obtaining data for the S&OP process is fundamental, in fact, without data there is no process to lead. One of the main consequences of the silo mentality is a lack of data upon with which to make decisions. Quantitative data is only the beginning because there are a lot of details that only the heads of Production, Finance, and Sales know. If the S&OP process is well laid out, these details will be taken into account. We’re talking about incorporating insight into new products, consumer demand spikes that escape statistical analysis, changes in consumer demand, and negotiations with suppliers etc.

Obtain all possible information from your Enterprise Management System with the help of the IT team. Look at the data and study its dynamics because it is necessary to understand how the numbers move along the cycle. It is very important to know how each area works and how it connects with the process. I recommend investing a lot of time in this step because by improving our information system with each cycle, new information appears that enriches the entire process.

Excel is a good way to kick-start the process and bring order and discipline to decision-making

5%: Hardware And Software

5% of success in S&OP depends on the hardware and software used. There are companies that have specific software for this, others only implement some parts of the process such as Demand Planning with Excel spreadsheets. In my first S&OP implementation project, I used Excel only. We all know that a spreadsheet is not the best tool for this, but it is a way to kick-start the process and bring order and discipline to decision-making. Then, as the process covers other regions and geographies, it is necessary to incorporate other technology, but to start with, specialized tools are not necessary.

For those of you undertaking this journey, don’t allow yourself to be discouraged, and don’t lose sight of what drives 80% of this process – that is to say, people.

‘Sales and Operations Planning: The How-to Handbook” by Thomas F. Wallace is available for purchase on IBF’s online store.