I recently wrote an article titled, “Why Surging Adoption of S&OP is No Accident“. In it, I argued that S&OP remains key for any business contending with 1) external, fiercely competitive markets; and 2) internal, persistent directives demanding more agility and operational efficiencies.

Why, then, aren’t more organizations deploying this business process? In perplexing instances such as this, it can be more useful to play devil’s advocate and explore why more companies aren’t deploying S&OP, or at least not successfully. While S&OP promises a plethora of benefits, it is surprising that many businesses have been slow to embrace this transformative practice or have failed in their initial attempts. This article delves into the reasons behind the hesitancy, and offers insights to help organizations overcome these obstacles to reap the practical rewards of S&OP.

The Promise of S&OP

S&OP is a cross-functional process that involves all functional areas—Sales, Marketing, Operations, Finance, and Supply Chain Management—working together to develop one unified plan toward business goals. The primary objective of S&OP is to synchronize demand and supply over a strategic horizon, allowing organizations to optimize resource utilization, reduce inventory costs, enhance customer satisfaction, and increase profitability. Yet, despite its potential advantages, S&OP adoption has been far from universal.  So, what’s holding some companies back?

Barriers to S&OP Adoption

1. Lack of Top Management Support: S&OP requires substantial organizational commitment and willingness to change. Without support from top management, it becomes both practically and politically challenging to allocate resources, implement necessary changes, and drive the cultural shift needed to make S&OP successful. Relapses can occur when there are regime changes at the top, especially if new leadership tries to mark their new territory by moving in a different direction.

2.Siloed Organizational Structure: Traditional hierarchical structures can foster the creation of silos within organizations, hindering the free flow of information and collaboration between various functional departments. S&OP relies heavily on cross-functional teamwork, making it challenging for companies with rigid structures to effectively implement the process. Whether intentional or not, it’s hard to overcome a tiered, closed-off system that promotes a “stay out of my sandbox” mindset.

3.Data Quality and Integration Issues: S&OP hinges on accurate and timely data availability from various sources. If a company’s data management systems are not up to par, or if there are ongoing, unresolved data integration gaps, the entire S&OP process can be compromised, leading to inaccurate forecasts and decisions. Making decisions based on bad data will only lead to one thing—a bad decision.

4.Resistance to Change: Introducing S&OP often necessitates changes in processes, responsibilities, and even company culture. Resistance to change is a natural human response and can emerge due to employee fears of job insecurity, loss of control, or unfamiliarity with the new processes and/or technology. What is true of any process change, but particularly so with S&OP, is that changing hearts and minds can really test an organization’s resolve to pivot from entrenched daily routines and move toward more forward-looking, sustainable strategies.

5. Lack of Clear Communication: S&OP demands a clear and transparent exchange of information between organizations. Poor communication and lack of strategic direction can lead to misunderstandings, misaligned objectives, and flawed decision-making.

6. Complex Implementation Process: Implementing S&OP may evolve into a more complex endeavour than anticipated due to a combination or even culmination of these potential barriers. Like any worthwhile endeavour, S&OP development and deployment involves substantial time, resources and a commitment to change to ensure success. Companies might shy away from adoption due to concerns about potential disruption to ongoing operations during the implementation phase.

Overcoming the Hurdles

1. Top-Down Support: For S&OP to thrive, leaders must champion the cause and demonstrate their ongoing commitment to the process and its benefits. Clearly defined strategic objectives and financial goals must be communicated throughout the entire organization.

2. Cross-Functional Collaboration: Breaking down silos and fostering collaboration between departments is crucial. Organizations can facilitate this by creating dedicated cross-functional teams and promoting a culture of cooperation to drive company-wide success.

3. Master Data Management (MDM) / Data Management Enhancement: The evidence is clear that investing in robust data management systems and integration capabilities will ensure more accurate, real-time information flow. It’s not uncommon to start with disparate systems bound together through Excel and other various query tools.  However, develop a plan for technology deployment over time.

4. Change Management: Addressing employees’ concerns and providing adequate training can mitigate resistance to change. Transparent communication about the benefits of S&OP can also help ease the transition. Develop a change management program at the onset of your S&OP deployment project and designate an in-house articulate communicator/leader to champion this effort.

5. Project Management / Phased Implementation: Kudos to those businesses that adopt a phased approach to S&OP implementation to minimize disruptions and allow for gradual adjustments. In many cases a phased-in implementation is actually the smarter approach—first crawl, then walk, then run. S&OP deployments take time to mature, so set the expectation of improvement over time through continuous cycles of learning.

6. Technology Adoption: Leveraging advanced technologies such as AI and machine learning can enhance forecasting accuracy and decision-making in the S&OP process. Integrating new technology can also occur over time, but these advanced tools must serve the demands of the endorsed process, not the other way around.

The Bottom Line

Sales & Operations Planning still holds the promise of coordinating and reconciling an organization’s functions to maximize efficiency and effectiveness. However, businesses must recognize that the road to successful S&OP implementation requires commitment, collaboration, and the willingness to embrace change. Because of its transformative potential, enterprises that 1) are willing to self-evaluate to determine potential internal hindrances to S&OP adoption; and 2) implement appropriate, proactive measures to resolve or mitigate these issues are already way ahead of the game.

Whether your organization hasn’t started an S&OP deployment or continues to struggle in its efforts, achieving a better understanding of your own barriers to success is half the battle in conquering these obstacles. The recommended solutions outlined above can help your enterprise unlock the tangible benefits of S&OP, thereby gaining a more competitive edge in an increasingly dynamic market landscape.

To learn the fundamentals and best practices of S&OP/IBP, join us in Chicago from June 12-14 for the biggest conference of its kind. With several workshop sessions, networking, and panel discussions it is where you’ll make S&OP a reality in your organization or elevate an existing process. Click here for more details.

 Many companies strive to build, enhance, and protect their culture for a variety of reasons. Through corporate culture, companies provide an experience to their internal and external stakeholders that impacts the longevity of those multi-directional relationships. These relationships carry a premium value that directly impacts the bottom line.

In this article, I will describe why and how to build a data-driven culture that serves both internal and external stakeholders with a focus on the supply chain.

What is Culture?

One of the most comprehensive definitions I have encountered was provided by Dr. Norman Doidge in his book The Brain That Changes Itself, stating that “Culture is not just produced by the brain; it is also by definition a series of experience that shape the mind…we become “cultured” through training in activities such as customs, arts, ways of interacting with people and the use of technologies and the learning of beliefs and shared philosophies and religion.”

One’s identity is difficult to contain as we evolve, experience, and learn. This makes Dr. Doidge’s definition for the concept of culture appealing. We can all be on a self-correcting path by evaluating our experiences and their resulting takeaways. Although this broadly pertains to an individual’s own domain, the corporate world has a responsibility to improve the quality of the experience that their employees can ‘life’. These experiences might slowly but surely impact their weltanschauung [world view], and directly impact how employees evaluate and respond to what is around them. This is engrained in companies that have a well-defined culture.

“The starting point is identifying the mission statement – defining the purpose of the organization and how it serves its customers.”

As more and more companies mature in their culture, that responsibility grows to have an impact both internally and externally. The starting point of, course, is identifying the mission statement – defining the purpose of the organization and how it intends to serve its customers.

Internal Impact of Corporate Culture

Similar to how people become cultured in society as a whole, employees can build, embrace and enhance the corporate culture. The more serene and positive the culture, the higher the positive impact on the bottom-line. This is mainly driven by enhanced productivity through employees’ willingness to go the extra mile and adapt their efforts to support companies in dire times.

Additionally, higher employee retention rates have a direct correlation with minimizing additional costs. Based on stats shared by recruitment site www.indeed.com, hiring a new employee for most companies ranges between $4,000 and $20,000 – excluding salary and benefits.

Just some of the many external costs include advertising and marketing expenses, background checks and eligibility to work expenses, drug testing expenses, employee referral payments, and relocation costs. There are, however, additional costs that are harder to identify such as the time existing employees spend training the new hire and as a I see it, a “calibration” cost that is associated with transitioning a specific duty to a new employee while minimizing the risk of errors as part of the learning curve.

External Impact of Corporate Culture

When a positive culture is established, it is visible to the external stakeholders through employees’ interactions as well as the company’s overall reputation. The market positioning from the direct interaction between the clients and employees can be a competitive advantage that no one else can replicate.

The quality of service that the customer facing teams provide is a direct reflection of the quality of service the support teams behind the scene present as well. Culture is at the heart of all interactions.

While culture can positivity maximize the top line through repeat business from satisfied customers and converting new opportunities thanks to a positive reputation in the marketplace, it can also enhance the bottom line through cost reduction resulting from employee retention.

Key Characteristics of a Data-Driven Culture

There are few major characteristics of data driven cultures:

Objectivity

When internal teams are aligned on the importance of the data, it helps foster a safety zone in which to openly debate different points of view. This helps gain alignment without necessarily having to reach full consensus. This is where decision makers must look beyond their own interests while accepting that the best, data driven decisions win. Amongst many other things, objectivity means:

1.) Making decisions with the quality of the final product or service in mind beyond what is easy or convenient. The best opportunity I had to witness this approach was in the CDMO industry (Contract Drug Manufacturing Organization) and in the medical devices industry. The quality and availability of an end product that would help save a patient’s life – whether it was a drug or emergency medical device – would override any other consideration.

2.) Making decisions while accounting for both the current state of the P&L and the impact on future profitability. The best opportunity I had to witness this approach in action was in a global leading performance fabric company that is family owned. Critical decisions in that organization are never made without accounting for the potential long term impact on the future generations of the family.

Trust and Humility

Trust is a prerequisite to humility. The best way to build trust is through aligning on facts, and the best way to align on facts is through data. Where there is a healthy culture, employees across the hierarchy of the organization welcome constructive debate, have the humility to seek advice and feedback, and admit mistakes.

The major advantage that data driven cultures have lies in the ability to self-correct and apply lessons learned in transformation and agility journeys. This creates a unique competitive advantage. When major change-driving decisions are made and announced with transparency, and supported by data and facts, even the most difficult decisions such as reorganizations can be supported by employees across all levels. For that to happen, the foundation of a data-driven culture needs to be established so that such transparency can be accompanied with wisdom and compassion. It is worth noting that wisdom and compassion in a healthy culture is not limited to the top down, but also from the bottom up.

The Importance Of Data Integrity

The best way to appreciate something is to realize the impact of its absence or malfunction. Poor-quality data therefore can help a company embrace a data driven culture. When there is poor data within an organization, employees always welcome data integrity enhancements.

“The best way to appreciate something is to realize the impact of its absence or malfunction.”

Accounting for the fact that there is a hierarchy of planning based on horizon, investing in data integrity should be a strategic endeavor. The reasoning behind that is simple: the longer the decision horizon, the bigger the magnitude of the negative impact that using bad data has on an organization.

Once the negative impact of using bad data is comprehended, fixing the data becomes a strategic target that gets sponsored by the senior executive team.

How Processes Can Help Build a Data Driven Culture

Once data integrity is achieved, if it is not leveraged to its fullest extent, opportunities can be missed. The philosophical question posed by Dr. George Berkeley, an Anglican Bishop and philosopher in the 1600s, comes to mind: “If a tree falls in a forest and no one is around to hear it, does it make a sound?”

To ensure that organizations benefit from available data, robust processes should be implemented. S&OP/IBP is definitely a process that leverages data to its fullest extent, bridging the gap between execution and strategy with a direct impact on the bottom line. This is done in a a variety of ways. Some of the advantages consist of proactively providing visibility to constraints through the means of scenario planning and in ensuring cross-functional alignment on the integrated forecast.

“To ensure that organizations benefit from available data, robust processes should be implemented.”

An AMR Research study indicates that more than 50% of companies that implement S&OP experience increased sales revenue, along with other benefits that impact the P&L.

In addition to nurturing the data and giving it a home in the form of a process, to get the desired results across the different decision-making horizon the process itself needs to be well defined and established. The key components in ensuring the process progresses in its maturity journey include having the right champions, participants, and cadence.

Supply Chain/Operations is the Leader in Building a Data-Driven Culture

Amongst the main planning nodes that are part of a good S&OP/IBP process, Demand Planning & Forecasting represents the key node that helps shape the identity of this unique process. Although this function can fall under any part of the organization, it is well suited to being housed within supply chain. This doesn’t mean at all that S&OP/IBP is strictly a supply chain process. As the very name of Integrated Business Planning (IBP) indicates, it is a business process necessitating the integration of all the major business plans within the organization. However, the process is best suited to this segment of the business due to the lack of bias towards the demand signals that have a concrete impact on the rest of the organization.

A survey conducted by the Institute of Business Forecasting and Planning (IBF) indicated that 50% of the surveyed organizations house the Forecasting and Planning function under Supply Chain (Operations, Logistics, Procurement).

As such, to establish a data-driven culture from the ground up, once data integrity concerns are addressed, the right process needs to be established to derive the best results from the data.

“If we want objectivity, trust, and humility at the core of a data-driven culture, what environment should we provide employees to nurture it?”

One question we should all ask ourselves as leaders is that if we want objectivity, trust, and humility at the core of a data-driven culture, what environment should we provide employees to nurture it? This is where we must be clear on how to maintain positive human interaction in serving the people entrusted to our care.

To get up to speed with the fundamentals of S&OP and IBP, join IBF for our 2- or 3-day Boot Camp in Miami, from Feb 6-8. You’ll receive training in best practices from leading experts, designed to make these processes a reality in your organization. Super Early Bird Pricing is open now. Details and registration.

I recently read Bob Stahl’s newest book, Sales and Operations Planning – An Executive Update, and I came away with a different perspective on a long-time problem; how to get consensus on a challenging forecast.  

Over the course of my long career, I have been part of, or facilitated, more than a thousand consensus meetings. And while most of these sessions generated little to no organizational tension, there have been times when it has been particularly difficult getting different parties (Sales, Marketing, Finance) to agree on a forecast. Under normal circumstances, early in the year and new product forecasts tend to cause the most tension because of the significant commercial ambitions loaded into these plans.

However, even these plans are often malleable with sufficient supporting data and conversation. The most difficult consensus challenges are always those forecasts that are most speculative, with little supporting data or with the greatest uncertainty.

Finding Consensus During Demand Chaos

COVID created forecasting chaos for many organizations. Tension increased during consensus meetings, especially during the early phases of the pandemic when, as an example, the fortunes of different product families were trending in opposite directions. Demand felt out of control.

“It was as if the pandemic froze us into inaction.”

The once-in-a-lifetime disruption confronting all of us made it hard to arrive at a forecast that everyone could agree on, despite having considerable supporting data. And for those product families for which orders and POS activity were down, arriving at consensus often seemed more difficult. No one wanted to “give-up” on the forecast so early in the year – especially given the unknown nature of consumer behavior in disruptive times. It was as if the pandemic froze us into inaction.

How I Handled Disagreements During COVID & What I’d Do Differently

When I was faced with the inability to arrive at consensus for many of the declining categories, I found myself proposing a simple approach that short-armed the forecast. I suggested looking at only at the next two to three months—acknowledging the reality of a short-term decline–while also holding the outermost forecast range to prior expectations.

We then provided a growth ramp back to the original forecast. It was a cheat of sorts. We did not “put the moose on the table” as Bob Stahl might have suggested but the short arming allowed us to move forward, effectively kicking the can down the road to the next month when better or more confirming information might be available.

While this tactic felt right in the moment, it also tossed out the window some time-honored S&OP concepts regarding managing the depth of horizon of a forecast. And while it is hard to call this approach a mistake, as we were in dark and unknown waters at the time, in hindsight it would have been better to press the issue more—to lean less on the crutch of uncertainty and rather push each member of the consensus group for their best (in this case, lowest) call.

“Start with a plan that everyone can roughly agree on, and then further challenge the assumptions.”

Instead, we did not so much collaborate on a plan; it was more like we ducked for cover. Which brings me to Bob’s book, in which he makes a pragmatic point that really resonated with me: Start with a plan that everyone can roughly agree on, and then further challenge the assumptions of that plan to get further clarity.

The ‘Greatest Common Denominator” Approach to Planning

Think of this as almost a “greatest common denominator” approach to planning. Effectively, the consensus facilitator starts by asking everyone their estimate and supporting data before trying to seek agreement. For example, in the face of double-digit declines ask, “Does everyone agree the forecast should come down for the year ?” Then follow that up by asking, “By how much, and how would you pace the decline?” By asking relatively open ended questions all voices and opinions are heard, and the range of perceived opportunities are dimensioned.

After reading Bob’s book, it became apparent to me that by putting in a short arm “device” we avoided much in the way of thoughtful conversation. We did not seek common ground. I know this because nearly everyone walked out of the consensus meeting thinking that the forecast should have been lower. We did not reach consensus – we only postponed the hard decision by four or five months when we finally made the hard calls needed to reset the forecast lower.

Some Conflict is Normal is S&OP – Embrace It

Most long-term S&OP practitioners know all too well that at least some level of tension, conflict, and disagreement are normal in consensus meetings. In fact, some disagreement within the S&OP process is to be expected and perhaps even encouraged. No one wants an S&OP plan put together via groupthink and without some rigor of organizational tension applied. Unfortunately, in the midst of COVID, we avoided this tension.

“No one wants an S&OP plan put together via groupthink.”

One of the most important lessons to come out of the COVID crisis (and Bob’s book) is to solicit more opinions and points of view as a way to put more voices into the forecasting process before trying to arrive at an agreed number. Let the opinions of the consensus team come out and bloom to see if there is a unifying or common perspective before trying to narrow the forecast. Disagreements over outcomes earlier in the pandemic would have helped avoid “chasing the forecast down” phenomena that ultimately occurred.

If history offers a lesson, avoiding tension is, well, wrong. If we believe disruption will become more common place, this is a lesson worth learning.

To get up to speed with the fundamentals of S&OP and IBP, join IBF for our 2- or 3-day Boot Camp in Miami, from Feb 6-8. You’ll receive training in best practices from leading experts, designed to make these processes a reality in your organization. Super Early Bird Pricing is open now. Details and registration.

In today’s rapidly evolving business landscape, in which companies are facing an unprecedented level of complexity and uncertainty, Sales and Operations Planning (S&OP) is undeniably having a moment. For organizations facing global supply chain disruptions, market volatility, changing consumer preferences, and rapid technological change, S&OP deployments have emerged as the critical strategic process experiencing a surge in demand.

The Fundamentals of S&OP

Progressing from a strictly manufacturing-based, supply chain-oriented business process in the 1980s, today’s more mature S&OP process boasts an end-to-end, cross-functional program that better aligns a company’s sales and marketing efforts with its operational capabilities. The current iteration of S&OP incorporates technology gains (AI/ML) with a more inclusive and collaborative approach that brings together all relevant departments within an organization, including Sales, Marketing, Finance, Operations, and Supply Chain Management.

The goal of S&OP is to create a unified plan that integrates demand forecasting, inventory management, production scheduling, and financial planning to ensure that a company can meet customer demand, optimize its operational efficiency, and maintain a long-term financial view beyond a given fiscal year.

S&OP Addresses the Challenges of Today’s Business Environment

Several factors contribute to the challenges many businesses face today. These challenges illustrate a persistent, recurring theme, with increasing magnitude and frequency. So, what are the most common issues, and how can S&OP address them?

More Complexity in Supply Chains

As companies continue to expand globally and source materials from various regions, supply chains have grown increasingly more complex. Managing these intricate global supply chain networks more nimbly means that an organization’s best bet is to develop and deploy more advanced planning capabilities, i.e., effective S&OP processes.

Supply Chain Disruptions

The COVID-19 pandemic highlighted the inherent vulnerabilities in global supply chains. Companies suddenly had to navigate sudden disruptions, shortages, and delays in production and transportation. Natural disasters, geopolitical tensions, and other unexpected disruptions can also severely impact the efficiency and reliability of these supply chains. S&OP provides a proven framework to assess and mitigate these risks by 1) proactively enabling better long-term visibility into supply chain dynamics, and 2) evaluating alternate scenarios to mitigate potential disruptions.

Sales vs. Consumer Expectations

Consumer preferences are evolving at an unprecedented pace, driven by technological advances and changing societal values. Today’s customers expect quick and accurate responses to their demand. Companies must be more agile in first adapting their product offerings, and then intentionally rolling out new products to best meet these shifting demands. S&OP allows organizations to more quickly adjust their production and distribution strategies based on changing consumer behavior.

Data and Analytics

The advent of advanced technologies such as data analytics, artificial intelligence, and machine learning has given businesses crucial tools to gain deeper insights into their operations and market trends. Today’s S&OP integrates these tools into its framework, giving enterprises the capability to quickly analyse vast amounts of data, enhance demand forecasting accuracy, optimize inventory levels, and align production with actual customer needs.

Global Competition

As markets become more interconnected, companies are facing stiffer competition from both domestic and international players. Optimizing the balance between supply and demand through S&OP can provide a competitive edge by reducing costs and improving customer satisfaction.

Financial Pressures

Efficient resource allocation is a crucial advantage within a volatile economic environment. Mature S&OP programs integrate financial planning into the operational decision-making process, enabling companies to allocate resources more effectively and manage working capital efficiently.

Benefits of S&OP

It’s not just today’s business challenges driving the surging demand for S&OP.  Industry analysts, consultancies, and trade associations, among others, are promoting its value by sharing success stories while highlighting the tangible benefits gained in S&OP deployments:

1. Improved Forecast Accuracy: S&OP enhances demand forecasting accuracy by leveraging data-driven insights with real-time analytics, leading to better predictive – rather than reactive – planning and reduced risk of inventory imbalances.

2. Enhanced Collaboration: Formerly a sticking point in previous S&OP iterations, today’s S&OP breaks down silos between departments, fostering cross-functional collaboration and alignment around ONE unified plan.

3. Optimized Inventory Management: By aligning production and distribution with actual demand, companies can maintain right-sized inventory levels which reduce carrying costs and the risk of obsolescence.

4. Flexible Response: S&OP provides companies the agility in a timeframe needed to respond quickly to unexpected market changes, minimizing disruptions and capturing opportunities.

5. Strategic Decision-Making: With a complete view of operations and sales, executives can make more informed, strategic decisions that consider both short- and long-term goals.

Implementing S&OP isn’t without its challenges. However, rising demand demonstrates that companies are recognizing S&OP is more than just a business process. It’s a strategic enabler that empowers businesses to navigate uncertainty with the agility to make well-informed, timely decisions. The ability to align sales and operations, optimize resources, and respond to market dynamics is no longer a luxury but a necessity for success in today’s business landscape. As technology continues to advance and markets evolve, the importance of S&OP is likely to increase, cementing its role as a cornerstone of a modern business strategy.

To get up to speed with the fundamentals of S&OP and IBP, join IBF for our 2- or 3-day Boot Camp in Miami, from Feb 6-8. You’ll receive training in best practices from leading experts, designed to make these processes a reality in your organization. Super Early Bird Pricing is open now. Details and registration.

One of the most important aspects of being a successful leader is loving people leadership. You have to really enjoy it and have a passion for it. In my demand planning career I have worked in individual contributor roles but I quickly realized that my passion is really in developing and empowering people. 

The Keys to Building Effective Teams

1. The first key to building really great teams that are highly motivated and drive their own work is having a very clear mission – what are we here to do, what is our mission statement, what are we delivering year after year? It needs to go beyond just having a vision; it needs to be a defined mission statement that every business activity supports and works towards

2. Secondly it’s mastery, i.e. getting your team members to become experts in their field. As a leader, it is my job to help people learn their jobs. What I do annually with the IBF is the certification of my planners and I always budget for that year after year because that is my way of investing and developing my team members. That’s how I give them the foundational knowledge of what forecasting and S&OP should be. They all come back and say that it was such a great use of time, that they’re better informed, understand why we do what we do, and why S&OP is a critical business decision making process. [Ed: learn more about getting your team certified here.]

3. The third key is giving team members autonomy. There’s a lot of debate around coming to the office and making that mandatory. The Coca-Cola company has a flexible work-from-home program and we are completely hybrid. I have teams all over North America. We try to have physical meetings whenever we can but I give everybody complete autonomy when they come into the office. As long as they know what their individual missions are and they have the skills and the tools to complete and do their work as effectively and efficiently as possible. I find that this kind of independence helps bring the best out in people.  

It All Starts With Hiring the Right People 

The starting point to developing effective teams where individuals can be trusted to drive value independently is of course hiring good people. People make all the difference – you could have the same process, same leadership, same technology, same everything, but when you hire good people you can really take performance to the next level. 

The number one thing I look for is enthusiasm and passion for the work they do because you can’t teach that. You bring that with you as a person. I have always been so passionate about the work that I do that people always say “Oh my God Sara, you love what you do,” because I do and it shows. That passion allows me to go and try different things and learn and continue to develop myself. I want to see that in others because I know how powerful it can be.

Number two is intellectual curiosity. I want people on my team who ask, why is it like that? I want  them to say “Oh, Sara’s offering a forecasting certification program. I don’t know what that is but I want to go do that”. I want people who want to expand their knowledge and get excited when Gartner publishes this thing, or when the latest issue of the Journal of Business Forecasting is released, or when Apple News drops an article on machine learning. 

I love when people ask why the forecast looks like that, what retailers are doing, or what is happening with the consumers because that intellectual curiosity allows them to learn and improve in their roles.

It can lead them to learn things I might not know and it might be something that we can explore and take advantage of. It’s so important as a leader to adopt the attitude that I’m not the smartest person in the room. If I am then I hired all the wrong people! I don’t know everything so I need others to bring their expertise and their learning so we can be better together as a team.

 I very much lead like that and I love having my team challenge one another respectfully and challenge me and say “Sara wouldn’t it be better if we did it this way”. If it makes sense I say, yes absolutely. I tell them to go explore it and report back on what they find out and if it’s something that we need to go after, let’s figure out how we’re gonna do it.

Mentoring Helped Me Enormously – It’ll Help Your Team Members Too

Mentoring is very important in people’s career development and I’ve had many mentors in my career. Without my mentors and advisors I’m not sure if I would be where I am today. Mentors are people who can advise you but do supervise you. I have had people approach me for mentorship after hearing me speak at a Town Hall or at a conference.

When people reach out to you you can see if there’s a personal connection (i.e. beyond just professional interest). If there is, it is worth establishing a structured mentoring process. It’s my job as a mentor to schedule time for and provide a framework whereby there is an objective for the mentee, with actions or follow-ups that are then documented by the mentee that help to track progress. It’s a two way street: the mentee has to commit to doing work outside the meetings and the mentor has to provide feedback and guidance to make it worth their while.

Mentors have helped me get through some tight spots. I have had career failures – just like we all all do – and whenever I had those challenges, my mentors helped me get through them. Now I want to pay it forward and I have many, many mentees and many of them just find me. In fact, the latest mentee who reached out to me found me through an IBF podcast on Forecast Value Added. He’s currently implementing S&OP for a company in Atlanta and he wanted my perspective on certain challenges that he’s facing, so we connected. My point being, when people reach out to you, think about how you can help them and don’t be shy about formalizing a mentor/mentee process, whether that’s internal or external to the company.

Leadership Is Driving Team Members Towards Self Actualization

Ultimately, high-performing teams in any field is down to leaders building up their individual team members, giving them mastery over their domain, and bringing them to a point of self-actualization whereby they become the value drivers of the organization. It’s my goal at all times to build people up so I’m not the smartest person in the room. 

One of the best ways to develop demand planning teams is training and certification. IBF’s Certified Professional Forecaster program trains your team in demand planning best practices and validates their knowledge and skills. Upskill your team. 

One of the most crucial elements of supply chain planning is Sales and Operations Planning (S&OP). It provides the channels of communication necessary for top management to coordinate the many planning initiatives within a company.

The major goal is to create a comprehensive business plan that combines the efforts of several functional planning initiatives. If S&OP is not integrated and operating under a cross-functional plan, the business could fail. Here are the top five advantages of S&OP and why every company should implement this method.

1. S&OP Leads to Improved Customer Service

One of the most significant benefits of S&OP is its ability to improve customer service. By bringing together different departments within a company, S&OP enables organizations to better understand customer demand and develop a more accurate forecast of future demand. This, in turn, helps companies optimize their inventory levels, ensure timely delivery of products, and avoid stockouts or overstocks.

With S&OP, companies can also better align their production and delivery schedules with customer demand, reducing lead times and improving on-time delivery performance. By improving customer service, companies can not only enhance customer satisfaction but also increase customer loyalty and generate repeat business.

2. S&OP Means Better Efficiency & Productivity

S&OP also helps companies increase efficiency and productivity by improving their planning processes. By integrating different departments and functions, S&OP helps companies identify and eliminate bottlenecks and inefficiencies in their supply chain, production, and logistics processes.

S&OP also enables companies to optimize their use of resources, such as labor, equipment, and raw materials, by aligning production schedules with demand forecasts. This helps companies reduce their production costs, improve their asset utilization, and increase their overall productivity.

3. S&OP Means Better Collaboration Between Different Functions

Better integration between functional areas in a business is one of the major payoffs of S&OP. By bringing together stakeholders from sales, operations, finance, and other areas of the business, S&OP enables companies to share information, align their goals, and coordinate their actions.

S&OP also helps companies break down silos and overcome functional barriers, creating a more integrated and collaborative culture. This, in turn, helps companies improve their agility and responsiveness to changing customer needs and market conditions.

4. S&OP Will Enhance Decision-Making

Another significant benefit of S&OP is its ability to enhance decision-making across different departments and functions. By providing a holistic view of the business, S&OP enables organizations to make informed decisions that align with their strategic objectives.

With S&OP, companies can evaluate different scenarios and options, such as changing demand patterns, market trends, or supply chain disruptions, and develop contingency plans to mitigate risks and capitalize on opportunities. This enables companies to make better decisions, reduce uncertainty and improve their overall performance.

5. Without S&OP You Lose a Competitive Advantage

Finally, S&OP can provide companies with a significant competitive advantage by enabling them to differentiate themselves from their competitors. By optimizing their supply chain, production, and logistics processes, companies can improve their delivery performance, reduce their costs, and enhance their customer service.

S&OP also helps companies become more agile and responsive to changing market conditions, enabling them to quickly adapt to new opportunities or challenges. By leveraging S&OP to improve their overall performance, companies can create a sustainable competitive advantage and achieve long-term success.

In conclusion, Sales and Operations Planning (S&OP) is a critical process for any organization looking to improve its performance, increase its efficiency, and enhance its customer service. By providing a framework for improving communication, collaboration, and decision-making across different departments, S&OP can help companies achieve a significant competitive advantage and achieve long-term success.

To get up to speed with supply planning and S&OP, join us in Nashville from August 9-11, 2023 for IBF’s Supply Chain Planning Boot Camp. It’s 2 or 3 days of expert instruction designed to give you the knowledge to establish or improve supply chain planning in your organization.  Early Bird Pricing now open. Click here for details.

One of my favorite books is Good to Great: Why Some Companies Make the Leap…and Others Don’t. Published in 2001 by business management professor Jim Collins, it outlines the fundamental ideas that set successful businesses apart from ordinary ones. I have seen first-hand how these principles can be applied to drive success in Sales and Operations Planning (S&OP).

Collins discovered that success was the result of three key elements:

• Disciplined people
• Disciplined thought
• Disciplined actions

In S&OP, we always talk about People, Process and Technology as the crucial pillars of success. We don’t think in terms of disciplined people, disciplined thought, or disciplined actions. But S&OP, when it has the right People, Process, and Technology, what we get is disciplined people, disciplined thought and, best of all, disciplined actions.

Let’s dive into these 3 pillars of S&OP and see how Vanguard organizations who take S&OP from good to great apply Collin’s key principles to each.

Disciplined People in S&OP

Jim Collins discovered that outstanding (level five) leadership was a shared trait of all great businesses. I have witnessed how strong S&OP always has involved, humble, open, and strategic leaders. These people maintain a spirit of humility and perseverance. These level 5 leaders develop core principles that go beyond just making money. Such people support the S&OP process, participate in it as advocates, and offer corporate strategy, which gives the process direction.

A cross-functional team with the correct skills and culture is necessary for an S&OP process to go from good to great. Collins emphasizes the phrase “First Who, then What?” Applying this to S&OP teams, it is essential to include more than functional representation—you must also bring the right individuals to the table. Emerging S&OP processes that make the transition from good to great begin with “who,” not “where.” Figuratively speaking, you direct the bus first, and then you convince others to follow.

Disciplined Thought in S&OP

To start, as Collins says, people must face the harsh realities of their present situation. We must be honest with ourselves and address any inefficiencies or bottlenecks in our supply chain and logistics procedures.

Companies making the shift from good to great must be prepared to recognize and evaluate their defining facts through the S&OP process. Collins lays out a four-step procedure to raise awareness of new trends and potential issues.

1) Lead with questions, not answers. Take a Socratic approach to questioning; ask questions to understand rather than to manipulate. Instead of asking “Why don’t you agree with that,” one can ask “Can you explain that to me?” or “What should we be concerned about?”

2) Engage in dialogue and debate, not coercion. Discuss and argue issues instead of using force. Use dialogue to not only secure “buy-in” but also to identify the optimal course of action.

3) Conduct autopsies without blame. Use KPIs as tools rather than as rewards or prizes. Try to draw lessons from your prior failures and achievements.

4) Build red flag mechanisms that turn information into information that cannot be ignored. Having the power to draw attention to an unpleasant fact is using the red flag. Beyond mere transparency, it involves fostering a climate in which everyone feels free to express the truth, no matter how harsh it may be.

Disciplined Actions in S&OP

Next, Collins emphasizes the significance of having a succinct and clear approach and taking focused action. Like this, a successful S&OP process necessitates that businesses have a solid grasp of their goals and create a cohesive strategy. Do not imagine that this calls for a despotic, rigid devotion to a constantly evolving process. Every team member is instead given the level of personal authority and freedom needed to realize the goals the company has set for itself. This is accomplished via a methodical procedure and a focused vision to achieve a common goal.

Collins describes the idea of the flywheel, in which persistent work generates momentum and produces ground-breaking outcomes. Like this, an effective S&OP process necessitates that businesses continually assess and enhance their performance, creating momentum toward their goals. Positive momentum is created by making choices and performing activities that support and affirm the company’s vision.

The S&OP process is energized as a result of the accumulation of observable positive outcomes. Reactive decision-making, overextending into too many various areas of focus, adhering to transient trends, and making frequent modifications to plans results in a lack of interest in the procedure and underwhelming outcomes.

Bonus Tip: Technology Accelerates Change, it Doesn’t Create it

The final tenet in going from good to great is understanding that technology accelerates success rather than creates it. Technology is crucial, without a doubt, but it is never the primary factor in determining whether an S&OP process is successful or not. Companies that have gone from good to great steer clear of trends and instead concentrate on the areas where technology can speed up the S&OP process.

None of the good to great businesses Jim Collins researched started out with cutting-edge technology. In my experience, many Vanguard organizations have led the way in applying technology after establishing their S&OP process.

In conclusion, a successful Sales and Operations Planning (S&OP) process can be achieved by applying the ideas presented in Jim Collins’ Good to Great. This entails assembling the ideal team, facing reality head-on, formulating a specific plan, fostering a spirit of cooperation, and consistently raising performance. Companies can produce ground-breaking breakthroughs and sustain long-term success by using these concepts.

Take your S&OP from Good to Great, or get started with a brand new process, at IBF’s S&OP & IBP Global Conference from June 14-16, 2023. Held in the heart of Chicago, you’ll learn from and network with S&OP/IBP experts from the world’s biggest companies. Click here for more information. 

Some years ago I took up a new role as Director of Demand Planning at a global sporting goods company. I was charged with overhauling its planning function. This is challenging at the best of times, but this was complicated by the company’s unique growth-by-acquisition strategy. The following is a case study of the transformation project I led, covering the problems I inherited, the step-by-step improvements I implemented, and how it was designed to facilitate decisions that directly supported organizational priorities.

Company Background

This Indiana-based company imports and distributes multiple widely-recognized sporting goods and athletics brands globally. They do this through major retailers, specialty dealers, key online retailers, traditional department stores and eCommerce. The company operates primarily in North America with over fifty corporate accounts that includes companies like Walmart, and others. They also sell directly to Amazon and on Amazon marketplace. They launched their own internal website and fulfilment for direct-to-consumer sales last year and it already accounts for over 10% of their business.

Their business model was simple: grow through acquisition. During my time there, they owned forty-seven brands. While there was moderate organic growth within some of their brands, they relied on consolidation of the market to increase market share and top line growth. To do this, cash was King and the availability of capital was a key priority for the organization.

Their Existing Planning Process

Being their focus was on adding to their portfolio of brands, they had inherited a mishmash of various ERP systems and planning processes. For the most part their forecasting process was still somewhat manual, using traditional time-series methods like moving averages and seasonal random walk. They got some inputs from sales reps but their input was typically either about products that customers want in the current month or products that they thought were needed in inventory.

There were often competing objectives across inventory, purchasing, logistics, and manufacturing with attempts to get products at the lowest cost while constant pressures to reduce inventories. These problems were compounded with adding new brands and product mangers attempting to provide value to corporate accounts with unique offerings which added cost and caused SKU proliferation.

The Challenge: A Changing Marketplace

Over the past few years, they have seen a changing landscape in the way consumers are making purchases. This impacts how they needed to go to market. Direct-to-consumer was less than 10% just a few years ago. It now accounts for over 25% of their business. This includes all eCommerce business including Amazon, other retail websites, and the company’s own direct selling. It is estimated to grow by double digits over the next few years.

A major challenge they were facing is that their supply chain was designed around what retail stores were purchasing, i.e. the were planning for bulk orders with 2 week lead times. That is fine for retails order, but not for the increasing amount of direct-to-consumer orders that required single items to be delivered in 48 hours. This necessitated having inventory on hand instead of making to order, which required high quality forecasts.

To add to this challenge there is the issue of retail stores making up less of their total sales volume because now they are increasingly dealing directly with consumers. Given these shifts, their forecasts had gotten worse, as evidenced by a higher error percentage over the past couple of years.

Some challenges we faced were:

• Direct to-consumers expect a 36-hour delivery window. Prior retail customers traditionally allowed up to 2 weeks or more.
• Average lead-times to produce or source items has grown from 46 days on average to over 118 days as more products are now coming from China.
• Forecast accuracy at a weighted mean absolute percentage error (lag 1 WMAPE) with has gone from 68% to 85% due to SKU proliferation and complexity of new channels.
• Previous On Time and in Full (OTIF) was at 89%. It is now 77% due to the added volume of direct-to-consumers.
• Inventory turns have decreased from 4.2 to 3.7 as inventory rises due to SKU proliferation, longer lead-times, and poorer forecast quality.

The Solution: Integrated Planning

The company kicked-off a comprehensive digital transformation project whose goal was to standardize different planning processes to create competitive advantages, while Improving Total Cost and Enabling Inventory Optimization by integrating strategy, forecasts, planning, and perpetual inventory. Over an 18-month time horizon we would totally revamp the planning process, implement new platforms and technology across the entire organization, and introduce SKU rationalization, segmentation, and add predictive analytics—all of which was aligned to the organization’s growth-by-acquisition strategy.

Our initial focus was data and within first few months we went live with a new data warehouse and central data storage repository (DSR), and new business intelligence software (BI). These critical first steps helped the company find hidden issues in their data structure and in the information that was being used to make decisions. It provided visibility into data and was important for insuring they had the right data for planning and to create insights. It also allowed us to look at new attributes using web crawlers that extracted consumer information and other information about the new eCommerce channel that could be used in modeling.

Part of this new visibility included the development of new balanced scorecards and performance metrics to understand the trade-offs of decisions and how they impacted strategy.  We made the KPIs more relevant to what the business wanted to achieve: number of active items, minimum order quantities, and gross margin as return on investment (GMROI). Understanding more of the drivers and being able to see the interdependence of metrics, we could now decide at what cost we were willing to service our customers or not.

We knew the importance of cash to the business model and that the availability of capital was a key objective of the organization. To this point, we determined that it made strategic sense to not aim for higher levels of service at the cost of higher inventories or additional, specialized SKU’s. Further consideration was given regarding the tradeoff inherent with larger orders that have longer lead times, i.e. they save upfront costs but risk tying up cash in inventory if it is not sold quickly.

After the initial focus on data, visibility, and decision making, attention was given to people, process, and technology. By the end of the first full year of the project, we defined and created specialized roles and hired new planners and a data architect to augment the current team, and went live with an advanced planning system (APS). We used clustering methods to help segregate items and customers which allowed us not only to focus planning resources on the most important items, but to do SKU rationalization to eliminate poor performing items. We now had a planner focused on eCommerce and began forecasting weekly using a combination of traditional methods and new models such as decision trees using external data. One example of external data is social media comments about new products which we used to predict through sell through post-launch.

Results

The results came with much coordination, collaboration, challenges, and success. Due to these efforts, this company by the end of the second year saw a 10% improvement in fill rates, a 26% improvement in forecast accuracy, a 19% reduction in some supply chain costs, and an 11% reduction in excess inventory. Add to this real time visibility into data and new insights, they had a much better way to manage their business. Significantly, we saw a return on investment of the entire transformation project in less than 14 months. The company continues to be a leader in their industry and is taking full advantage of the changing consumer landscape.

This article originally appeared in the Winter 2022 issue of the Journal of Business Forecasting. To receive a print copy of the Journal every quarter, become an IBF member or subscribe. 

When a large company plans to deploy S&OP there are a lot of things to keep in mind, key among them the ‘people’ aspect of change management.

When gaining stakeholder buy in for S&OP, I tell people that we do not deploy the process for the sake of the process, instead we want to achieve something, and this something has to be measurable.

For example, a company may wish to improve delivery performance and customer response time by having E2E transparency of demand and supply. Or to reduce production costs by balancing production using ongoing input from sales. It is very important to know why we do S&OP as it will help optimize resources and build a better deployment strategy.

When implementing S&OP, organizational change will occupy a good half your time and effort. We can buy a tool for tactical planning and we can sit down and design the process in just a few days, but only with the right organization in place will we ever be able to make this process work.

Describe Roles & Responsibilities

Here comes the question of how to transform an organization to support a complex process such as S&OP. Organizational rollout has to start from the top down: Business leads must be the first to understand the necessity and the purpose of S&OP. With their sponsorship, the Project team is created – the team that designs the process and drives the necessary changes in the organization.

Inside the planning function we have to prepare a description of the standard roles and tasks for each role at any given point in time. This includes small details such as who prepares the unconstrained demand plan and who approves it, who evaluates WorkCentre load and who proposes the planning scenario for the factory.

Appoint an S&OP Champion

S&OP deployment needs a champion, someone to sponsor the idea and demand results from entire organization, not only the project team. It is very important that this champion understand and explain to everyone that S&OP is not “just” a supply chain tool, but a process that aligns demand and supply with business strategy, Finance and product portfolio to make the right business decisions.

When this becomes clear to stakeholders it becomes much easier to break silos between different business functions and to cascade the importance of S&OP further to the Local Leaders, who will support and navigate the deployment in their regions and secure buy in of their key people.

Now that we have established the leadership and communication, we now need to appoint Facilitators. Depending on the size of the organization they can be global or local, or both, and include people who are eager to build new things and share the information with others in a clear and structured way.

Since creating an S&OP process structure and building a community is a complex job, it is recommended that at least some of these team members are dedicated full time to the implementation project. The more time they spend working on details of the process and the tool, the easier it will be for stakeholders to buy into the new vision and move into execution mode.

Engaging & Training People

Very often we underrate this step in the process deployment and it can cause slowdown or misuse of the S&OP idea. Often when introducing something new, you come across those who embrace it straight away and then there are those who are reluctant to adapt to change. And that is exactly why an onboarding program is needed. It will make people feel comfortable with the new process and the tools. Here are several points to keep in mind for onboarding:

1. Decide Who Needs Training: Decide whether to train all people or have only super users. Will we have face-to-face training or online? Who prepares training materials? What is the best timing for training keeping in mind that teams should be onboarded before the process is in place but not too early.

2. Beta Test the Training: Make sure to get trainers’ resources upfront and run a pilot with an interested and supportive team – this will help to collect useful feedback and upgrade training materials before wider training rollout.

3. Free Up Employees’ Time: Talk to team leads to free up employees’ time for training – we want participants to be focused. It’s better to have three training sessions to accommodate a variety of people and schedules than a “one fits all” single session.

4. Hold Q&A Sessions: It is absolutely necessary to have a follow up and Q&A session. Give learners some time to taste the S&OP process, try the tool and then schedule a follow up. Show support and care, and repeat if needed. It is also a good idea to test follow up sessions to identify problematic areas before rolling out to larger groups.

5. Organize the community: Bring people from different business units together. Let them talk to each other, help each other, and share and create together. Share updates on development and new ideas with S&OP Managers, S&OP Planners, and Demand Planners. An E2E planning process will only work when it is bound by people with the same vision and priorities.

Changes Don’t Happen Overnight

Regardless of how well training is prepared, changes in people’s mindsets will not happen overnight. There will be complaints, errors, and fallbacks to legacy methods of planning but as long as we are consistent in our  communication and approach, the new reality will take hold.

When preparing documentation and introduction for different parts of the organization, make sure to explain that S&OP is a business process binding together Finance, Demand planning, Operations etc. and must be understood as business decision making forum right from the start. Be prepared to train not only direct participants of  the S&OP process but also Finance, Business leads, Product Managers, Procurement and other business functions. They all have to deliver their own onboarding to keep up with the changes and opportunities triggered by S&OP implementation.

People will always be the main driving or stopping force when something new is introduced. S&OP process success in the first few years depends on how well organizational onboarding is prepared and performed so it is highly recommended to invest significant time and resources into it.

To learn the fundamentals of business forecasting and demand planning, join us for IBF’s Chicago Demand Planning & Forecasting Boot Camp from March 15-17, 2023. You’ll learn how to forecast demand and balance demand and supply from world-leading experts. Click here for more information. 

After 8 years implementing, coaching businesses and designing Integrated Business Planning (IBP) processes I have accumulated a long list of common challenges that often plague IBP deployments. To understand all the challenges it is important to understand the intent and purpose of IBP.

To contextualize how IBP should work in a business it is best to illustrate with an example. Let’s say you want to grow your business from $500M to $1B in 3 years while maintaining a 15% EBITDA. This is the goal around which the IBP process is centered for all the 5 steps: Product Portfolio Review, Demand Review, Supply Chain Review, Integrated Reconciliation Review and Management Business Review.

Placing IBP in the Context of Strategic Priorities

The context of each step is the aim of achieving $1B in revenue growth. The following are questions and suggestions that reinforce that focus and provide valuable context to decision making:

1. Product Portfolio Review: Do we have enough product or service to reach our business goal? How will technology change or impact our business? What is our product plan over the long horizon? Do we have any constraints? What are our capital expenses and engineering expenses over the 3-year horizon?

2. Commercial Demand Review: This is not just about the numbers but understanding the consequences of the unconstrained demand plan. Do we have enough sales to achieve the business goal? Should we enter or exit selected markets? Do we have any gaps in terms of profitability, margins or volumes? What new selling opportunities exist? Do we need to adjust pricing?

3. Supply Chain Review: Do we have any constraints to meeting the unconstrained demand plan, either externally or internally over the 3-year horizon? Are we achieving our inventory and COGs targets?

4. Integrated Reconciliation Review: Reconcile the 3 core steps with a rolling updated 3-year profit and loss statement for the purpose of understanding gaps to the business goal. Review scenario plans to address gaps and agree on recommendations for the MBR.

5. Management Business Review: Drive business goal and deliver business commitments through decisions to close gaps. Are we on a trajectory to achieving the $1B target?

IBP sets a monthly cadence for the business to effectively align plans, understand gaps to the targets, and to make appropriate decisions to maintain that trajectory.

How IBP Loses Track of Strategic Goals

So what can go wrong? Here are a few common challenges in implementing IBP.

1. Strategic priorities are not clearly defined or change every year. If the business does not have this ambition stated clearly than the IBP does not have focal point to center the business with to facilitate gap closing actions.

2. The business is very short-term focused (perhaps a one-year horizon). This prevents the business from understanding the impact of short-term decisions on long-term goals.

3. Supporting process capability is often overstated or not fully understood, thereby decreasing trust in IBP’s ability to answer the right questions. If the demand planning process is not trusted, then any discussion surrounding long-term strategic growth simply doesn’t happen. Instead, the Commercial Demand Review becomes a debate about how the numbers missed. Another example is if Supply Chain does not have an effective supply planning process that identifies constraints over a longer horizon. This prevents the business from making the right reconciliation decisions and perpetuates mistrust in Supply Chain’s ability to execute demand plans.

4. The IBP process is viewed as a supply chain process and not a business process. In this case, business goals and gap closing are completely missed and the focus of the process through a supply chain lens and not an overall enterprise perspective.

To make IBP a reality in your organization, join us in Las Vegas for IBF’s S&OP/IBP Boot Camp. Running from February 15-17, 2023, it gets planning professionals up to speed with planning fundamentals and best practices. Complete with the chance to earn the world’s only S&OP/IBP certificate and 1-day Supply Planning Workshop.