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. 

The topic of Integrated Business Planning (IBP), Sales & operations Planning (S&OP) and demand/supply balancing has been widely researched for nearly 40 years, yet organizations still struggle with this fundamental business capability. What about planning is so difficult?  Why is effective business planning so elusive for many firms?

So, what is a person (or firm) to do? Simply accept the status quo? Do we search for a new application, algorithm or the latest AI capability that is guaranteed to provide the solution? Or if we redesign the business process the breakthrough we need will appear. Or maybe not.

What has helped a number of organizations break the shackles of the current state is to re-frame the problem to be solved.

Re-framing is the art of evaluating a situation, developing an understanding of what needs to be achieved, and developing a new problem to solve. More simply, re-framing is asking a different question with the goal of getting a different result.

The Capability Challenge

Viewing IBP/S&OP as a business capability helps us to begin re-framing.

We define a capability to be the integration of 3 areas: People, Processes, Technology. People have always been, and will continue to be, the most critical element in any capability and it’s no different for the IBP/S&OP process.

Why are people the most critical element? Because people define the processes, the steps required, the sequence, the roles to be involved and the responsibility of each role. Beyond the process definition, people need to identify the technology needed to perform the process as efficiently as possible.

Once we identify the elements needed for a business capability to exist, we can begin re-framing activities. Re-framing helps “zoom out” from the details of IBP/S&OP so we can reconsider the complicating factors restricting our success. When we move away from discussions about the processes, metrics, roles and responsibilities, software, etc., we start to consider what is needed to progress beyond the current state.

As we evaluate the capability and focus on “People” as the critical element, the questions we ask become focused on the actions that we can take that will result in positive change. The discipline of Organizational Change Management provides ideas and tools that help us to ask the right questions.

Organizational Change Management

There are several change management frameworks to choose from, and all consulting firms tout theirs as the best. Let’s start by “zooming out” and consider the underlying issues that make Organizational Change Management necessary to implementing new capabilities.

The process of company transition occurs on an individual basis which requires us to identify all individuals involved in, or impacted by, the capability. It helps to create a transformation map to identify where each person is on the transition journey.

On our map we include how each individual perceives the change. This requires only minimal interaction with each individual to gauge how they feel about the transformation and generate a first draft. A transformation map is helpful because you’ll gain insight into the team and their overall level of enthusiasm. Understanding the current state of the team and the individuals in it is useful but action is what will realize improvements. Before action plans can be developed, we need discussion with each team member to validate their stage in the transition process.

Talk To Individuals To Identify Why They’re Resistant To Change

Discussions with individual team members help uncover underlying factors that cause them to be resistant to change. Such discussions with individual team members should not be ad-hoc; a template with specific questions should be developed before any meetings take place. This template should include questions that probe for pain-points individuals are experiencing in adopting the process. Of course, the template should cover the IBP/S&OP process itself, the tools used to perform the process, and most importantly intangible “soft” areas like responsibility, performance measures, accountability, recognition and rewards, and training (attended, offered, etc).

Check List For Change Management In S&OP/IBP

By taking a proactive approach to managing change, the success rate for adopting IBP/S&OP increases dramatically. Here’s an outline of activities and actions that I use to help implement change, it’s proven to be successful at companies like AT&T, Fiskars Brands, Motorola and others.

1 – Provide education materials and resources explaining S&OP/IBP to executive leaders

2 – Conduct executive review and discussion sessions and describe how executives are involved in the process. Ask what concerns exist and resolve concerns before moving forward.

3 – Identify the individuals that will be involved in IBP/S&OP and sort them as follows:

• Directly involved – responsible for performing steps in the process
• Indirectly involved – may be asked for inputs or preliminary review of outputs
• Impacted – results of IBP/S&OP may be used in their role

4 – Provide education materials and conduct review session(s) describing how IBP/S&OP benefits the business. Ask what concerns exist and record all concerns (separate session for each group).

5 – Design and pilot IBP/S&OP with a small, focused group to ensure the process and tools deliver expected outputs.

6 – Establish an IBP/S&OP continuous improvement team to gather feedback and incorporate changes into the process .

7 – Prepare IBP/S&OP kick-off meeting.

1. 1. Conduct pre kick-off meeting with leaders of key functions (supply planning, demand planning etc.) ensuring alignment and agreement.

8 – Arrange and conduct an IBP/S&OP kick-off meeting with the entire team (direct, indirect and impacted team members)

9 – Conduct initial IBP/S&OP meeting.

10 – Arrange and convene a continuous improvement team, review feedback and prioritize updates.

Summary

In summary, IBP/S&OP is a critical process for every business but establishing it requires an effective Organizational Change Management process. This 10 step process ensures engagement of executive leaders, managers and staff to execute activities and make decisions. The challenges encountered in implementing IBP/S&OP are often associated with people – proactive change management reduces resistance to change and gets everybody working towards the common goal.

Over 70% of predictive analytics implementation initiatives fail. Eric Wilson CPF and special guest, Misty Doan CPF, dive into how to make digital transformation work.

Hear how Misty achieved a 26% improvement in forecast accuracy after 18 months, reduced excess inventory, increased fill rates by 10%, and reduced premium freight costs and fines by 17%. And hear Eric’s 5 tips for digital transformation success.

Learn more about effective change management and digital transformation to help ensure you’re the minority who successfully implement software solutions.

Click here to see all previous episodes of IBF On Demand.

I must admit I was wrong.  I recently helped pen an article in the Journal of Business Forecasting (JBF) Fall 2017 edition entitled “Why Is the S&OP Process Stuck in Third Gear?”. The truth is most Sales and Operations (S&OP) processes are not stuck at all – they don’t even get out the starting block and are stuck in park. 

I believe one of the major reasons why so many companies struggle to get started, or not succeed at traditional S&OP, is they fail to understand the magnitude and scope of the task at hand. To help understand why so many firms fail at S&OP, I will explain not what S&OP implementation is, but what it isn’t.

• S&OP is not a supply chain procedure – it needs to be a business process.
• S&OP is not a project – it needs to be a continual development.
• S&OP is not about adjusting plans – it needs to become the way you create strategies.
• S&OP is not about change – it needs to be transformational.

There is a misconception about what constitutes change versus what it means to have deliver transformation. Many companies have a good idea of how to manage change, but most organizations continue to struggle with transformation. Change means implementing finite initiatives, which may or may not cut across the organization. Organizational transformation and a fully implemented S&OP process is altogether different. The objective of transformation is not just to execute a defined change initiative, but to reinvent the organization, change the culture and behaviors, and discover (rather than create) a new process and new way of planning.

You will need to be a model of “extreme leadership” to keep people energized even as the challenges mount in front of them.

Transformation Management Instead of Change Management

As opposed to change management, transformation is far more challenging for two distinct reasons. First, the future state is a concept you start with, and the final process is achieved through effort, and sometimes, trial and error. This makes it difficult to “manage” transformation with pre-determined, time-bound and linear project plans. Second, the future state is so radically different from the current state that the people and culture must change to implement it successfully. New mindsets and behaviors are required.

Understanding this distinction is crucial to knowing why some organizations fail to get the traction needed for transforming to an integrated business planning process or to a successful S&OP process.  Treating your journey like a traditional change management project may provide incremental improvements which can be sustained with ongoing thought, effort, and persistence but it will be difficult to sustain.  What you may need is a transformation management process that shifts the entire organization into a new way of thinking and planning that sustains itself.

Make continuous efforts to ensure that the transformation is seen in every aspect of your organization

Transformation management is a more complex process which varies according to each individual organization’s needs. There will be different approaches taken depending on a wide range of factors including the type of organization, the S&OP objectives and the external environment. To help you on your journey the following are the twelve process steps for transformational management and the factors critical for S&OP success.

Transformation Management 12 Step Process

1. Admit you have a problem: For transformation to happen, it helps if the whole company understands there is a problem and thinks we need a solution. Develop a sense of urgency around the need for new or improved Business Planning Process. This will help you spark the initial motivation to get things moving. If many people start talking about the transformation, the urgency can build and feed on itself.

2. Engage Leadership: Engage leaders and stakeholders, rather than seeking sponsorship, where the sponsor’s role is open to interpretation. Engagement is a process of being actively involved, and being seen to participate in the process at every level.

3. Form a Powerful Coalition: S&OP is about collaboration and you need a solid team. For transformation, you need to bring together a coalition, or team, of influential people whose power comes from a variety of sources, including job title, status, expertise, and political importance.

4. Listen First: Stakeholders have insights to provide regarding the transformation being proposed, and you provide the opportunity for those insights to be shared. Strive to listen and you may not only find good ideas that contribute to the overall vision but also a substantial amount of goodwill with people involved in the transformation.

5. Create a Vision for Change: A clear vision can help everyone understand why you are asking them to do something. When people see for themselves what you are trying to achieve, then the directives they’re given tend to make more sense.

6. Show Passion: You will need to be a model of “extreme leadership” to keep people energized even as the challenges mount in front of them. One the most important characteristics of a sucessful business planning process and transformation management is the ability to have a positive outlook and belief in what can be achieved.

7. Continuous Engagement: The “S&OP Journey” is a significant part of an everyone’s experience during transformation, and when managed well, it sets the right platform for motivation and expectations. Understand that communication is a marathon, not a sprint. You can’t say everything about the S&OP Process all at once. This means that you should focus on communicating small, focused messages on a regular basis to targeted audiences.

8. Training: Develop a new set of skills across the organization, including relationship building, interpersonal communication, conflict resolution and coaching/mentoring. This includes building out functional capabilities in areas like demand planning and finance and augmenting skill sets and professional training as well.

9. Be Able to Adapt: Put in place the structure for change, and continually check for barriers to it. Removing obstacles will empower the people you need to execute your vision, and it can help the transformation move forward. The ultimate vision may not change, but the route to success will require continuous adaptation to overcome obstacles and exploit opportunities.

10. Credibility: Nothing motivates more than success. Give people a taste of victory early in the transformation process. Within a short time, frame you will want to have some “quick wins” like improved planning for a holiday or key customer, or reduction of inventory that your company can see. Without this, critics and negative thinkers might hurt your progress.

 11. Transparency: Setting expectations and providing transparency throughout the S&OP journey can go far in minimizing conflicts and keeping everything on track. With a transparent process, people know what is happening and why. They feel more involved and trust the direction you are going in. 

12. Anchor the Changes in Corporate Culture: Finally, to make any S&OP process or any transformational project stick, it should become part of the core of your organization. Your corporate culture often determines what gets attention, so the impact and process must show up in everyone’s day-to-day work. Make continuous efforts to ensure that the transformation is seen in every aspect of your organization. This will help give the S&OP process a solid place in your organization’s culture. It’s also important that your company’s executives continue to support it. This includes existing staff and new leaders who are brought in.

The New Reality

Everyone agrees that change management is important. But many people underestimate the challenge of implementing a mature Sales and Operations (S&OP) process and the transformation that must take place inside the organization for its success. This type of transformation is far more unpredictable, iterative and experimental than traditional project or program management, and consequently entails much higher risk. The key elements needed to build success are understanding why you are changing, a clear vision of the final outcome, good stakeholder engagement and flexibility to adapt the process to meet the business need and strategic initiatives. Done well, transformation is a shift in consciousness. In fact, transformation creates a new reality.

In today’s business climate, it has become so important that businesses focus on three imperatives:

1) Get business planning right the first time, as much as possible
2) Build stronger business teams
3) Start linking current operations to long-term growth strategies

S&OP is a ready-made solution to address these challenges head-on. With its structured processes, organization and procedures, S&OP can bring a strong sense of direction and order to our businesses.

Generically speaking, though, there is variance from business to business as to what S&OP looks like on the surface. Underneath its core, there are basically 5 individual phases. These sequential phases are designed to gather information for building a proposed business plan, perform supply checks, and reconcile Demand / Supply gaps that may surface. Then, finally, the process culminates in two levels of S&OP meetings. The entire process is designed to garnish participation in developing, and alignment on the proposed go-forward Business Plan by key players and executives alike in Sales, Marketing and Operations.

Other aspects of S&OP’s structure are its monthly, very predictable cycle. S&OP also integrates at the Business Planning phase that includes critical business issues such as Innovation Pipeline opportunities (NPI/NPL), promotions planning, information from Category Management (if available), and other Business Intelligence sources. Additionally, the 2 levels of S&OP meetings serve as important open forums for discussion, and decision-making on key business issues. Quite literally, from stem to stern, S&OP serves as a business-centric process, which could almost, after the passage of time, become self-steering.

While the structure and ordered processes may be the strength of S&OP, reliance on these alone as a strategy to drive for success in your business could possibly expose a weak point the “Kryptonite” to S&OP. How can this be? How can a business-centric process that is so vital to the planning of our business activities over a long time horizon (18+ months) be so strong, but at the same time become vulnerable to a possible internal weakness?

Please consider this. S&OP actually has two sides, the first is very recognizable as discussed above– it is the sum total of its strengths as derived from its structure, ordered processes, and its cyclical nature. It is true, that you can’t even get out of the “starting block” unless you have the structure of S&OP. Make no mistake, structure is the foundation. But the other side of S&OP – its Drivers are equally important, perhaps even more so.

The Drivers of S&OP are the culture of the organization, the behavior of its employees, and values…those aspects of the organization which are most important to us as individuals, we value them above all else.

I will interject here with a question. Which organization below, in your opinion, will be more successful on a sustainable basis?

ORGANIZATION #1: An organization in which everyone participates, provides input and analysis, one in which everyone attends the meeting? Things are precise in this organization, but, perhaps, things sound sort of routine here.

ORGANIZATION #2: An organization in which there is extraordinary engagement by all, collaboration and consensus decision-making flourish, teamwork is viewed as the only way to work, and more specifically, there is an undercurrent of passion to win and succeed, coupled with inspirational leadership.

I submit that you better not get in the way of Organization #2 type of Super-charged S&OP. Better yet, you should probably hope and pray that your competitors don’t bottle this either.

So, what about the “kryptonite”, the weakness of S&OP notion? Well, I submit, if you allow your S&OP to just move along, if you rely on its structure alone to control the pace of your business then you may just be tempting exposure of its weakness.

Now, how do you get around and beyond this weak point? Try this on for size…Lead by example, your employees will emulate. If you want engagement, then become the most engaged. If you want teamwork to be the only way of working amongst your employees, then first make sure your executive team operates this way–knock down functional barriers, and before anything else, collaborate and increasingly utilize decision by consensus as a way to bring about wining solutions. And try a little passion, not the red-faced yelling type of passion. But, I mean the type of passion you see when nothing else matters, full speed ahead, the, “I am all in” type of passion – show your employees that you will be passionate at helping them win and succeed.

Your comments are welcome.

Richard P. Kerivan

Journal of Business Forecasting – Summer 2012 Issue

Today’s rapidly changing market demands elasticity and flexibility from people, processes and technology. In the current economy, change is the only thing that is consistent and we must change in order to adapt to this constant. However, knowing this doesn’t make it any easier. The Summer 2012 issue of the IBF’s Journal of Business Forecasting provides insight into the challenges and presents solutions covering a multitude of facets in this difficult market.

Alan L. Milliken, a member of BASF’s Business Process Solutions Team, presents a five step process for planning, implementation and monitoring successful change in any arena. This includes determining the firms capability to change and why we need it. How to properly communicate needed change across the organization including how all stakeholders will benefit. He also speaks about developing a public relation program to counter resistance as well as measuring performance to ensure objectives are being achieved.

Also, in this issue, Patrick Bower, Senior Director of Corporate Planning and Consumer Service at Combe Inc., demonstrates why forecasts provided by the S&OP process to supply chain planning are not sufficient in the current market and how to enhance them for better performance. We need guideposts/directions and scenarios for effective planning. In other words, supply chain people need a set of alternate plans or scenario options to use in the event the market deviates significantly from the targeted value.

Michael Morris teaches from his experience implementing change at Yokohama Tire Corporation.

Larry Lapide, a Research Affiliate at MIT, discusses global supply chain uncertainty and the best way to master it.

Robert F. Byrne demonstrates how multi-national consumer goods companies have benefitted by using demand sensing tools for forecasting.

Evangelos Otto Simos talks about uneven patterns of global recovery, and gives updated growth rates and inflation rates of 60 different countries.

Jack Malehorn discusses why the US economy is growing so slowly, and presents forecasts of 13 key economic indicators and how they will affect economic growth.

To receive a complimentary issue of the IBF’s Journal of Business Forecasting, Please CLICK HERE.

To become a Member of the Institute of Business Forecasting & Planning, IBF, and receive a subscription to the Journal of Business Forecasting  please CLICK HERE.

Michael Morris - Yamaha

Have you ever pitched a new idea or process improvement where everyone agreed, but  you kept running into road blocks once you began the implementation? It seems that most everyone believes in “change” until it starts to affect them. The more you can manage or mitigate change, the more successful you will be.  There are several approaches to help reduce the heartburn associated with change management. Everything from basic education to even some mild underhandedness is fair play in my book; whatever it takes to make the implementation successful.

One key approach is to leverage power. This should be executed with forethought and care. And when I say this, I mean that you really have to do your homework in order to find out who your “ace” is going to be. Don’t necessarily go straight to the CEO; that may not be your best bet. If the CEO is too busy, you may not get the attention you need when you need it.  You need to find someone with horsepower who is available when you need them.  Gain their support by speaking their language; if your “ace” is the CFO, your approach should focus on saving money. If your “ace” is the VP of Sales, focus on better supply. You need to “Sell” the benefits of the new process in a way that your “ace” will understand it.

I was into year two of pitching my new forecasting process and was fighting an uphill battle when I got a call from the president of the company. He had seen my presentation and had heard my pitch many times before, so I was thrilled when he asked me for a “one on one” to explain, in detail, exactly how the new process would work. I’m not sure what prompted him to ask for the meeting, but it changed everything for me. He wanted to know it all; how the current process worked, how the new process would work, when we would be able to utilize the first forecast, and what kind of accuracy was I expecting? When I left that meeting, I knew he had an intimate understanding of what I wanted to do and that I finally had my “ace”. From then on, it was clear to everyone that the forecast project was “per the president” and things became quite a bit easier…

Everyone wants sound and efficient processes; the trick is getting them to implement one  with the least amount of heartburn. Having some “Horsepower” in your back pocket is essential in helping you achieve your goals.

Michael Morris CSCP, CPIM, CPF, PLS
Inventory and Planning Manager, Keyboard Division
Yamaha Corporation of America

Hear Michael Speak at: