It is that time of year when leadership starts talking about strategy. The result will be very nice-looking slides that will be discussed in every town hall for the next month. When you are looking at the presentation, two questions will go through your mind.

First, how relevant are these initiatives to the company? You’ll have your own thoughts the direction the company wants to go in and wonder how serious the enterprise is about it. You’ve seen before how leaderships fails to follow through on their  own guidelines or change direction for some reason or another, making it hard for people on the ground to understand what the priorities are.

The second question that arises is: What’s my role in this in strategy? This is where you try to understand the impact it will have in your area and what will be required of you to support these strategic objectives Translating impactful PowerPoint slides to what we actually do day-to-day is easier said than done.

COVID showed business leaders the importance of Supply Chain Management so there is usually a section that links the overarching business plan to this area in a way that helps everyone involved in the process. As planning professionals, this is where we should focus our attention and seek to understand not what good enterprise strategy looks like but what good supply chain strategy looks like.

The Link Between Business Strategy & Supply Chain

“Plans are worthless, but planning is everything”, said Dwight D. Eisenhower. What we do as Demand Planners will invariably fail to reflect reality perfectly but are nevertheless valuable—indeed critical— to responding to demand and changing marketplace dynamics.

During the strategy ideation stage, the main question that the planning organization needs to answer is how to create value—value for the customer, employees, and even for our suppliers. If this is done successfully, it will set your company apart from the rest. I will not delve into the details of how this is done, rather I will provide an example of how to link this into the value chain.

Supply chain is a pilar that supports some of the core business objectives. How does your company’s strategy allow you to compete in it’s chosen market? And what supply chain model will support it most effectively? Supply chain can create value for our customers either through consistent and reliable delivery, truly short lead times, or great pricing. It is important that we choose the supply chain model that best aligns with the value creation strategy. Some examples of these are if we produce to a forecast, make to stock, only manufacturing when an order is received, or even only start designing the product once the order is confirmed. The following is a real-life example.

Real Life Example of a Planning Model

This happened during my first experience working in supply chain as a Master Scheduler. I worked for a factory that produced brass goods and had a wide assortment of products that kept growing over time. The main idea was to be able to manufacture these products in a reasonable amount of time and with an optimized amount of working capital. So, the model we used was Late Configuration. The company offered a wide variety of finished goods but with a lot of commonalities at the component and subassembly level.

The intent of the Late Configuration model was to wait and produce at the latest point of differentiation possible. To accomplish this, for example, you create buffers before a color change, or before you assemble the product and add a different option like another handle or trim. This allows you to absorb some of the demand variability of the finish goods in a subassembly that is common to several products, thus smoothing some of the variation by netting out puts and takes in the ordering pattern across different SKUs.

At the same time, it lets you reduce lead time as you are not starting productions from scratch and it has an inventory benefit as well, since the valuation of a semi-finished product is less than the finish goods and has a lower storage cost.

Finally, the supply signals were based on a pull system, using Kanban. This meant that if there was no demand, production would not be trigged and inventory would be kept at a component level. Components were acquired based on a forecast due to the long lead times, being sourced from Asia. This meant that if demand dropped after you filled the pipeline of semifinished products, all the excess inventory would be accumulated at the component level, which costs less and is cheaper to store. Obviously, the tradeoff is that you need to flex capacity. Adjusting staffing was the main way to change the output.

Real Strategy Vs Pie in the Sky

At the end, any strategy that you choose will be different depending on how you are creating value for the stakeholders in your business. But there is a sure way to identify a real strategy versus a wish list. Look at the tradeoffs. If you see a statement where the organization wants to provide an elevated level of service with little to no inventory, long lead times from suppliers and at a low cost, then this might be a clue. The classic tradeoff example that comes to mind when discussing this topic is about three attributes in a product or process. You can be fast, good, or cheap—but you can only pick two. This helps clarify supply chain decisions in a quite a straightforward way.

If you consider the Late Configuration example from the previous section, the model helped you reduce inventory, align production to demand, and have a reasonable lead time. But if demand changed a lot, you would have idle resources at the shop floor, creating additional costs or manufacturing variances to the financial plan. Another strategy for the company in question would be to produce all the finished goods assortment per the forecast. This could optimize manufacturing costs, reduce set ups, and slightly reduce lead time but will increase inventory and storage costs due to the complexity in product mix.

Going From Strategy to Execution 

“Culture eats strategy for breakfast”, said Peter Drucker. This highlights that while strategy is critical, it requires buy in and support from the whole organization to bring it to life. Since Management by Objectives was introduced in the 1950’s, the intention of closing the gap between what needs to be done and what is executed has been a very intensive journey. The combination of academic research and practical approaches has yielded a few frameworks that we can use. The main idea behind these concepts is that metrics drive behaviors and these in turn create a culture of execution in the company.

So, the next logical step is to go from top-level guiding principles to long term objectives, zoom into what the annual operating plan will look like and, finally, link this to Key Performance Indicators (KPIs). This is a straightforward process, and there are several methodologies available, like the Hoshin Kanri matrix if you are a fan of the Toyota Production System, or a balanced score card if you prefer classical methods.

The important aspect is to understand which part of the high-level objectives your area will have a real impact on. Then the priority is to cascade the measurements that are important for the organization in general into specific metrics that your department will own and deliver. In my experience, this is a terrific opportunity to spend some time together with your team (offsite to avoid distractions) and talk about how the supply chain organization creates a positive impact in the company and how we can measure it. At the same time, you can combine this with some team building activities to create relationships conducive to the development of a high-performance team.

A widely used method to define and deploy objectives is SMART Goals (Specific, Measurable, Attainable, Relevant and Time-bound). A recent trend, which is now one of my favorites, is FAST Goals (Frequently-discussed, Ambitious, Specific and Transparent), created by Don Sull from MIT. The main components of the former are intensive communication and stretch targets; both are key factors in developing the necessary culture. I will go back to my own experience to explain how this works in practice.

Several years ago, I was hired for a turnaround role as a Supply Chain Manager for a manufacturing site. The challenge was to increase the service level. The metric we had in place was on-time in-full (OTIF). After getting my head round their process, two things became clear. First, the bottleneck was at the finished goods warehouse. Second, Production was focusing on their own efficiency metrics. From an operations perspective, we had to add an additional shift and create Standard Operating Procedures (SOPs) to remove the constraint; this was very straightforward. However, from a scheduling perspective, we had to implement a daily cadence to discuss production deviations from the plan and understand the root causes. At the same time, we published the metric all over the plant, including the cafeteria.

At first, it was hard to stomach lunch while looking at an extremely low fill rate (OTIF). However, it generated a lot of internal discussion and a noticeably clear sense of priority. This created a tense but positive environment that supported the daily scheduling meeting and finally the process enabled the team to change the priority to mix over volume and hitting committed dates versus reducing the amount of set ups at the plant. After a few weeks of this, the metric started taking off and since it was very visible all over the plant, it generated a positive feedback loop that helped gather engagement from everyone and changed a very defeatist environment into one where everyone wanted to participate and contribute.

This allowed us to move the meeting cadence from daily to weekly and it became part of the operational review and culture of the plant. From this example you can see the importance of frequent communication and how a prominent level of transparency around metrics helps link the strategy directly into the culture of the organization.

One last word of caution when deploying FAST Goals: It is extremely critical that when reviewing stretch targets that there is a range in place and that the incentive plans for leaders are set up in tiers, so you can recognize ‘good’ and really reward the achievement of ambitious goals.

The Framework in a Nutshell

• Identify the role that Supply Chain plays in the bigger picture and make sure that the model fits the strategy.
• Call out the tradeoffs in the supply chain strategy to clearly define priorities.
• Cascade the business strategy all the way down to metrics that will define what success looks like. This will generate visibility of the impact that supply chain has in the organization.
• Make sure that there is frequent discussion around the metrics and the current performance of the team. Recognize ‘good’ but really reward excellence.
• Make sure that these processes are incorporated into the culture of your team; this will enable the creation of a high-performance organization.

Next time you are sitting in the strategy town hall, make sure that you apply some of these ideas. This will change your perception of these meetings from pretty slides with all power and no point (pun intended) into meaningful ways to make a difference in your organization.

This article first appeared in the winter 2022 issue of the Journal of Business Forecasting. To access the Journal, become an IBF member and get it delivered to your door every quarter, along with a host of memberships benefits including discounted conferences and training, exclusive workshops, and access to the entire IBF knowledge library. 

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. 

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. 

To understand what strategy is about and how it should direct our approach S&OP, a good place to start is the model devised by Michael Treacy and Fred Wiersema in their book The Discipline of Market Leaders.

Market leaders are companies that outperform their competitors over a longer period of time, not 2 or 3 years, but consistently over 10, 15 or 20 years. Their first finding is that market leaders make a choice as to how to compete in the market place – they opt for Operational Excellence where they choose to compete on price, Customer Intimacy where they seek to provide the best total solution, or they go for Product Leadership where they offer the best product.

The second finding is that, once they’ve made a choice, every fiber of the organization focuses on executing that choice. They create a cult-like culture to the extent that when you enter the building and talk to the people, you feel the strategic choice that a company has made. So how does strategy influence the S&OP process?

Strategy 1: Product Leadership

A product leader, whether it is a science company like 3M or a CPG brand like P&G, is often technology driven. They have certain competencies and are continuously looking to combine and recombine them to create superior products.

Whether it is about future or current markets, they look for high growth and high value add niches. They assess risk by understanding technological evolution and potential disruptors. In summary, you could say the segmentation at a product leader is technology-driven.

Strategy 2: Customer Intimacy

A Customer Intimacy player delivers a total solution. Instead of being technology driven,  a customer intimacy player is more customer-driven. This strategy involve building total solutions which leads to large portfolios with a lot of SKUs. Some of them may be produced internally others may be bought.

Customer Intimacy players have complex portfolios, so the main complexity is downstream of the supply chain. For such companies it is crucial to segment A, B and C customers. It is equally important to segment products into A, B and C products. This helps to identify the optimal forecasting approach for each segment and which products to prioritize in case of shortages.

Strategy 3: Operational Excellence

Then we come to the Operational Excellence player. Whereas a product leader is technology driven and a customer intimacy player customer or solution driven, an Operational Excellence player is cost and efficiency driven.

Here you segment customers based on the cost-to-serve. Visibility on the cost-to-serve helps to better manage expectations, pricing and margins, which are often razor thin. You segment products based on the total-cost-of-ownership (TCO). Again, better visibility into TCO will help in better managing expectations (for instance availability), pricing and margins.

If we believe every company needs customer-product segmentation to plan effectively, the drivers for the segmentation should be strategy-dependent – technology driven at a product leader, more volume and margin driven at a customer intimacy player, and more cost-to-serve driven at an Operational Excellence player.

Product Management Review According To Strategy 

Different strategies also lead to a different focus in the product review. Product leaders have a high innovation rate. Take a company like 3M. They will step out of the market when growth disappears. They aim for least one third of their sales to comes from products developed within the past five years.

This implies a frequent introduction of new product categories, often pulling together completely new supply chains. It could be over existing assets and with existing suppliers with new materials combined in new ways over different sites and partners, and in different variants.

Equally crucial is the scaling down or phasing out of product categories that are no longer delivering the anticipated growth or margins. These are the key challenges for product management at a product leader. You could say it plays at a category level and is about scaling up or phasing out complete supply chains. 3M once was in VHS video cassettes. They stepped out long before it became a commodity.

For a customer intimacy player, it is much more about controlling the complexity of the customer-product portfolios. A good metric is analyzing margin over inventory. That may be negative on an individual SKU but it needs to be positive on a customer level or on a product group level. Complexity creates costs and means extra capital (working capital and/or fixed assets) is employed, such as higher inventories (more slow movers) and more DC space (either owned or rented).

Good complexity adds ROCE (Return On Capital Employed) whereby the margins are high enough to compensate for the increase in complexity. Bad complexity reduces ROCE whereby the margins do not compensate for the increase in complexity. Pruning the customer-product portfolio to keep it healthy is the key challenge of the product management review at a customer intimacy player. You could say that instead of on full product categories, the focus in more on specific SKUs. At a product leader it is about cutting trees, here it is about cutting branches or leaves.

An operational excellence player doesn’t like complexity as complexity drives cost. They will continuously apply the pareto principle where 20% of customers and products drive 80% of the volume.

In this world, fast movers drive efficiency and efficiency keeps costs low. Think about hard discounters like Costco in the US or Aldi and Lidl in Europe. Where a traditional supermarket may have 10,000 to 15.000 SKUs, a hard discounter may have 1,000 – 1,500. They will cut the assortment as much as possible while still offering enough variety to bring traffic. They continually monitor the contribution per m² in the stores or in the distribution centers, focusing very closely on how each SKU sells.

Demand Planning According To Strategy

With regard to forecasting, the key challenge of the Product Leader is forecasting new products. Imagine you are Apple and you are about to launch the Apple Watch. How many do you think you are going to sell? You can easily be off by a factor of 10. Product Leaders will reduce the uncertainty of new product demand by performing market testing e.g., testing at key distributors or by mining data from specialized social media forums.

Product Leaders have a lot of volume uncertainty or volume variability. These are also good candidates to apply judgmental techniques like the Delphi method.

Because of the large customer-product portfolio, customer intimacy players have mix uncertainty or mix variability. Our overall volume may be relatively stable or predictable; the key challenge is predicting the mix. This is where we see collaborative forecasting with A-customers for A-products. That combination may account for 50% of your volume.

You have to get these right. At the same time you don’t want to waste salespeople’s time on forecasting the long tail of C-customers and C-products. Here you want to maximally rely on statistical forecasting or push to make-to-order so you can avoid forecasting on the mix level all together. If you need to take a service hit, you want it to hit the long tail. Segmentation is key to keep the service manageable, at a reasonable cost, and without slow moving inventories or excessive write-offs.

Operational excellence players will try to stabilize the demand with everyday low prices instead of promotions. They will try to work make-to-order to avoid forecasting and reduce uncertainty. Variability and uncertainty create costs and require buffers which is bad for efficiency. Operational excellence players may also be willing to sacrifice service for cost. Availability may depend upon the production schedule.

The more we simplify the portfolio and the better we stabilize the demand, the easier it will be to rely predominantly on a statistical forecast or a demand-driven pull mechanism. So yes, every company needs a forecast, but the challenges are quite different depending on the overall strategy.

Supply Planning According To Strategy

When coming to supply planning, product leaders should organize for upward and downward volume flexibility. If the forecast is 100, the demand could also be 500 or 1000. Equally likely it could be 10.

Think about fashion retailers or high-tech consumer electronics. Customer intimacy players should organize for mix flexibility. How can we shorten production lead times? Are there ways to decouple the supply chain with some intermediates or subassemblies on stock and doing the last step as assemble-to-order? Operational Excellence leaders will be focused on efficiency, and efficiency is driven by larger volumes at a constant loading.

On the flip side of production there is the inventory management. Product Leaders will need to think about strategic inventory buffers. If a business has 5-10 business lines, considering overall inventory limitation, review where the business wants to focus on to achieve efficiency and where to focus on to achieve scalability.

Doubling production in 3-6 months may require placing strategic inventory buffers. Customer Intimacy players have large portfolios with long tails. Their inventory may be driven by high safety stocks for high variability items and high Minimum Order Quantities or production batches for low demand items.

At Operational Excellence players, inventories may be driven by the optimization of production costs. We may decide to keep producing inventory in periods of low demand to keep the assets running. We may decide to produce in bigger batches to keep efficiency up and costs down. We may decide not to disrupt the production sequence even if we’re short on a certain product because breaking the sequence drives costs up.

Inventory is a consequence of cost optimization so it can hardly be managed separately. Just as different strategies drive different types of inventories, inventory management or the inventory review should also focus on different aspects.

Executive S&OP According To Strategy

And let’s finally look at the Executive S&OP. For a product leader it may focus on successful products and how to scale them up faster. It may review failures, assess the unsold inventory and review options on how to sell that off.

Executives at a Product Leader will be keen to know different Scenarios for new product launches and the required scalability. At a Customer Intimacy player, we may review profitability and growth per customer/product segment and how to prioritize in case of shortages so the desired service levels are met.

At an Operational Excellence company, we primarily review efficiency and efficiency distractors. We may decide on mitigation strategies or on cutting parts of the business where we believe sufficient margin cannot be generated.

In summary, different strategies lead to different S&OP processes. We walk the same steps, but we need a different pair of shoes.

This article originally appeared in the Winter 2021 issue of the Journal of Business Forecasting. Become an IBF member here to get the Journal delivered to your door quarterly.