Your insight into the potential for this is where the opportunity lies. If you can help your leadership grasp what you articulated so well, S&OP will remain vibrant and continue to improve as your go forward. If they assume S&OP will just take care of itself and delegate the leadership downward, the process will begin to deteriorate.

My sincere compliments on your insights; they will do you well!

Best wishes for success!

Posted by Mark Hardison

Shareholders sometimes have short memories. When a project is successful, they tend to think it was always “that way” and selectively forget the “culture” and processes that enabled the long term practice of an inefficient business process.

Management could also have another “crisis of the quarter” which will shift resources away from the successful program to “fight the fire” and obtain visible short term results.
By
Robert Gotsch

Great post! My experience has been similar in almost every area except one: buy-in from senior management.

I’ve seen S&OP at its best and at its worst in multiple companies. Early successes like yours are common when implemented with the apparent rigor and commitment demonstrated by your team’s success to date.

My concern is for sustainability of what you have invested so much time and effort in. S&OP is supposed to be a tactical planning process that implements the strategic plans of senior management, as you noted in your closing comment. My experience and recommendation is that senior management has to buy into S&OP as THE process for how they want to run the company. THEY MUST LEAD the process, even though others in management may do the leg work and execution.

Every instance of failure with S&OP that I have seen has been directly tied to the absence of senior management buy-in and process leadership. If sustainability and continuous improvement of the S&OP process is important, it is my opinion that senior management’s ownership and leadership in S&OP is an absolute requirement.
By
Mark Hardison Director Global Supply Chain Management

The result of this directive was: an S&OP program which consisted of four conference calls per month with the “keymen” of four regions consisting of 40 field warehouses which stocked the material in question. The “keymen” were the 40 site managers, the 40 field engineers who planned the jobs requiring the components and the warehouse regional managers or their representatives.

Each region conference call normally lasted two hours, with folks checking in and out as their area was called for a report. The area reports consisted of jobs the field engineers had scheduled for the next 2-3 weeks and the components required to complete the project. My responsibility was to identify shortfall component requirements at the market level, and locate the components at one of the other 39 field sites.

This process was called “Dynamic Deployment”. With real time inventory access to all 40 sites, I would negotiate release of the material from the market with excess inventory and ship it to the market with inventory shortage.

The second part of this process was control of the $150 MIL in open orders. Based upon the available inventory and short term requirements, open orders could be canceled, pushed out, or expedited.

The third part of the process was Supplier Managed Inventory (SMI) implementation with our suppliers. Knowing the short term requirements of our customers, our open orders and inventory on hand, I could negotiate with the suppliers to maintain sufficient stock on hand for projects where our material was in short supply, or provide to other customers on material where we were overstocked.

The results of this program were: cancellation of $30 million dollars of purchase orders where sufficient stock was on hand in the system; an increase of inventory turns of $150 MIL of inventory from 2 to 4-6/year in three months, implementation of a valid “demand forecasting” program, and customer satisfaction by being able to provide the component support to the planned engineered jobs and reduction of the job backlog.

An S&OP program can be successful. It does not need buy-in from senior management. It does require a directive to improve a business process such as “increase the number of planned engineered job completion each month by improving component support” or “increase the number of inventory turns and reduce the dollar value committed to inventory” or “implement a Supplier Managed Inventory system”, or “implement a Demand Forecasting System”.

S&OP has more chance of success if it is implemented as a process to resolve a general issue identified by senior management as part of their strategic plan.
By
Robert Gotsch

The facilitator of an S&OP meeting has to be a brutal task master to keep the discussion up to the level that top managements wants. To do that the meeting that preceeds the S&OP MUST do the tactical stuff. All that should be left are decisions; that is how management makes their time worth while. S&OP is NOT a meeting; it is a process.

Emmet