“Perfection is the enemy of progress.” – attributed to Winston Churchill

Disciplined Sales and Operations Planning (S&OP) has long been recognized as a transformative process for aligning demand, supply, and finance with long-term strategic goals, providing a single, integrated view. For many organizations, the promise of S&OP is very compelling in its potential to achieve improved service levels, lower costs, better overall alignment, and faster, data-based decisions.

So, then, why do so many companies stall or fail in their S&OP implementation efforts?

First, the bad news: one common culprit is perfectionism. A fully mature S&OP process that functions flawlessly on day one simply does not exist, and an organization’s pursuit of perfection before implementation often becomes the very reason nothing meaningful gets launched at all.

The Trap of the “Perfect” S&OP

All too often, organizations defer S&OP implementations until:

• All data is available, clean, and integrated across all systems
• Forecast accuracy is “high enough”
• All stakeholders are on board and trained
• The “perfect” KPIs are defined
• Executive leadership is 100 percent aligned

These are all worthwhile goals — but they should not be prerequisites. After all, a well-designed S&OP program, geared toward continuous improvement, can help address, or even resolve, these very concerns. If company leadership’s demand for a perfect process becomes the bar for starting S&OP at all, there’s a high probability that it won’t ever actually happen.

Overused analogy aside, S&OP is a journey, not a single release event.

Start Small Rather than Waiting for Perfect

When companies choose progress over perfection, they quickly gain:

• Momentum: Small wins build credibility and energy
• Learning: Real-world feedback reveals what’s important
• Buy-in: Success breeds adoption, even from skeptics
• Clarity: You see which data, metrics, or tools are truly essential
• Flexibility: Each cycle identifies course corrections for the next

Why Good Outperforms Perfect: A Simple Case Study

One organization delayed its S&OP for six months, waiting for IT to complete a custom dashboard. Another kicked off with a simple spreadsheet showing demand vs. supply for their top ten items. Within two weeks, the second group was having better discussions — and catching issues early. Six months later, their process was more advanced than the one still waiting for perfection.

Keys to Making Progress Now

Launch, or relaunch, your S&OP process without falling into the perfection trap:

1. Start with what you know: Use existing data and systems.
2. Focus on issues and decisions, not documentation: The goal is alignment, not reports.
3. Engage the right people: Cross-functional doesn’t mean everyone — just the key voices.
4. Set a cadence and stick to it: Monthly reviews with a clear agenda are enough to begin with.
5. Be transparent about gaps: Call out data issues, assumptions, and tradeoffs — it builds trust.
6. Make iteration part of the plan: Document learnings and evolve over time.

Progress Is the Path toward Perfection

“Perfect is the enemy of good.” – French Philosopher Voltaire

There’s nothing wrong with aspiring to have a best-in-class S&OP process. But this doesn’t come overnight — it’s achieved through consistent progress.

• You can’t optimize what doesn’t exist.
• You can’t refine what hasn’t been tested.
• You can’t learn until you’ve started.

So start now. Start simple. And improve relentlessly.

Because when it comes to S&OP, good can be more rewarding than perfect, especially when it leads to more rapid alignment and better decision-making.

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.

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.

Companies that have survived decades of change have done so by flipping the script on long-established business tenets, and ripping up the rule book to adapt to new business realities. However, the maxim “the more things change, the more they stay the same” still rings true for many businesses that have neglected to gauge how legacy supply chains are faring in the midst of all this change.

Regardless of industry sector, it’s almost too easy to get caught up in the day-to-day chaos of routine business operations, particularly if company results are reasonably successful with few customer complaints and acceptable financial returns. This operating model of “if it ain’t broke, don’t fix it” ignores inevitable internal and external shifts in supply and demand. Instead of just coasting along, if we want to remain truly competitive, we should be taking stock of our supply chain planning processes and performing our due diligence to ensure we’re always equipped to proactively support change. Below are some of the more common fluctuating variables within supply chain planning that should be considered and addressed on a periodic basis.

Use S&OP To Determine Important Customers and Products

Demand management is much larger than simply forecasting—over time, customers and products come and go, and a customer that’s critical today may not be so important tomorrow. Our focus on products at time-of-launch becomes much different as they move toward end-of-life. But how does an organization define “importance”?  A robust S&OP process is the answer. Much of its value lies in its support of corporate objectives and financial goals, especially when an organization is challenged with identifying the characteristics or attributes that make a given product or customer segment important, for any number of qualitative or quantitative reasons.

Priorities change, so develop a process that can proactively identify and manage that change.

S&OP helps organizations stay on task with the larger challenge—periodic reevaluations of customer and product importance—to ensure these rankings still support the organization’s current strategic goals. It’s good to remember that strategic goals are longer term in nature, not to be confused with the near-term, tactical day-to-day issues and necessary course corrections. S&OP programs give enterprises the ability to play the long game, and regularly adjust customer and product priorities based on a strategic view, which is a critical advantage in successfully supporting an organization’s corporate objectives and financial goals. Priorities change, so develop a process that can proactively identify and manage that change.

Monitor Changes In The Market & Be Prepared

Customers both new and old can have very high expectations of service and delivery, conjuring up sometimes challenging requirements in today’s demanding marketplace. The reality is that we can’t plan for every customer request that comes our way. Still, it’s important to continue monitoring these requests to determine which of them are necessary or worthy of consideration in the future. For example, working with a group that was two years into a multi-year journey of global process change, e-commerce—not considered relevant at the start of this engagement—emerged as a challenge. The impact to demand planning, inventory management, distribution, and order fulfillment was quite significant. When considering evolving market requirements, understanding the relationships and integration challenges to your end-to-end processes will minimize the impact these changes will have on future implementations.

Actively Promote Knowledge Development In Your Company

Some people within organizations have short tenures, while others stay for a long time. For these long-time individuals, it’s human nature to become personally invested in an established role within a business. This isn’t a bad thing when key functions are being performed and the organization is doing well.

The upside: that these hard workers within the organization gain a solid understanding of the business.

The downside: they often lose touch with the outside world, without access to crucial insights regarding what similar companies are doing.

Best practices are relative to their applicability within an organization, so it’s important to look outside of one’s own experiences to grow knowledge and apply these new insights to improve processes within one’s own organization. Continuing education and networking are two ways to gain new proficiencies, and global organizations like the Institute of Business Forecasting and Planning is an excellent resource. Promoting your staff development through various training sessions, certification courses, and global conferences helps expand your company’s vision toward a broader view of what the rest of the world is doing. Leverage this new knowledge to improve your own processes.

Technology is an enabler, certainly, but only as a tool to accomplish the solution, not the solution itself.

Keep Technology Current But Let S&OP Process Drive Proper Governance

Many organizations jump on the technology bandwagon, convinced it will provide the solution for all their problems. Technology is an enabler, certainly, but only as a tool to accomplish the solution, not the solution itself. These systems depend on instruction—in the form of process rules which originate from the various organizational owners—to help businesses make appropriate decisions. A solid S&OP program rides to the rescue, again, by instilling proper cadence and governance before new or enhanced technology is considered to improve speed and accuracy. Technology advancements are being introduced every year, so there’s no shortage of software vendors that can support S&OP and Supply Chain planning processes. Enterprises typically don’t switch to new technology frequently, but developing awareness of what’s available can better support a longer-term strategic plan for continuous improvement.

Achieve ROI Faster by Engaging Experts

When was the last time you looked beyond the four walls of your own organization, or the processes that manage it?  What are other companies doing in your industry sector? Are you aware of new trends and practices that have come and gone over the years? These are valid questions organizations should consider when evaluating their own supply chains. Today, toolsets like block chain, AI, RPA, and predictive data analytics hold promise, and many organizations are incorporating them into their own processes. A company’s reluctance to engage with outside experts based on perceived ROI concerns is a missed opportunity to quickly tap into external knowledge and insights surrounding latest trends and best practices.

A commitment to review, re-evaluate, and evolve is critical to long term success.

Sir Isaac Newton’s first law of motion, that an object at rest stays at rest and an object in motion stays in motion, can be applied to Supply Chain and S&OP Planning processes, which require periodic outside forces and effort to maintain continuous improvement.  Taking stock of your supply chain, demand management, and S&OP processes with expert guidance to achieve awareness outside of your own organization will help your organization thrive and grow. A commitment to review, re-evaluate, and evolve is critical to long term success.  Companies that neglect this can be left behind.

It’s no wonder that supply chain planning environments are often challenging and chaotic, with demands coming at us from all directions. While customers and suppliers are often the cause of our anxiety, some of the most threatening fire often comes from our own executive management. Dealing with internal leaders requires courage – indeed, the success of your organization depends on it.

Regardless of whether it’s a deliberate tactic or a reflexive response, when the c-suite instills and maintains a corporate culture that stifles open and honest communication, that leadership can sometimes be our greatest enemy. Over the years, I’ve witnessed situations in which truth and transparency are desperately lacking.  However, fearing the wrath of executive management can make an organization’s stakeholders very reluctant to  reveal bad news. To avoid a dressing-down in front of the troops, bad news is often sugar-coated, or even worse, not communicated at all. One hopes that bad news isn’t a day-to-day event, but when bad news is looming, it should be addressed head-on and in a timely manner.

The Reality Of Demand Forecasting

When it comes to forecasting demand, many factors can contribute to a rosy outlook. We develop and launch new products with the hope that they’ll do well – all the years of researching and developing products inclines us to be optimistic whether it’s warranted or not. Or Marketing is bullish about a new promotion because their budget depends on these projected revenues. But these are anticipated volumes and forecasts do have a remarkable propensity for being less than right, and you are the one who has to separate reality from fiction.

Have the courage to declare that the plan did not materialize – your business will benefit from the truth in the end

What should your organization do when projected volumes aren’t coming to fruition? The sooner you can notify the rest of the organization, the better your chances are of achieving a positive outcome or even mitigating risk.  Yes, there will be a net lower revenue, but additional resources won’t be wasted on building products to a finished goods level, only to sit in inventory. Have the courage to declare that the plan did not materialize – your business will benefit from the truth in the end – and then create and enable alternate strategies to overcome these areas of constrained demand.

New Product Introduction Gate Process

New product introductions can be several years in the making, and the life cycle of that product can be as short as one year. Depending on how much time and money has been invested in the new product, if the product launch fails, it could have an enormous impact on revenue and market share. Product engineering teams generally have a strict set of gates that a product must pass through as it moves its way closer to release.

Rather than ducking for cover, honesty now saves valuable time and money

These pre-defined checks and balances are in place to ensure that the product is ready to advance to the next step. When there are great expectations on launching a new product, no one wants to declare failure on the passage of a gate, particularly if there are many more gates ahead that will course-correct. So, what does a fearful organization do? Rather than face management, it gives the product a pass and lets it move forward. This only moves the problem up the line to the point that it can jeopardize the launch itself. Rather than ducking for cover, honesty now saves valuable time and money.

Truth In Available Line Capacity

Manufacturing lines have finite levels of capacity. We have yet to see a plant state capacity at its full theoretical level, and that makes perfect sense. But when you state capacity at a lower level – sometimes referred to as “sandbagging” – the reduced level of capacity is used by the plant for many reasons, such as variability on the line, or distrust of demand, or another creative explanation. The result is a self-inflicted, artificially constrained plan. We get it. Things happen outside of our control. However, it’s imperative to be honest with your capability up front, because it can only help the overall success of the plan, and it will actually reduce the time for error resolution.

The Supply Is On The Way…..Or Is It?

Suppliers can come in all forms and from all corners of the globe. They provide us with everything from piece parts to semi-finished to fully finished goods. Our ability to deliver a finished product to our customers is highly dependent upon the timely and reliable delivery from our suppliers. We place purchase orders on our suppliers, receive a delivery date, and expect an on-time delivery.

Honest and early communication helps to mitigate the negative impact of late supplier deliveries

But when all deliveries are not timely, what do we say when executives are breathing fire down our necks? When there’s a short window between how much advance notice you have before you need to report to management, what do you communicate before the “shoot the messenger” game starts? The answer is, don’t play the game at all. Honest and early communication helps to mitigate the negative impact of late supplier deliveries.

How Big Is Your Inventory Buffer?

Everybody says inventory is a necessary evil; necessary because we need inventory for order fulfillment, and evil because too much of it ties up cash. Typical marching orders from management include a mandate to reduce inventory levels. But as time passes and inventories rise, or inventory levels dip below minimums, what do you communicate to management? Management won’t like either scenario, but too much is probably the least favorable answer. Why? Because once product is in inventory, you can’t change it immediately. This is a case of bad news vs. worse news—while neither scenario is ideal, communicating accurate levels to the rest of the organization allows for the proper actions to be taken, albeit after the fact.  Inventory might be bad, but it is still that necessary evil which should be measured at actual levels and communicated to management.

Honesty Is Always The Best Policy

The old expression, “Don’t bring me bad news; bring me solutions,” is generally good advice. But what happens when there are no immediate solutions to address bad news? Bad news is bad for a reason – ducking for cover to avoid drawing fire only makes it worse. Honesty and transparency are always the best policy, and open and honest communication are the only ways to address, mitigate, or completely remove the negative impact of bad news. Changing an oppressive business culture into a proactive entity that fosters honest, transparent behavior, starting at the top, will serve any organization well.

Bill Mrzlak is CEO of ChainSequence.com.

When it comes to supply chain professionals, most of us like to think we know the best way of doing things. Starting off with the best of intentions, we work under an unproven premise that our little supply chain foibles are typical in organizations like ours. Ignoring some consistent fault lines, however, will eventually expose costly cracks in the supply chain process, leading to lost sales, a decline in morale and the loss of talented personnel.

By normalizing day-to-day chaos, we may be avoiding a hard truth—some of our entrenched behaviors are, in fact, sabotaging our everyday and long-term goals. Consider these bad behaviors so that they can be squashed before they integrate themselves into your business processes.

1. Allowing Customer Service to Pass Judgment on Available-To-Promise (ATP) Data

Our ability to commit to customer orders begins with our statement of product availability through our ATP. This ATP is based on the culmination of many demand planning processes. The longer-term demand forecast drives the planned procurement of materials and production of finished goods. These plans reflect the prioritization of that demand, which is based on the corporate objectives and financial goals of that organization.

These plans also reflect the supply chain’s capability and constraints – lead times, cycle times, manufacturing planning parameters, and level-loaded capacity consumption over time, just to name a few. At any given point in time, this plan—which serves as the foundation for the ATP—is truly the best product availability signal. When customer service arbitrarily second-guesses or doubts ATP—overriding a commit date to the customer—the only logical result is a potential false commit to that customer. Do this enough times, and you will lose customers.

2. Allowing Executive Management To Circumvent The Process

Controlling the actions of our executive management is not our responsibility. It’s their prerogative to take action, and as an organization, we’re generally compelled to comply. But, for example, how many times have we seen an executive return from a customer review meeting which resulted in a one-off, special action on that customer’s orders? This kind of decision—which overrides all the careful planning preceding it—has a very good possibility of creating a disruptive ripple effect on the balance of the business. We can’t control that executive’s action, but we can provide them with the necessary data to make an informed decision. Understanding the full impact of their request may not change their decision but may get them to think before requesting the next one.

3. Hiding Available Inventory Or Capacity

Transparency in a supply chain is critical. Why? Because transparency is what enables very quick response times to the demands of a dynamic market. A sudden upside request from a customer can only be supported by inventory on-hand or projected inventory from future production. In a constrained environment where product is limited, an exception process may be invoked as an attempt to close on the upside opportunity. When inventory is hidden, sometimes asking a second time, or asking louder, can cause a sudden appearance of product availability. All this achieves is unnecessary internal chaos, which elongates the time to respond and creates additional frustration with the customer. While lack of inventory visibility may be a symptom of system capability, if it’s due to forecast mistrust, manufacturing capability doubts, or just plain sandbagging, this kind of sabotage can and should be avoided.

Not sharing how much inventory is actually available is just one example of normalizing bad supply chain practices, and inviting chaos in the process.

4. Allocating A High Percentage Of Supply Capability

In a perfect world, the supply chain is driven by a statement of demand that, through the S&OP process, has consensus from all organizations. If we thought that forecasted demand was 100% accurate, reserving or allocating your supply capability—including inventory—to support that demand would not be a problem. We may turn away a customer order because those resources are being held for another customer. However, it’s accurate to say that forecasts are less than perfect. If these reserved resources are not used for their intended purpose (i.e. the forecast was off), we could find ourselves with no orders. Reserving our supply capability to perfectly align with the forecasted demand can result in self-inflicted, lost opportunities. There are certainly business reasons to support reserving supply capability, such as contractual agreements with our customers or internal strategies, for example. But these reasons must be balanced with the total demand to provide flexibility that can react to a volatile, less-than-correct, forecasted demand.

5. Allowing Conflicting Metrics Across Organizations

One thing I know all too well from running Chain Sequence is that internal organizations within a large enterprise often act as semi-autonomous fiefdoms. We all want our own fiefdom within the larger enterprise to succeed. Toward this end, we design our metrics to ensure that, on paper, our organization is performing successfully. By neglecting to consider how our internal group integrates with the bigger picture, our success may be at the expense of other business units, or even at the expense of the entire enterprise.  For example, if our Sales organization is measured on orders received, regardless of product availability, that’s great for Sales. But if there is no product available to fulfill those orders, as an enterprise, we have failed.  Metrics should be designed to work in concert across all organizations to ensure success for the greater good of the entire organization.

Break Out, And Stay Out, Of Bad Supply Chain Habits

Whether your organization has just completed a significant process improvement effort, or you’re about to embark on one, keep in mind that business processes across various organizations within a company are ultimately executed by people. Technology can support a process and enable speed and accuracy, but that technology needs direction from each of these organizations.  It’s human nature to doubt the ability of these systems to make the right decisions, so results are often second-guessed.  Don’t let these kinds of bad habits creep back in to cripple your planning processes—by being mindful of the harm these behaviors can do, all internal organizations can more collaboratively create opportunities for positive business gains.

According to Merriam-Webster, “The English word chaos is borrowed from the Greek word that means ‘abyss.’ In ancient Greece, Chaos was originally thought of as the abyss or emptiness that existed before things came into being.” Bill Mrzlak, founder of ChainSequence, reveals how CEOs must combat business chaos with S&OP.

When chaos rules over everyday business operations, it isn’t just stressful for your employees, it can be devastating to your company’s bottom line. The cure for persistent business chaos—Sales and Operations Planning (S&OP)—was specifically developed to help companies move from reactive business decision-making, to a structured, measurable program that capitalizes on opportunities while minimizing barriers to future growth.

S&OP, which has actually been around for decades, is especially relevant today as a practical methodology to navigate a strategic pathway through today’s unpredictable global marketplace. As commerce becomes increasingly dependent on data, analytics, AI, and digital technology, a thoughtfully-designed S&OP program helps an organization 1) identify and map out a cohesive, goals-oriented business strategy, and 2) follow through on that strategy with robust forecasting and transparent reporting cycles.

A perfect storm of disruptive events has caused disruption to many industries in recent years

A perfect storm of disruptive events – the onset of digital start-ups, creative product innovations, and the evolution of e-commerce – has caused disruption to many industries in recent years. The result for competing businesses? You guessed it – chaos. If your business wants to respond effectively to the potentially negative impacts these disruptors may have on your organization, creating an S&OP program can be your best defense in safeguarding your market share, and reinforcing your strategic aims through common purpose. S&OP has proven its worth time and again, helping enterprises to effectively disrupt the status quo and change the direction of their business, build support for common goals, and lead to continuous gains and improvements over time.

Re-Routing Your Business Toward S&OP – Without Flying By The Seat Of Your Pants

We always recommend that business executives take the time to research S&OP, obtain a basic understanding of the mechanics of the process, and go about the work of building internal buy-in and support. There are several factors management partners must bear in mind before embarking on an S&OP deployment. Change Management is by far the first and most important consideration—know what you’re getting your business into and why. Often, changing longstanding behaviors and pivoting to new organizational processes can be more difficult than defining the actual process itself.

The first and most important question is, “Why do I want an S&OP process?” Years ago, Gartner published its five-stage S&OP maturity model, which offers a straightforward guide to help your business determine where it lands along the S&OP maturity spectrum. As a starting point, evaluate where you are currently and be realistic in where you’d like to go. If your organization has no process in place, an impartial evaluation conducted by an external subject matter expert can help you launch an enterprise-wide S&OP deployment effort on the right footing.  Some organizations, for instance, confuse a basic demand/supply planning process for S&OP, so be cognizant of keeping S&OP, which is an oversight and decision-support system, separate and distinct from supply chain processes.

Understand the key drivers and objectives of your organization by 1) identifying the company’s strategic goals and financial objectives; and 2) ensuring that everyone within the organization know what these goals are. Be clear on what you want so that it can be achieved, whether that be for financial, operational, organizational reasons, or for behavioral issues such as revenue, profits, utilization, accountability, communication, or consensus.

Warnings, Detours, and Obstructions Ahead – Getting Around These Obstacles

The inherent psychology embedded in S&OP implementations—learning to work collaboratively instead of as independent silos—means that the road ahead has potential behavioral obstacles to overcome.  Knowing these obstructions exist in advance will help you to cut them off at the pass –

• Some individuals may say, “We already have a process and have always been doing it this way.” But, are you performing to plan? Can you do better?
• Others may say, “The S&OP process is too rigid.” Don’t confuse rigidity with discipline. An S&OP process should be a consistent, repeatable process, month-after-month-after-month
• There may be a general perception that, “We already have an S&OP process.” But, do you really? Is the focus more tactical than strategic?  Are you identifying potential issues at a point in time where solutions can minimize the potential impact of that issue or help you close on an opportunity?
• A time-tested favorite is, “Senior Management doesn’t have time or will never agree.” This very legitimate concern is the one that can be the deal-breaker. At the end of the day, if your senior management team doesn’t support AND own the S&OP process and its outcome, you would be almost certainly heading down a path of failure, even before you begin.  Get executive sponsors involved, early and often, and sustain that level of engagement and ownership long after deployment.

Become Familiar with Hazardous Terrain Along the Way

One of your biggest assets for driving success will be your people and their ability to adapt. Deploying S&OP allows your management to understand the behavioral nuances and personal strengths of these staff members, and then use that knowledge to your advantage. While it would be ideal to have a team of evangelists that support you 110%, this won’t ever happen.

As the saying goes, keep your friends close and your enemies closer.

Some people are simply averse to change. It’s important to accept that there will be proponents that fully support you right out of the gate, and there may also be “antagonists” who, feeling threatened, will create roadblocks at every turn—some in very stealthy and passive-aggressive ways. Working with these individuals through education and collaboratively defining the process helps mitigate and marginalize these challenges.  As the saying goes, “keep your friends close and your enemies closer.”

Be Optimistic, but Manage Expectations…

Because the journey to mature S&OP is a long one, don’t expect to get to your destination overnight. Have clearly defined and aligned goals and metrics and have a solution in place to measure their progressions accurately. Develop incremental achievable targets, because in S&OP as in life, the devil is always in the details. If you’re engaged with a multi-national company, eventually work toward a single, global process. If possible, start off by piloting a specific region or product. Enterprises can’t define a common global process if every region or product line has a different way of doing things. Keep in mind that there will always be specific unique requirements to address, but these anomalies run generally less than 20% of total requests. Once you’ve defined the process for one group, then take the initial lessons learned, tout the early positive results, modify as needed, and then replicate these best practices across the rest of the world and product lines.

Make the Journey Part of the Reward

Embarking on an S&OP program requires careful thought and planning, like developing an itinerary for an extended trip. Executing this plan is in some ways the easy part. Know that one size does NOT fit all, but that doesn’t mean you need a unique solution for each region and product line.  As a therapeutic exercise, an S&OP program allows an ideal opportunity for self-reflection. You learn what’s really going on at your organization, and with that you are able to drive change.

IBF’s Business Planning, Forecasting & S&OP: Best Practices Conference in Orlando features workshops on how to deploy S&OP for better visibility into demand, streamlined inventory, organizational alignment and superior customer service. From 16 to 19 October 2018, this event is the biggest and best of it’s kind. Presenting companies include Nike, Starbucks, Target, Puma, and more. LEARN MORE.