S&OP is Dead…Long Live S&OP!
Recent articles such as “Is the Traditional S&OP Process Outdated and Heading to Extinction?” and “The ‘post-S&OP era’ – Managing in NOW mode” have suggested that the existing S&OP processes in today’s world are fast becoming out-dated. While S&OP processes are much improved over the disjointed silo mentality of functions within companies of old, the lack of speed needed in today’s reality where companies have access to multiple channels to real time data is causing significant waste and sub-optimization. On average, S&OP processes take 3 weeks to complete the cross functional collaboration before converging on a common plan.
Most everyone would agree that faster is clearly better; a company that is able to have a culture and capability of real-time or NOW collaboration reduces costs in numerous areas (inventory, man-hours, materials, operations, etc), improves customers service, and thus ultimately improving shareholder value. Another positive is that the tools to enable this type of collaboration exist today with several options to choose from.
While all would agree that a real-time solution is the best way to plan and react to real times changes in demand; as is often the case, the devil is in the execution. Consider large companies with locations in multiple countries and regions, where different cultures exist, and also challenges that come with varying time zones. In addition, while it may now seem like a far outdated stance, there are still several companies that haven’t fully embraced all (or any) social media tools with open arms.
Having come from a large multi-national company with >60 manufacturing locations, in >30 countries and >100K sku’s, I see the potential for the numerous areas where the roll-out of this strategy could have negative consequences if not executed correctly and embraced at all levels. It is clear to me that this is truly the direction where the enterprise needs to head – however, I warn that the approach needs to take into account the company profile and culture. I believe this can be done by ensuring your implementation plan contains, at minimum, a the following key elements. 1) total buy-in from the top levels to embrace the selected solution and all that comes with it; 2) a balance approach with realistic timelines based on the level of complexity of such a solution; 3) the understanding that likelihood of success goes up exponentially as the size and complexity of the company implementing the solution goes down.
Greg Hatcher is a partner in JBF Consulting’s Supply Chain Strategy practice.