People in Sales and Operations Planning

Sales and Operations Planning

First of all, let me start by saying that S&OP (sales and operations planning) and IBP are both the same for me. Bottom line, it’s all about creating alignment within the different silos in the company. This doesn’t even necessarily have to result in just one consensus plan as long as the executives are aware of the differences. Just like there are multiple names for this process, there are also multiple ways to achieve the alignment mentioned above. Some companies only have one S&OP meeting per month, others need the full cycle of meetings to be able to align.

Regardless of how you perform S&OP (sales and operations planning) in your company, I think we all can agree that the following is needed to be successful:

  • a process in a certain cadence,
  • relevant data, and
  • the right people.

I could have added software here as well, but in my opinion, the software can make things easier but it’s not paramount to success. In this blog, I’ll share some of my findings on these three key elements.

Process in Sales and Operations Planning

Laying out the desired process is not that hard. Using LEAN-tools like Value Stream Mapping can be of good help to set up a stable process. This tool also helps to get the right disciplines at the table in the meetings that are being set up. To get your basic process in place, you simply need to develop standard meeting agendas, a RACI-table (RACI = Responsible, Accountable, Consulted, Informed), and determine your process’ inputs and outputs. Having a process facilitator in every meeting will boost the maturity of S&OP (sales and operations planning).

Make sure that the meetings are not only about sharing information but that they drive decisions. For continuous improvement make sure to critique the meetings and capture the decisions that are made as well as the actions that are assigned. Do not wait until every process is laid out perfectly, but start right away and improve from thereon.

Data in Sale and Operations Planning

Getting the right data can be a pain but with the ability to pull data out of an ERP-system it should be fairly easy to start with some basic data and improve this week over week. Start with basic action-driving KPI’s, set future targets based on history and perform root-cause analyses. Don’t hold in because you do not have 100 percent accurate data. If the measurement and definition is consistent, you can still improve based on the trend your KPI shows. What metrics to use is highly dependent on the type of business (B2C, B2B, etc.) and the type of product (MTO, MTS, etc.).

Show tables and/or charts by Product Family (or other relevant product classifications) that point out the differences per plan, e.g. Financial Budget, Sales Outlook, and Operations Plan. Putting these numbers in the table for review will often lead to a discussion which then will lead to more clarity on the presented numbers. With so many plans, items, etc. it’s easy to get lost in a sea of data, so focus your analysis on large gaps first and then dig in deeper as needed. Again, my advice is not to hesitate, but yo get going in order to gather feedback to use for continuous improvement. It’s about progress, not perfection.

People in Sales and Operations Planning

Having nearly 10 years of experience in S&OP (sales and operations planning) at three different companies, I struggle the most with the people part. I struggle in terms of having the feeling that we could be more efficient and effective (and accomplish so much more) if the attendees would ask the right questions at the right time. Talking to peers, I often hear that they are having the same struggles and do not always have a solution for this. It’s refreshing to them to admit that they struggle with this rather than simply dismissing their struggles by saying that “It’s all about change management!” or that “It just takes time!” Well, that’s not a good enough answer for me.

Some of the positive and negative characteristics below will be recognized by many of you:

  • New Product Planning meetings: I think these are the most interesting but teams often remain non-committal. While a lot of information is shared, often no decisions are made in regards to quantities, due dates, etc.
  • Demand Planning meetings: They give you the feeling that everything will work out fine as long as Operations supplies the necessary product in time. Decisions are often made based on gut feeling which makes it hard to get a commitment on targets. Out of all meetings, the Demand Planning meeting is the one that gets rescheduled most often due to other priorities.
  • Supply Planning meetings: These are usually organized and data-driven, resulting in clear action points, owners, and due dates. When supply is out of sync it can be hard to judge if Operations really does its utmost to resolve the issue because they often claim “there’s enough inventory on other products that Sales can sell”.
  • Senior Management S&OP meetings: It’s often the case that the same person always second-guesses the presented numbers, another person is always the optimist, and so on.

In my opinion, the above has its origin in the difference in personalities within an organization, which contributes to having organizational silos in the first place. We obviously need all the personalities, but should the same person always act the same in every meeting?

Maybe the solution lies in pointing out which roles/competencies are needed (e.g. Belbin) within S&OP (sales and operations planning) and combines that with exchanging these roles amongst the attendants. Belbin points out that we all have two or three roles that fit us naturally and some that we really don’t like. Having all disciplines involved in at least the Pre-S&OP and Senior Management Team (SMT) S&OP meeting means that the odds are high in these meetings that all required team roles can be fulfilled by the meeting attendants.

I’ve never tried some of these tactics for dealing with people, nor do I know if there are other best practices on how to get the best out of the people involved in the S&OP (sales and operations planning) process. This part will become more and more important especially in combination with on-the-fly data gathering. Imagine a situation where, based on the discussion in the meeting, different scenarios are shown on-the-fly in order to make the right decisions.

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About Vanguard Software

Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on the Vanguard Predictive Planning platform. Vanguard Software is based in Cary, North Carolina.

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