by Greg West, Farthing West Chief Brilliance Officer
The great rewards from S&OP / IBP come through collaborative processes and focused planning. Forging a company culture that is unified in purpose. A company culture moving forward positively to achieve a common strategic direction.
The following is a guide to developing and improving your S&OP process. I have broken it into 4 sections. The first three sections are about People, Process and Technology, while the fourth is the importance of being Future Oriented.
In the previous blog, I highlighted the importance of the first two steps which focused on people.
3. Work on the input to the process to achieve great outcomes
The heart of S&OP is collaborative thinking but the soul is process design.
It is one of the fundamental rules of business and indeed life, that if you want to achieve great outcomes you need to work on the inputs. Process improvement should always be focused on the inputs.
Growing the maturity of your S&OP / IBP process is a never-ending journey.
Continually challenge the design of the process and look for opportunities for improvement.
Develop strong agendas, standardise the sequence, timing and outcomes of each step.
Use meeting calendars, have clearly defined objectives and ensure that fit for purpose tools are used to promote meaning making.
Be vigilant for waste – delays through waiting for information, over analysing, rework and errors, unnecessary processing steps.
Take the time to reflect on what has worked and what has not. A good practice is to ask yourself the following simple questions. What did we plan to do? What did we actually do? What is there to learn and how can we improve?
When you continually refine your processes, you develop brilliant processes. And when you have brilliant processes, average people deliver brilliant results.
4. Design Your System for Facts that Flow
For S&OP to work effectively, information must flow with minimal constraints between all parts of supply chain.
Pay particular attention to the design of your information flow in order to win in the future.
It’s not enough to just collect information, it must be normalised and shared.
Consultation and information sharing promotes multi knowing across the supply chain and delivers superior results.
Remember your supply chain includes customers and suppliers. Consult and share information so that they can adjust their plans for win-win outcomes.
This approach maximises opportunities and minimises risks.
Data sharing also improves forecasts accuracy.
This is particularly the case for promotions. Good promotional planning tools like E2open not only improves planning of specific events, they improve the corporate knowledge bank on what works and what doesn’t and this leads to better profits and greater market share.
5. Measure the success of the process
The S&OP process is specifically targeted to positively influence the success of the business. To grow profitable sales. To improve margins. Lower the cost to serve. Reduce the cost of inventory and importantly improve customer service.
You need to be measuring these and many other key business drivers. However, these measures can be impacted by other things and are not of themselves a direct measure of the success of the process. And, as previously stated, it is the process that will deliver brilliant results.
Forecast accuracy is another key measure. But there is always inherent demand uncertainty in forecasts. Improving forecast accuracy is a worthwhile objective and is a key measure of performance.
Maths and content expert input into the process helps to improve forecast accuracy and this is the advantage of using a good advanced planning tool like E2open. It does the maths well and allows you to structure the work flows to promote collaboration and make it easy to tap into the input of content experts.
But the key measure of success of the process itself is forecast bias.
Monitor forecast bias. A consistently under or a consistently over bias is an indication of imbalance and points to either unrealistic expectations or functions with too much influence.
Use this measure to help to improve the overall health of the process.
To be continued…