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 step that focused on technology.
9. Balance long term strategic focus and short term objectives
Improved performance comes from managing the future rather than reacting to the present.
S&OP can deliver brilliant results. It harnesses the creativity of you people. They master the art of planning and the power of team work. In short S&OP helps you manage the future.
It is this future oriented thinking that drives profits and shareholder value.
Exceptional results are the product of design, not accident. Exceptional S&OP delivery melds people, process and technology to deliver a future focused organisation.
Your agility and resilience is enhanced when there are thoughtful choices of options, when opportunities and risks are identified and alternative plans are available.
This long term thinking results in stable execution of the plan and eliminates firefighting.
When short term thinking dominates as there is a tendency to chase targets and “fire fight” issues, at the expense of the bigger decisions.
Remember value increases with a longer view.
S&OP / IBP should be looking forward at least 18 months. This longer-term planning horizon makes budgeting easier and promotes and supports strategic thinking.
Use this same approach to long term thinking when setting out to improve the maturity of your S&OP / IBP process. Thoughtfully assess the maturity of your existing process and then plan the improvement path.
A mistake that many business make on their journey for excellence in S&OP / IBP is to be overly ambitious.
Being too ambitious in your improvement target can lead to a lack of mastery at each step in the process. You then run the risk of your process complexity overwhelm your key players and delivering poor results.
Similarly, if your ambitions to improve are modest, your risk is a stagnation of the skillset and a loss of competitive advantage.
The journey to planning excellence should be made using a realistic schedule. Stepping up from a lower level to the upper one while securing the mastery of the solution implemented.
S&OP / IBP require you to balance long term strategic focus and short term objectives, be that within the S&OP cycle or the striving to improve the maturity of the process
10.Don’t just develop scenarios, develop action plans
Henri Poincare, one of the foundation builders of Chaos Theory said: “It is far better to foresee even without certainty than not to foresee at all.”
You can’t predict the future but you can plan for eventualities.
S&OP is a forward-looking decision making process.
To become good at it you need to practice the skills of planning – learn by doing. And you need to spend time reflecting on what worked well and what didn’t and continually asking yourself how you can do better.
That is, you need to learn from the lessons of history so that you can improve your response in the future.
You need to identify potential events ahead of them occurring and then plan your response by running multiple scenarios.
This practical learning process means that you and your team become increasingly skilled at solving problems and as a result, your supply chain becomes more agile in rapidly responding to changes as they occur.
Having prepared contingency plans mean that when the time comes, you can execute the planned steps without having to spend time, under pressure, working out what to do.
But it is also important to not only develop scenarios, you must develop action plans. Who is responsible, what are the issues that need to be addresses, what are the actions that will be taken by whom and when will it be done.
Practice, reflect, learn and improve. The secret from moving from good to great.