Why Your S&OP Initiative is on the Back Burner

Perhaps the absence of a Sales & Operations Planning process (or a well-functioning one anyway) has caused your team some missteps. Perhaps you are scaling up and need to get your act together internally. Perhaps you’ve lost a key heavy-lifter you depended on. Perhaps corporate is on you and you need to be better prepared to deal with them. You know these situations can get fixed or at least improved upon by paying some attention to S&OP. No one in your organization disagrees. It’s an easy call, let’s do it.

Another month goes by without action, then another, and another. Why? You and your team are busy. The day-to-day is all consuming, every week there’s some fire or request from above that needs attention. It seems you just finished a board meeting and the next one is already upon you. Lots of initiatives are already in progress. Lots of things are urgent.

You can make S&OP urgent

Aside perhaps from the urgent things your boss tells you to do, urgent projects and activities have one thing in common, they are tied to dollars.

Much of the time, S&OP is one of those “important”, but not “urgent” things. You work on it, then some months later you see some changes, hopefully. It doesn’t have to be this way, it can happen faster with a sense of urgency.

The best way to get your team’s or boss’s attention on S&OP can be summed up in three letters, ROI. ROI is the best form of change management. What are the costs of the doing nothing? It’s likely not going to cause a meltdown this month or even this quarter, but what if it continues for several months, while in the meantime, your business continues to get even harder. Quantify the costs of doing nothing and you have your business case. Here are some things to look for. Most companies have issues with some of them.

Low OTIF?
Long lead times?
Lost sales?
Expedite costs?
High or the wrong inventory?
Obsolete inventory?
Rework?
Recent or repeated major $ blunder because the left hand didn’t communicate with the right?
Low forecast accuracy causing the above?

Find the root causes of these things, examine your KPI set and history, quantify what could be different, and communicate the story through the data. Without a business case, S&OP is just another good idea, and every organization has lots of those, yawn.

Figure 1. Financial Metrics Improved Due to S&OP