Implement S&OP First or Fix the Underlying Planning Processes First?
The short answer is yes. For organizations that don’t yet have S&OP, this is a question that usually gets asked since there are often recognized gaps in the underlying planning processes (e.g. product development/introduction, demand planning, inventory management, production planning, raw material planning, and financial planning). The point that gets raised is, “Shouldn’t we improve the foundational processes and inputs to S&OP first then we can attack it afterward?” Certainly a logical point, and if the gap in one or more input planning process is large, such as the company doesn’t even forecast, or have a way to roll-up a production plan across multiple facilities then the point becomes even stronger.
In most organizations, some level of planning is in place and although the processes can be improved upon, they can feed an S&OP process with a reasonable level of accuracy to get started. While you can launch S&OP in a few months, it will usually take several months to make it effective. If resources allow, the ideal condition is to work on S&OP and the underlying processes in parallel such as to continually improve the quality of information coming into the meetings. Hence the yes answer above. If resources don’t allow, and you choose to work S&OP first, it’s important to set the expectation with meeting owners and participants that S&OP will surface gaps in the input processes that will be prioritized and addressed when possible. The balance is to improve the feeder processes before the S&OP participants lose their patience.
While you can get away with some process gaps underneath S&OP, the deal killer is the inability to aggregate your planning data by product family over the required S&OP time horizon. If your systems do not let you go between aggregate and sku level detail easily, the required manual effort may be too time consuming to generate the necessary reports for the meetings. Please make sure this capability as well as the product and business hierarchy roll-up structure are in place before attempting S&OP.
Thus, maybe the answer to the question is, the consultant cop out answer of it depends. If your underlying processes are non-existent or have major gaps or you have the data roll-up gaps described above, address that first. If you can provide reasonable input data, set the right expectations with the participants, move forward with S&OP, and improve the underlying processes along the way.
