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Mitigate these S&OP Hazards in Mid-Market Companies (Part 1)

While we are known for our work within the complex environments of global corporations, we do a significant amount of work with mid-market companies as well. For this post, I’ll define the midmarket as companies in the $100M – $500M revenue range.

 

For us, these projects are faster, leaner, and frankly easier than the larger ones. Easier perhaps, but not easy. The mid-market projects still squirm on us, usually because of the common challenges that we discuss here.

First - Some things that are easier in the mid-market that decrease time to effectiveness and project cost.
  • Unified management teams – Politics are much lighter, usually there is good alignment behind a strong CEO, and this just makes things go faster.
  • Momentum – Once decisions are made, it’s full steam ahead, we don’t waste time recreating the wheel for those who missed the memo or are holding on to the hope that this too shall pass.
  • Accessibility – Executives are over-committed in any company, but they are more accessible in mid-market companies. Sometimes executives are located in the building (not always, but certainly more so than in large companies). This also means less “make-up” sessions for executives who couldn’t make meetings and less travel for consultants who need to be where needed for change management purposes.
  • Fewer business units – This makes S&OP designs much simpler, meaning fewer or no exceptions to accommodate the whole business.
  • Fewer people to engage – Following from less business units, it means less to replicate, fewer exceptions, and less change management.

After the assessment and some training, we can get consensus on an overall S&OP design in a couple workshops, and then build-out the report and KPI templates pretty quickly.

 

While we are deeply experienced and enjoy working with the bigger companies as well, they need more time and investment to implement change. Most executives in large companies are aware of this.

Okay, on to the the mid-market

Resources is the big one

 

Mid-market companies don’t have extra people to put on projects. All involved will fit this into current job responsibilities. No “Center of Excellence” function, and forget about 50 to 100% project roles for S&OP and underlying process improvements. Some other key resource-related items are broken out separately below.


Org gaps and tactical demand/supply balance (Note that I don’t call this S&OP)

 

After a brief assessment, we will see the S&OP design immediately. Our next questions will be – Who will run each S&OP meeting and who will put together the reports and KPIs? If one name keeps coming up, this is usually a problem.


Many mid-market companies have the “supply chain guy/gal”, typically a manager who begs commercial types for whatever demand information s/he can get, and then schedules production as best as possible. Finance is typically absent from the process and does their own thing with numbers. There may be some kind of tactical demand/supply balance meeting that they call S&OP, but this is far from what we have in store for them.


Gaps in underlying processes

 

We see the most important gaps on the demand side, lack of KPIs, and financial integration. We can discuss product integration/management too case-by-case. Underlying processes need to work enough to culminate in each meeting of the S&OP meeting cadence. For example, if there’s no forecasting process or accountability, how can you have a Demand Review?


Limited IT that has not kept pace with business complexity

 

If you have hundreds of SKUs, multiple business units, geographies, and business channels, and your IT group consists of the network guy and / or the gal that supports Microsoft Office, this will be a problem for real S&OP. We still see “green on black” and homegrown ERP out there with any kind of planning completed by various people on spreadsheets. S&OP is a data intensive process, and it’ll become a burden on those facilitating meetings if nothing is automated. If you have less than ~100 SKUs, it may be manageable on Excel, we can discuss.


In a prior life, I had one very supportive project sponsor that declared that S&OP was not an IT project. While this sounds right from the high ground, and is right, provided that high ground has a strong planning data foundation with automated rollup capability underneath. Wasn’t the case on this one and project successes were limited, which is a nice way of saying failure. We are very upfront during assessments when we see complexity handled through dependencies on individuals and their complicated spreadsheets.


Multiple on-going initiatives

 

Twenty percent involvement across 4 or 5 projects, plus the regular job as explained above doesn’t add up to 100%, and is a recipe for frustration and failure. While a few heroes do well in this environment, many of your best people will leave because they can. We particularly look for the ERP project elephant or a Finance FP&A system or reporting initiative as projects to discuss.


Limited consulting budget

 

While not exclusive to the mid-market, it is more extreme here. In the mid-market, there typically isn’t a budget to do a full assessment that will result in a business case and project ROI. Much more to say here, but safe to say, without a real business case, it’ll be easy to bail when the going gets tough or the next thousand things people think of come up requiring immediate attention. With mid-market consulting budgets, success is highly dependent upon your team’s ability to execute. Consultants typically have budgets for leading the design phase and some project management/coaching only.


Several on the management team have not seen what good looks like

 

Not their fault, and not a statement on their fitness for their roles. They are talented in other areas (like sales or science), and their prior experience has been with other organizations that never did S&OP or mislabeled the tactical thing described above. Based on their misguided perception of S&OP, they rightly question their involvement in the low-level details of the mislabeled tactical process. See Part 2 on the change management that will be needed.  


These are the main things and they are very common. While addressing some of these things is more in control of the management team than others, all can be mitigated. See the link to Part 2 below that describes how we work with clients to work through these challenges.


See book on Amazon
Focuses on finding and getting results througout the Supply Chain and managing through S&OP
See booklet on Amazon
Quick primer that we provide for S&OP training and project teams
Full content repository
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We are a management consulting firm that specializes in Sales & Operations Planning and Supply Chain improvement. We leverage S&OP to be the platform for continuous improvement and profitability within client organizations. We also work with clients to improve organizational performance, structure, and enabling information technology. Consulting methods promote sustainability of performance improving behaviors, tangible results, and development of client team members. Our consultants are highly experienced business and consulting leaders with track records of delivering results for clients across the world, typically with larger well-known consulting firms. We are based in the Boston area, but travel worldwide to conduct training seminars, speak at conferences, and work with clients on high-impact, performance improving initiatives.

 

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