Ask for permission to be reality-based. I would often describe my role as an S&OP lead as being neither half-full nor half-empty. It is my role and assignment to be “half” – choosing not to take sides with the pessimists or optimists, but rather just “calling it like it is.” If you are successful at being perceived as reality-based instead of negative, you may find that you are used as a touchstone when a senior executive wants the real pulse of the business. Ask your boss and/or S&OP leadership team for permission to call it like it is. If you present to the president in an S&OP meeting, ask for his permission as well. Let them know your intention is not to be negative but to provide the best, most realistic rendering of a plan.
Make sure any presentation is fact-based. Demand planners, as an example, should not necessarily have an opinion of a demand plan – they should let the facts guide any suggestions or recommendations. As a consultant, I would often suggest to demand planners and S&OP leaders that they view themselves as front page reporters, not as Op-Ed columnists. Their presentation should be fact-based. For example: “The current shipment volume is -3 percent for the last 13 weeks, and -10 percent for the last 26 weeks, while the POS numbers are -4 percent and -12 percent, respectively, for the same time periods. It would appear demand is improving slightly in the near term. However, it does not appear to justify the +5 percent lift in the plan. As there are no known distribution changes or trends that suggest volumes should increase above the current trend, we suggest moving the plan closer to the best near-term trend and revisiting this plan next month.” Keeping the conversation fact-based helps remove excessive aspiration from the plans.
Pre-circulate all content. Sending out the “bad news” supply chain content a few days in advance of any meeting (such as an S&OP meeting) allows some digestion of the bad news. It also prevents you from being personified as the bearer of bad news. Make sure to annotate charts and graphs with neutral, fact-based comments, events and other elements influencing the negative numbers.
Socialize the bad news in advance. After distributing any bad news content, stop by and talk with Sales, Marketing and all interested parties to get their input on the changing demand patterns or the negative results. Give them an opportunity to think, challenge and work the numbers. Expect them to have some spin that you may or may not agree is valid, but listen to their explanation of the negative trends. This will help you know what to look for in the future.
Avoid negative or editorial words. Do not use words such as “bad,” “problem,” “worse” and so on. Instead, use more empirical or mathematical words – “decline,” “lift,” “directional,” “trend,” “step change,” “lower.” Use the actual numbers to tell the story – do not editorialize or you will be considered Dr. Doom or the personification of the negative results.
Always define the prevailing trends. Many people focus on the delta to the forecast; I suggest zeroing in on monthly, quarterly, half-year, year-to-date or year-over-year trends for both shipment and consumption data (when appropriate). Define the prevailing trends in your business, product category or SKU, whichever is appropriate.
Bring other facts to the table. Often referred to as “deep dives” – where all organizational knowledge about the negative results is culled for analysis. In essence, by digging in and getting at the root cause of the poor results, you become part of the solution and not the problem. If there is a problem product category or platform in your business, try to use research and analysis to explain it better. Look at competition, econometrics, pricing, promotional activity, point of sale, channel dynamics – you should leverage all appropriate extrinsic data in your marketplace that will help management better understand demand. If inventory is an issue, bring EOQ’s, batch quantities, lead times and so forth to the discussion.
Create a “bad news sandwich.” Wrap bad news in a layer of good news and actions to improve the status quo. As an example: “Sales for product line X have been increasing steadily over the last four months, while product line Y has seen a step change decline in demand over the same period of time. We expect that a pricing change in Y to match our competition will stabilize demand, and we are putting together an elasticity study to find the ‘sweet spot’ price in this changing market.”