Top 8 S&OP Resolutions for the New Year

Exposing egregious "worst practices" in sales and operations planning, and offering words of advice for S&OP stakeholders

December 28, 2006 — With volumes of editorial coverage, worldwide conferences and various software announcements focusing on sales and operations planning (S&OP) in 2006, it was good to see the subject finally getting the attention it deserves.

Despite the visibility, though, some folks — practitioners, consultants and software providers alike — still cling to misperceptions and bad habits when it comes to S&OP.

So, with the start of a New Year upon us, it seems appropriate to cast some light on the most egregious of these S&OP "worst practices," in an effort to help minimize confusion in 2007.

And please, feel free to pass along this list to any offenders you may know personally.

1. Research Groups — Please stop trying to rename or reinvent the S&OP process model. I know you make your money by looking smart, and some of you have had great ideas in the past, but trying to turn a simple five-step process into a nine- or 10-step monster only confuses the marketplace and makes things harder for all of us. S&OP is not complex. Don't try to make it so.

2. Consultants — Like the research groups, you need to stop reinventing S&OP as well. Having observed numerous presentations on topics like Advanced S&OP and Executive S&OP, I regret to report they aren't any different than the basic five-step S&OP process model. If someone argues that Executive S&OP means executives should be participants, and that there should be an executive meeting, they're talking about plain-vanilla S&OP. It doesn't deserve its own name. And calling something advanced when it has little real differentiation is like naming a product "new and improved" when it's really neither. Most people see through this marketing hype. If you feel the need to reinvent S&OP, you probably don't understand it to begin with.

3. Consulting Companies — How about we all agree on a standard S&OP process model that everyone can share? Looking back at the vast and valuable insights codified by the SCOR model, it would seem S&OP warrants a similar effort. Wouldn't this make sense and help reduce confusion in the marketplace? All consulting companies could then benefit from the transparency of the process definition. There's plenty of work to be done and plenty of clients who need help working out the details of implementation. Can't we all just get along?

4. Authors and Thought-leaders — It amazes me that so many people who write about S&OP or who are considered experts in the field don't actually practice what they preach; they only write about S&OP or talk about it. Every author, conference presenter, and so-called thought leader should be required to actually implement an S&OP process at least once a year.

As in any field, you can't keep your tools sharp and your skills honed without getting a little dirt under your nails or scuffing a knuckle or two. Some of the "emerging" content presented at conferences last year was flat-out stale. And please don't claim credit for figuring out the demand/supply equilibrium; Adam Smith and the physiocrats did that long before you were born. So, if you must continue to write and speak about S&OP, please bring some real-life implementation experience to the discussion. Most people attending conferences are looking for "how to" information about S&OP, not "what is". In venues such as these, talking about S&OP as a theoretical concept has limited utility.

5. Software Providers — Just three requests for you:

  • Don't try to rename S&OP something it's not. Like S&OM?!?

  • Accept that software does not make S&OP, it merely enables it. Frankly, you can execute S&OP using Excel and PowerPoint, so the real value your tools offer are speed, slicing/dicing capabilities and scenario management.

  • Be careful how you position S&OP tools. When you try to sell Executive S&OP solutions that enable or encourage what-if scenarios within the executive S&OP meeting, it shows you don't understand the real purpose of the pre-S&OP process, which is where scenarios are worked out. No one with an ounce of common sense proposes un-vetted scenarios at an executive S&OP meeting. Real S&OP practitioners will see through the marketing hype.
Don't get me wrong; I've never seen a business software tool without some value, and there are a number of great tools currently on the market, but S&OP software providers need to better understand the problem that their applications propose to solve.

6. S&OP Clients and Implementers — Recognize the value of using an experienced S&OP consultant to help with the design and architecture of your process.

Yes, I work for a consulting company, and I realize this advice may sound like a conflict of interest, but it's not. S&OP is a major change initiative, and if you screw it up, you'll find it nearly impossible to get the executive buy-in you'll need to restart the process.

The business landscape is littered with S&OP initiatives that have fallen by the wayside or been crippled by poor implementation. If you're lucky, you'll get one chance to get S&OP right. Spend a little money up front, if only to get a roadmap to help implement S&OP.

7. S&OP Process Participants — Here's a secret, and it's a whopper: The single-most pervasive problem in existing S&OP processes is a lack of reality-based planning. A sales quota or a budget is not a demand plan, and a production budget is not a capacity plan. If it helps, hang a sign in your office that reads simply: Reality. This is not a call to rename your S&OP process Reality S&OP or anything nearly as clever. But when you think S&OP, think reality.

8. S&OP Executive Teams — You must make it a point to prepare for — and attend — the S&OP meeting. Most S&OP processes fail because of lack of executive involvement. Make S&OP a top priority in 2007, and attend all meetings. If you demonstrate that S&OP is not important to you, it will not be important to your employees, and you will lose all potential value of the process.

And so, here's to 2007!

Of course, these recommendations for the New Year are offered good-naturedly, but they're based on observations drawn throughout the year, from global conferences, professionals, and businesses just like yours. So consider these resolutions — and our wishes for a prosperous New Year — with all the best intentions.

Happy New Year!