Sales and Operations Planning (S&OP) is an amazing concept when you first hear its promises. Imagine all of the key business functions working together with common purpose with an optimized business and supply chain plan. The reality is perfect S&OP is darn difficult to achieve.
As a freshly minted industrial engineer graduate perhaps I am naïve and idealistic? In my role as an analyst at Solvoyo, I’ve gotten opportunities to work with supply chain teams at different customers improving their supply chain performances. Yet, when it comes to S&OP, the gap between the theoretically possible and the actual business reality seems to be getting wider. Considering the huge economic benefits S&OP affords - I can't help but investigate why it is so hard for companies to achieve S&OP perfection.
For me - organizational complexity and inability to deal with huge data are no longer acceptable excuses in 2016 with all the advancements in data sciences and technology. Since S&OP is about the right combination of people, process and technology, I’ve organized my findings around these three key ingredients.
The most common cause for unsuccessful S&OP is people. For S&OP to succeed, all stake-holders need to be engaged and committed. To achieve this, 2 things are critical: (i) awareness of its benefits, and (ii) basic understanding of supply chain fundamentals.
1. Poor leadership
2. Lack of Functional involvement
At risk of stating the obvious, a badly designed process will fail. For S&OP to be durable and successful, much depends on its design and implementation. Equally, as businesses continue to evolve, the S&OP process must get refreshed to meet changing realities.
3. Complicated Process Design
4. Poor implementation
The perfect team of people and process without the right enabling technology will find it difficult to get value from S&OP. An advanced supply chain planning technology can help house, organize and manage data and processes in today's complicated and chaotic world.
5. People Dependent Tasks
6. Poor Forecasting
7.Lack of Corporate Memory
I know now how messy the reality of S&OP planning is from the text book version. Yet we must resolve to continue to work in getting the right people, process and technology to strengthen S&OP. At Solvoyo, we are determined on building the right technology to support S&OP because the rewards of a well working S&OP process are absolutely worth it.