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This afternoon, I tuned into the Kinaxis sponsored webcast that discussed the increasing importance of Sales and Operations Planning (S&OP) in so many industry settings today.  Both Lora Cecere and Trevor Miles did a great job of pointing out the importance of the horizontal nature of an S&OP process, and the critical role that technology can play in the timeliness and depth of the analysis of data.

 

In the Q&A portion, a question was raised regarding the organizational alignment challenges that go with implementing an effective S&OP process.  I was very pleased that this question was raised because in my view, too many organizations stumble on the organizational and change management factors related to this process.  More importantly, an S&OP process uncovers a broader issue related to supply chain organizational alignment.

 

Many surveys, the latest being 2010-2012 Global Supply Chain trends, sponsored by PRTM, note that existing supply chain organizations are not integrated and empowered.  In spite of all the rhetoric, organizational stovepipes still exist, particularly among supply chain operating and procurement teams.  While both clearly have critical roles, too often senior management of both report to different C-level executives with different expectations. 

 

A truly successful and effective S&OP process must take a horizontal view of anticipated demand, supply, inventory and capacity.  In many cases, sensitive information must be shared, tough decisions need to be made and consensus as to agreed-upon operating plan is essential. I often hear senior supply chain executives note that the key to the success of their firm’s S&OP process is the trust and comfort level placed among the participants. That is essential, but sometimes that notion of trust can imply a fine line of “no surprises” or “no bad news”.  While every firm is unique in some ways, my consul to clients regarding S&OP process enablement is as follows:

 

  • Include all of the various key stakeholders, (sales, marketing, finance, planning,operations) including sourcing and procurement.  External partners should also be included, when warranted.

 

  • Provide for a dedicated S&OP support team that reports to a senior executive with horizontal operations responsibility. In some cases that might be the COO, VP of Materials, or the actual S&OP executive. Worldwide scope, process knowledge and influence is a must.

 

  • An S&OP team should be afforded focused technology and information analysis support either by application or dedicated IT organizational support.  The team should include members that are skilled in information analysis and what-if scenario planning, with access to enterprise-wide information.

 

As industries emerge in the forthcoming business recovery, the ability to have an objective and effective S&OP process may well be the differentiator to market dominance.  Do not overlook the organizational factors involved.

 

What organizational alignment lessons has your organization encountered regarding the proper alignment of an S&OP process?

 

Bob Ferrari

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