I interviewed Sanjay Desai who discussed S&OP Process in an Organization Part I.
Today we're speaking with Sanjay Desai and the topic is S&OP Process in an Organization. This is a two part series and this is part 1. Sanjay can you first provide an introduction?
I am Sanjay Desai, a focused supply chain professional who started the journey with UniLever India in their Mumbai Plant as Warehouse Blue Collar Worker during 1983. Over last 34 years, worked my way up in diverse organizations/ multiple geographies and handled end to end Supply Chain functions. Worked for some of the best Fortune 500 MNC’s like UniLever, AVENTIS, Exxon-Mobil, Apple Computers, Dell Global, SH Johnson, Thermo Fisher Scientific and finally HUNTSMAN as Director Supply chain GrAPAC. I left Huntsman in Dec 2016 and embarked next phase of my career as a Free Lance SCM professional. Honoured to talk to you today Dustin, thanks a lot.
What is Sales and Operations Planning?
S&OP is a STRATEGIC senior management tool that aims at improving end to end value chain efficiency of an enterprise. It is NOT about Supply Chain (only) hence I mentioned Value Chain - Enterprise wide. S&OP process creates a robust frame-work around the core processes of the business. This frame-work allows the senior leader/s to effectively build and communicate execution plan, also understand the moving dynamics of the business, and to have the ability to quickly shift gears and execute smartly in the changing environment. This process of self calibration is repeated at regular interval using S&OP platform.
When S&OP came into picture and how has this process evolved so far?
Good you asked this question. Oliver Wight who are the owners of this tool, mentioned that they first implemented this process around late 1980, which means it is around now for close to 30 years. While it has evolved to a full-grown process by now, the core elements have remained more or less the same. What has changed so far, is the execution methodology of the process. Different organizations have digested this process and amended some of the execution principles to suit their business model.
Who should own S&OP in the organization? Are you aware what is the general practice today in the industry?
Thank you asked this question Dustin!! This has been a topic which is debated widely with various opinions. I would say that S&OP process is most effective and will produce desired results, if it is functionally owned by Commercial and driven by the highest authority in that function. Supply Chain is in best position to run this process since it impacts working capital, Customer service and delivery efficiency. The senior leadership involvement is not just demonstrative but practical one aimed at keeping the S&OP focused on future, being strategic and decision oriented.
Not very long ago, we started hearing another process called IBP..What is IBP and is there a synergy in IBP with S&OP or are they different?
IBP is an acronym for (Integrated Business Process) In aesthetics and in principal, it is more or less the same process with differences being in the Nomenclatures used and overarching scope. Financially it is more woven and interconnected incorporating Financial Plans and Budgets at various stages in the process. Explained in another way, IBP is about shifting the focus of current S&OP beyond Supply Chain function and bringing-in executives from other functions inside from an ownership perspective. Although Oliver Wight does not agree to the sentiment, it is widely felt by industry leaders/ practitioners that IBP is like a “Big Brother” to S&OP process.
What are the key elements that an S&OP should address?
At a high-level S&OP is a 5-step process which is executed in a certain regularity. It is highly practical and recommended to run this process atleast once a month. 5 Broad Key elements of the process are 1)Product Review (NPI, EOL, Pricing) 2) Demand Review (changes, deals, market activities 3) Supply review (availability, shut downs, factory capacities, Asset Utilisation) 4) Financial review or Integrated review (P&L changes, Cost impacts, Gaps analysis, What if scenario)5) MBR or Management Biz Review (Actions, Alignments and decisions)
About Sanjay Desai
Strategic SCM Transformation, Manufacturing Planning, Inventory Mgmt, Network optimization, Service Segmentation & P&L