Eric Tinker, a Principal with Nexview Consulting, recently served as an S&OP Expert of the Week. He has spent the last 14 years in management consulting helping clients achieve large scale change within their organizations. Eric has written extensively on S&OP.
Thanks again to Eric, who graciously gave his time to answer the following questions from the community:
1. Social media has presented us with opportunities not just as consumers, but also as corporations. What’s the best approach to capturing customer, prospect, and partner data from social media outlets and incorporating it into an S&OP process?
Social media is certainly gaining more traction as a means of collecting market intelligence and as such, has the potential to become another thread of input into the planning process. It would seem that the most direct connections to S&OP would be through the product portfolio and demand management components. Social media input could be used here on a couple different levels. Most directly, what’s being said about your products, or those where you are key supplier, competitor, or substitute, and how should that affect the complexion of your product portfolio and resulting demand you see? Integrating social media with pilot launches, course correcting, and feeding results to the demand planning engine will become more common in leading companies. Social media will take its place among other components of demand management such as statistical forecasting and collaborative planning with customers. Don’t forget the timing aspect of using this information as well. As S&OP is a medium to longer-term planning process, this information should be used to feed your planning beyond the three months time horizon if possible.
The other level to examine would be more at the macro level, similar to the macroeconomic effects that feed your demand management process. These are things such as trends in key economic indicators, interest rates, government trends, even weather patterns. Key questions to ask include: What are social media outlets telling you about longer-term trends for your business and how should the company respond? How does the data and plan align with the business strategy and how should that be worked into your medium-term integrated business planning? Social media for those who adopt it, can be yet another information channel to feed S&OP.
2. We have run S&OP for more than four years, and we are responding quickly to demand. Recently, we came up with the idea to set up a "competitor S&OP" to gain additional market knowledge for the executive board, sales, and R&D. How should such a "competitor S&OP" be designed?
Wow, this is a creative one! I hope I’m interpreting your question correctly, but if you’re able to create a “competitor S&OP” process to predict your competitor’s supply, demand, and overall business position, you are much farther along than most organizations. As we know, most use the process to ensure their own houses are in order and have their hands full with this. Having said that, to set it up, it seems that it would require a single analyst or small group on your end with knowledge broad enough to pull it off. Too many involved in the process will be challenging to sustain. It seems you’d also have to know a great deal about the competitor.
I guess from here the simulation would entail the familiar components of predicting demand (perhaps buying historical data if available), evaluating capacity and supply constraints, predicting what the competitor would do to address them if applicable, managing to a target inventory, and monetizing results of the operating plans, estimating their margins somehow. The key question to ask is: Do you believe the accuracy of your analysis is high enough to drive actions in your own company? I’d like to hear how it goes!
3. We’re trying to institute an S&OP process in my company, but there are differing ideas about who should own the process. Is there a certain department/person that is best aligned to manage the entire S&OP process, or is it better to make it a cross-functional management effort?
It’s critical that S&OP be a cross functional management effort as you mention above. It’s not just this though. The process needs an Executive Sponsor (usually VP level) and Lead/Coordinator role (Usually at the Director or Manager level to drive it each month. Here’s a few comments on each role:
Sponsor – This is the executive role that ensures executive support and participation. This person should:
- · Help communicate the vision of what your S&OP process should be and how it helps the company
- · Ensure S&OP receives executive attention and support
- · Work with his/her executive peers (or reports) to educate them on best practices, what S&OP is, and to ensure they are accountable and leading their portions of the process
- · Ensure adequate resources are in place to make the process successful
- · Coach and mentor the often next level down S&OP leader/coordinator and challenge the working team to continually improve the process
- · Align with other regions and aid the flow of your regional information to the global process (if your process is an input to the global process)
- · Coordinate (and/or require) the integration and promotion of S&OP at the regional level (if your process is the global process)
Any member of the management team or the CEO/Division President could be a candidate for the Sponsor role. The important thing is that this person has cross functional experience/knowledge maximizing the whole of the business (not just one function) and has influence across the business. For more in depth discussion on the Sponsor role, please take a look at my recent article, “Revitalize Your S&OP” available at nexviewconsulting.com.
S&OP Lead/Coordinator – This is a leadership role and should be with a high achiever that will likely end up running a business unit or on the management team someday. This person must also have influence throughout the organization, be highly regarded, and be effective in dealing with your executive team. This person will be the driving force behind S&OP each month, ensuring that the meeting sequence happens each month. He or she does this by coordinating with the various functions and meeting owners. This person would likely own Pre-S&OP and be the one who takes issues into the Executive S&OP meeting. This person is often a Director of Supply Chain or equivalent.
S&OP is a cross functional process, but should be owned and driven by a Sponsor and Lead respectively.