While much of sales and operations planning (S&OP) hinges on well-orchestrated cultural transformation and business process change, companies shouldn't underestimate the technical
What trips up many S&OP deployments, they say, is that S&OP is by its nature a horizontal process requiring data from multiple functions within a company. Each has its own IT systems, practices and naming conventions for organizing and categorizing data.
In some organizations, S&OP-related data can just as easily be found in Microsoft Excel spreadsheets as any number of specialized systems—for example, those for material requirements planning and demand planning. Whichever the case, experts agree that the primary technical challenge awaiting S&OP project managers is working through and defining technology and data governance infrastructures and processes so this diversity of data can be easily integrated and managed as a holistic S&OP plan.
"The top technology-related challenge is assembly or integration," said Lora Cecere, a partner and analyst with Altimeter Group, which is based in San Mateo, Calif. Cecere drew a distinction between the S&OP integration challenge and the technical plumbing aspects of hooking up systems. "The key is knowing what to hardwire together, not necessarily the hardwiring itself."
S&OP data governance trumps data integration
Thanks to most companies' long experience with specialized software, IT shops are pretty savvy about the mechanical issues and technical infrastructure required to physically integrate key business systems, including any application that holds data critical to the S&OP process. Rather than grappling with creating the physical connections between packages, the challenge for most shops lies with figuring out what data is the best trusted resource for the S&OP process—a discipline that is really more about S&OP data governance than data integration.
"One of the greatest challenges with S&OP is in all the planning," said Joshua Greenbaum, principal at Enterprise Applications Consulting, a Berkeley, Calif., consultancy focused on enterprise application deployment. In many ways, Greenbaum said, it boils down to a matter of trust and being sensitive to the different kinds of data and perspectives on that data.
"Planning is always about whose plan are you going to believe most—the sales plan coming from the sales organization or the plan coming from the supply chain organization," he explained. "Being able to blend those plans into a best fit for the business is part of the art form that goes into S&OP."
As with any data governance initiative, there are nitty-gritty technical issues to address. One of the biggest is S&OP data quality—achieving normalization of data that ensures consistency among the various data sources contributing to the S&OP effort. Master data management on a global scale is another big issue. It deals with the requirement that something referred to by an item number in a sales system in the United States is called the same thing in a forecasting system in Europe and data can be compared and contrasted accordingly.
"If you haven't paid attention to your master data management strategy, you will have big issues in trying to implement S&OP technology," noted Michael Uskert, managing vice president at Gartner Inc., a research company based in Stamford, Conn. "If you're trying to make a decision across multiple regions and your information doesn’t roll up that way, you really haven't gotten any further along than if you still had disparate systems."
Mapping out the hierarchical view of data so it would roll up properly was the biggest technical challenge for Contech, a West Chester, Ohio-based manufacturer of construction products, which embarked on a formal S&OP program about three years ago. The company, which had grown by acquisition over the years, had a variety of systems in its different divisions across the globe—an IT scenario that resulted in fragmented data, according to Randy Ramsey, Contech's director of supply chain and purchasing who was brought in to facilitate S&OP.
Working closely with its IT group and S&OP vendor, Contech is doing two major things to get its data under control. It is currently moving off disparate ERP systems to a centralized ERP platform, which should help with data governance. It is also enlisting representatives from key functions in the business to help identify the proper data sources and put conventions in place to ensure data will align properly. "Making sure the data is good and rolls up correctly to meet the needs of all the functional areas—that was the biggest technical challenge we had," Ramsey said.