The cultural and business process aspects of sales and operations planning (S&OP) software, not particular technical...
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issues, are where most of the heavy lifting takes place -- and where many deployments run aground. To promote the organizational change required for successful S&OP, companies need clarity of purpose that starts at the very top, according to experts.
“S&OP has to be an executive process, and it's critical that you have the most senior person in the company say, ‘this is my process,’ ” noted David Goddard, principal at Oliver Wight, a New London, N.H.-based education and consulting organization focused on S&OP. "When the president of an organization says, ‘this is my process,’ it's remarkable how many people want to participate. You absolutely need top-down support.”
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You also need to give the different functional areas involved in S&OP a clear picture of how the transformation will benefit them directly -- not just bring time-consuming meetings for yet another corporate initiative. It’s an art that involves explaining how S&OP can further the goals of different functional areas, experts say, and framing the discussion in high-level terms that are meaningful to top executives focused more on revenue goals than the details of operations.
‘Stake in the game’ of S&OP software deployment
Contech, a manufacturer of construction products based in West Chester, Ohio, took that mandate to heart when it embarked on its S&OP deployment, according to Randy Ramsey, the director of supply chain and purchasing brought in specifically to formalize enterprisewide S&OP. With top leadership's backing, Ramsey selected a cross-functional, seven-member S&OP team from executive managers who were then trained on how S&OP would benefit their specific domains.
“If you looked at the sales team, the engineering team, or the product management team, we tried to make sure we had identified why they should embrace this and why it was important, so they would have a stake in the game,” he explained. “Once they understood that and what was in it for them, they embraced the process.”
Maintaining consistency was another strategic tactic in ensuring the constituents stayed focused on the S&OP charter. Ramsey and his S&OP team established monthly meetings for the various business functions and didn't veer from those set times. Other experts say it's equally important to have face-to-face meetings instead of holding discussions online or by email. “If you start bypassing the meetings or the system you set up, other people start to think it's not important,” Ramsey said. “Even if we have no changes to the plan and the meeting lasts 15 minutes, we still need to have it and stay consistent with our progress.”
Formal training in the S&OP discipline and establishing a knowledge transfer process are other critical components in ensuring that the community at large is onboard with the cultural and business process changes. This is especially true if the company is working with an outside consultant or business partner specifically trained in S&OP.
“We end up seeing a lot of deferring of implementation and strategy to consultants, and that becomes a problem,” said Michael Uskert, managing vice president at the Stamford, Conn.-based research firm Gartner. “The process and the technology have to coincide together. If they aren't properly meshed, then the technology will not succeed and the failure of the technology will bring down the process as well.”
While it takes time to convince participants that S&OP is about consensus-building and not chasing a particular department’s numbers, the continuous effort toward process improvement pays off in the long run, Ramsey said. One year into Contech’s S&OP initiative, pushback has lessened and everyone is getting more comfortable working off a central set of numbers instead of taking their own numbers as gospel. “The more we understand where the numbers and thought process are coming from, we jointly [start] closing the gaps and we're typically not that far off.”