Five Tips to Boost Your Sales and Operations Planning Strategy

For S&OP to be successful, it requires sponsorship from the very top leaders in an organization. This is crucial because it is an essential step in executing the organization’s strategy. Sponsorship is not only advocating but also being involved and fully understanding its importance. Engagement from leaders and stakeholders is paramount to kick off and sustain S&OP.

S&OP provides the business leaders with the overall position of the company, not just specific functions. S&OP will always prioritize the organization’s strategic intent over functional goals. All business decision is made through the S&OP process and not around it.

Leaders must be comfortable to embrace the change. Contrary to popular opinion, the real challenge is not the process, it is the mindset and behaviour. The culture change requires time and perseverance. It is important that everyone involved understands why the organization is embarking on this journey and leaders need to demonstrate the commitment to making that transformation.

A key characteristic of S&OP is having one set of numbers across the business. The financial budget or target is what the company aspires to achieve. It is usually top-down, planned to meet shareholders’ expectations, and has the element of ambition in it.

The demand and supply plan is the best indication of the future after taking into consideration the opportunities and risks. Identifying and calling out the gap between the demand/supply plan and the financial budget is the main requirement in S&OP. This is followed by developing plans to address those gaps with clear action and accountability.

To get to one number with one version of the truth requires transparency, trust, and open communication from everyone involved. Having the right people with the right capabilities in the meeting, who are empowered to make decisions and conduct those crucial conversations will determine the success or failure of S&OP.

The leader with foresight is said to have the ability to create and maintain a high-quality, coherent, and functional forward view and to use the insights arising in useful organizational ways. As a new core competency, foresight can provide a competitive advantage to those companies who use it to navigate our uncertain and changing world with purpose.

A successful S&OP provides us with a long-term outlook of at least 18 months. With visibility, an organization can identify issues, opportunities, and mitigate risk in advance. This allows adequate time for data analysis, propose tradeoffs options and ultimately make informed decisions. The long-term outlook will allow alignment of the organization’s strategic plan which includes scenario planning, remodeling, and gap analysis.

S&OP is the way organizations plan and run their business. It is an integrated management process that aligns and synchronizes all functions across the business. The desired design is uncomplicated, integrated, and repeatable. The step meetings happen each week and every month. Each step has a specific objective, output, KPI, assigned roles, and responsibilities for each participant.

While there are varied approaches practiced among different industries and companies, they typically focus on a monthly planning process with a long-term plan ranging from 18 to 36 months. Having a structured, consistent and collaborative framework that can be repeated in the form of meetings or forums where decisions are made ensure discipline and routine.

The step meetings calendar is booked in advance and absent participants require a proxy who can decide on their behalf. Pre-reading material is sent in advance to ensure meetings are run efficiently by focusing on issues, actions, and decisions. 

A successful S&OP journey requires continuous improvement. An organization must have the agility to pivot quickly. If what we are doing is not giving the desired result, how do we make it better? It is crucial to listen, understand, and adapt. Feedback sessions and self-assessments are conducted to capture areas for improvement.

A feedback session is conducted by the step meeting facilitator during the step meeting. A set of pre-circulated questions are tools to allow the facilitator to measure the current state of the process and the impact that various recommendations for improvement can have on the process.

S&OP self-assessment is used to evaluate the current S&OP capability versus the S&OP design framework. Leaders in the organization will identify gaps and priorities to design an improvement road map.