Our focus is helping companies implement effective Executive S&OP. After implementing hundreds of different processes, it is evident that there are trends that occur when companies begin their S&OP journeys. In this article, we will outline the top 10 pitfalls that these companies make when trying to implement or improve their Executive S&OP process. So let’s jump in.
1) Focusing on technology. I start here, because too often this is the mistake that companies make. Putting your full faith in technology to provide the answer will not work. Improvement comes when your organization learns how to align people, and process then use technology to support it. Too often people expect technology to provide the “answer” to their problems, but the process and understanding of getting to the answer is more important than the answer itself. Technology focused implementation seldom bring about real change in the way the organization is run… they just help you do what you are doing today faster.
2) Not prioritizing learning. S&OP is about aligning the organization on a plan. Implementing effective S&OP requires everyone understanding what is expected, and what a good process looks like. Alignment around roles, outcomes, objectives and presentation should not be assumed, especially as you work across the different areas of the organization. Don’t assume everyone is on the same page. Outline specific outcomes by teams, and decide what good looks like early, then once everyone has a common understanding of the framework, you're on the right track to getting there.
3) Trying to Boil the ocean. This can be a challenge in any project but even more so with S&OP. If you’re not familiar with the expression it means trying to fix everything all at once, or “the big reveal.” S&OP is complex as it connects all teams, data and information from across the organization. You will learn a lot as you start implementing, such as some of your current data and process issues. However, if you try to implement everything at once, you in turn create more work for yourself. Start with a product family, develop your understanding of the story and execution, and grow the process from there.
4) Expecting perfection right out of the gate. The process won’t be perfect, future plans never are. What’s more important is to start where you are, then use the monthly S&OP cycle to improve your process one step at a time. Because of this, we advocate the iterative approach to change. If you get it 50% right the 1st time, and improve by 50% each time within 6 cycles you will have the process pretty close to complete. Doing this for a pilot family enforces a proper learning and understanding of the process, and allows you to grow to perfection.
5) Not allowing the process to stick. I’d love to tell you that implementing S&OP leads to immediate results, but it doesn’t. Getting the process to work well takes time. Much like any new skill, you need to allow time for it to take root. Remember, this isn't about just adding new daily tasks to your operations. Your entire organization has to come to a common understanding of their role before you see change. Allow time for the process to stick, and you will see growth on all sides.
6) Don't get into too much detail. Most people think the answer to a better plan is in the details. Don't confuse precision with accuracy. Your goal should be to get the story of what is going on in the business, and base your decisions around that. The story is supported by details, but the details can’t be the story.
7) Not allocating resources to the project. This pitfall specifically focusses on the role of the S&OP coordinator. Often this is a new role in an organization. It takes time to organize the meetings, document the process, manage the executives and follow up on improvements. A good S&OP process will also uncover problems/challenges in other areas. You can’t expect results without taking the time and allocating the required resources to fix these. The S&OP coordinator is critical to ensuring the project is receiving the proper funds and attention it needs. Cheaping out on your inputs will show in your outputs.
8) Getting caught by conflicting metrics. Before you start, it is important to know the outcome you are expecting from improving your S&OP process. Is it reducing inventory, improving service levels, or reducing expedited freight? These metrics are often at odds with each other within the planning process. You need to be clear on what objectives and measurements you are trying to drive through, and you need to measure these by family. They may be different for each family so clarity and specificity is important.
9) Not assigning clear accountability. Bookings, shipments, production, backlog and inventory are all elements of the S&OP plan. Accountability refers to who owns what part of this plan, and it needs to be clear who the senior executive holds responsible for each part of the plan. If people understand the tangible outcomes, and their contributions to achieve it, it makes for easy engagement and action across the organization.
10) Not getting Executive leadership involved. It may be stating the obvious, but S&OP is an Executive Management process. Accountabilities need to be assigned by your Senior Executive, and the story needs to work for them too. In short, the process needs to work for them. Don’t make the mistake of implementing a process, then try to “sell” it to the Senior Executives after you’ve worked out the details. You need to start from the end first.
At DBM, we have the experience help your team by laying out the framework and tools you need to achieve an effective S&OP process. Take our Executive S&OP Assessment to get an idea of where your process stands with our benchmarked S&OP process. It will only take about 10 minutes, and you'll get personalized feedback to help find out where your process needs help today.