Not sure if your team is pulling together?
|S&OP is the way to line up your organization|
By Doug Dedman
Rowing has always fascinated me. In a four-man rowing team with a coxswain, the coxswain is the leader of the team. The coach. The only one facing forward, and the only one who is in command of the boat at all times.
I've watched people in a local rowing club as they learn to row as a team. It’s not easy. The slightest difference in the way a team member pulls on the oar will send the boat in the wrong direction. Races are both won and lost by milliseconds. The only way a team can win is through practice and trust. Trust in each other and also in the coach. The coach provides motivation and encouragement to the crew. Coaches must communicate their desires clearly to get everyone rowing in the same direction, toward the same goal.
Can you say the same about your organization? My experience with Sales and Operations Planning (S&OP) is that goals often do not flow unassisted. Many executives find the communication of their goals the most challenging part of their job. Keeping the company focused, making sure departments are working in sync, and that production and sales targets are met; it all begins with talk.
Plan to succeed or plan to fail
We are all familiar with the silo metaphor in business. But did you know it originally came from farming? On a farm, silo's are used to store feed, and feed is essential to the operation of the farm. But once it’s put in a silo we can't see it anymore. We know it’s there, and we trust that when it comes time to get the feed out of the silo, it is still good. Silos are critical to the livelihood of the farm, yet exist as independent structures that provide no visibility to what is going on inside of them.
This, unfortunately is a metaphor we live by in business because the silo image is so familiar. The sales department forecast the sales, production makes its plan which may or may not include the sales forecast, inventory struggles with accuracy issues, and procurement over buys material to avoid stock outs.
From automotive to aerospace this model plays out—not because we don’t recognize it. Unfortunately, we see it all the time. Part of the problem is with how we communicate. This is where S&OP comes in.
The long and short of S&OP
At its heart, S&OP is a way to improve communications within your organization. But not just any communications. S&OP focuses on the medium-term strategic plan, and it requires coordination across all the departments in your organization. The goal is a monthly meeting, built on openness and trust, where consensus plays an important role in problem solving.
Donald Sheldon, author of Class A ERP Implementation, defines S&OP this way: “A monthly planning cycle where the plans for both customer expectations and internal operations are reviewed for accuracy, process accountability, lessons learned and future risk management.”
As a formal definition of S&OP this definition covers the expectations. But it misses some of the fundamentals that are necessary for S&OP.
Putting the fun back in fundamentals
Top management must lead and chair the S&OP weekly meeting. Without the commitment and influence from senior executives, S&OP will fail. This point proves itself time and again.
The meeting must also be routine, part of the fabric of the organization. Pick the same day, room, and time each month, and book the meeting out in all required calendars a year in advance. A scheduled meeting is one that people remember.
If you want people to come to the meeting prepared to discuss their areas you must tell them so. Don’t assume they will pick up on your intention. Make accountabilities clear. Make roles clearer. Managers will accept responsibility when they feel part of a process. Silos have been built over time, and in many cases out of necessity. Overcoming them is a time consuming, patient task. In the end you will have a management team with a shared understanding of real demand and internal/ supply chain constraints. This is worth the effort.
Discussions in the S&OP must be open. You must create a climate where managers can raise their concerns without fear of repercussions. Disagreements will happen, tempers and voices will raise, but you must keep the team focused on the goal of the meeting, and not the personalities. No cookbook answer for this one. Think and act strategically; keep to your goal.
In the early meetings an observer from outside the company can help keep things focused just through their presence. But this won’t last. Managers are used to their own sandboxes, and they don’t easily invite others to play. Recognize this as part of the dynamic of getting people to work together. There are tools to help with personality profiles, like the Kolbe Index.
Here’s a list of five objectives that are the core of S&OP.
Get more out of your S&OP meeting
It’s about people and it’s about planning. Without a conductor an orchestra is just noise. You have to shape the meeting in the direction you need. It won’t get there on its own. Communicate. Explain your goals, and the goal of the meeting. Support and measure the business plan, and rate your performance to it. Make this the focus of the meeting.
Ensure departmental business plans are realistic, and based on achieving the same set of goals and objectives. If plans are not synchronized, address the issue immediately. Do not progress through the meeting without consensus on the customer demand and production plan. Managers will accept a consensus approach when they see that everyone is being held to their own responsibilities for the plan. Not only will this approach help build teamwork among the senior management team, but the act of discussing and solving issues together helps create trust. And this trust can be used to help drive improvement projects that will ensure better business performance.
S&OP is a decision making process. It is not just a new procedure to add to the monthly cycle. It is a fundamental change in the way you manage your business. Your managers need to provide the propulsion; S&OP is the feedback process that you need to see where you steer.
In your own S&OP, what happens is a shared direction for your company’s future. That’s worth the effort any day of the week.
Doug Dedman, MBA, PMP, CPIM, is a senior Business Consultant with DBM Systems Inc. in Cambridge, Ontario, Canada. Doug consults with global, multi-divisional organizations with a focus on S&OP and supply chain execution. Doug can be reached at email@example.com.
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