Implementing an effective S&OP process isn't a walk in the park. It requires a monumental shift in mindset, from firefighting to strategizing, from reactivity to proactivity, from silo's to collaboration. In our work helping organisations to review their S&OP processes, we have identified some common challenges:?
- Limited Executive management engagement: Executive buy-in and active participation is critical for an effective S&OP-process. But too often, decisions are made on the fly, outside of the correct channels. This ad-hoc approach disrupts the continuity of the S&OP process, making it difficult to maintain alignment and follow through on strategic objectives.?
- Misinterpretation of Demand: An re-occurring issue we often encounter is a misunderstanding of the meaning of “demand”. The demand within operations might differ from the sales or marketing perspective, demand can also mean different things when looking at different positions in the Supply Chain, creating confusion and disrupting alignment within the S&OP.?
- Business Plan ≠ Forecast: Another misconception is equating the business plan with the forecast. Although connected, they serve different purposes. A forecast is a probable outcome based on historical data and trends adjusted for known qualitative commercial input, while a business plan is a roadmap, outlining the strategic actions to achieve the business goals. Confusing these two can skew the accuracy of both and have negative effects on the entire supply chain.?
- ?Short-Term Vision: We often see S&OP discussions solely focusing on short-term issues and firefighting - dealing with urgent execution and allocation, forgetting about future possible constraints. Sometimes also coupled with long manufacturing lead times leading to heated discussions while not much can be done.?
- Focus on Forecast Accuracy: Poor forecasting is often one of the main subjects of these meetings. Forecasting is difficult and complex, and much can be improved just by understanding and handling the difference between base volume and other types of volume. However, in the end it’s not the accuracy that is the issue, it’s what you do with the fact that your business is difficult to forecast. Could be due to rapid growth, high volatility, long lead times etc. If this is the case, the supply chain must adapt by creating flexibility and responsiveness. Forecast accuracy is just another input of different types of uncertainties you will encounter and must handle.?
Let's embrace this journey from firefighting to strategizing. Make sure to follow us here on LinkedIn since in the coming posts, we will explore ways to navigate these obstacles and elevate your S&OP process.?
Business leader with focus on culture, growth and collaboration : Managing director, Change leader, Mentor and Continous learner
1 年Fully agree! Thank you for sharing ??
Do you recognize some of the challenges??