During the current pandemic and subsequent demand disruption, we are preoccupied with understanding current consumer behavior and short-term demand. But equally as important is the longer-term picture. In this article I present a framework for understanding how demand for different products will shift, both as we exit this crisis and for the year ahead. I use a categorization system based on product needs, revealing how consumer behavior now and going forward will impact your demand forecasts.
A one-number forecast has some serious drawbacks: it does not always facilitate honest discussion about constraints, it encourages people to agree to numbers they cannot necessarily meet, and certain participants may game the process. There is a better way—what I call the Collaborative Process Forecast allows each function to share what risks they see in meeting the number, and what opportunities exist to exceed it, as well as providing participants with greater visibility into the constraints other functions are facing. While requiring more work, this process drives better performance in key KPIs and fosters greater engagement with the S&OP process.
Starting an S&OP process from scratch is difficult, particularly in a small organization. In this article I discuss the key steps in the implementation process including securing support from the VP of Sales and other stakeholders. I also address how to overcome the challenge of cultural change by demonstrating the value demand planning brings to each function. The following provides practical guidelines that will serve as a template to ensure successful and sustainable S&OP implementation in your organization.
While many of us understand the importance of engaging the Commercial function in the S&OP process, less is understood about the benefits of engaging the Finance Function. In this article I discuss why engaging Finance is not only an advantage but a core requirement for a sustained S&OP process. Their experience in cross-functional collaboration, reporting and data-driven decision making means they are ideal business partners. When S&OP is sponsored by the CFO, Finance’s involvement can drive real and lasting change, and be a catalyst towards S&OP and IBP maturity.
Implementing S&OP is as much a change management process as it is a technical supply chain process, and yet many process owners fail to manage the critical nuances of change required for success. Often times, in excited exuberance, process owners publish positive metrics without understanding the negative impact it can have on the success and sustainability of the process. The poor handling of early metric improvements can stall or damage the S&OP implementation project. In this article, I focus on how to finesse the communication of these positive results, the appropriate metrics to use when gauging success, and key factors to be aware of throughout the process.
Since the e-commerce market is growing by leaps and bounds, companies need a
dedicated team within the S&OP process to take advantage of it. It is a different animal and requires a different skillset and
strategy to manage and grow demand. It presents major challenges and has already damaged brick-and-mortar retailers,
as well as a host of different industries—publishing being a prime example. At the same time, it has provided many new
opportunities to grow demand via target and subscription-based marketing.
The success of an S&OP process depends heavily on the behavior of its participants.
Unfortunately, the cross-functional teams required for S&OP often exhibit some form of dysfunctional behavior, resulting in
poor performance and reduced faith in the process. However, by setting behavioral expectations and refining the process,
the effect of these dysfunctional behaviors can be mitigated and reversed, enabling higher levels of performance.
This article asserts that standard integrated planning implementation requires three generic templates: a process model, a transformation framework, and an information systems roadmap. It makes the case for S&OP and IBP program managers to tailor these templates to their own organizations in order to assess current capabilities and guide the next phase of their business transformation. The results of implementation are improvements in financial results and key performance indicators.
This column is a modified version of an article I wrote, “Sales and Operations Planning (S&OP) Mindsets,” published in the JBF back in April 2007. While the content is largely the same as the one written 12 years ago, it is probably even more relevant today. Back then, S&OP was not as widely used as it is now but many of the challenges of running a well-functioning S&OP process remain the same. The major recommendation here is that one should establish clearly defined roles for various functional managers on an S&OP team—ones that are based on their psychologies or mindsets. I present a framework for understanding different stakeholders’ personalities in the S&OP meeting that can foster collaboration and help in achieving consensus.
The S&OP process is one of the key decision-making forums for an organization. The conflicting objectives from various departments can prove to be a challenge, especially when seeking alignment on decisions at the Executive S&OP meeting. This article provides insight into stronger decision-making methods to support the financial and strategic goals of an organization.
Customer service leaders have direct access to a wealth of demand impacting information. They know more than anyone else how customers are behaving and any upcoming events or issues that will impact demand for any given period. The information they hold alters the shape of your demand curve, your supply requirements, financial pacing, and fill levels. Why then is Customer Service seldom included in the S&OP process? This article discusses what kind of customer information they have access to and how you can leverage it for more accurate forecasts and demand plans.
Many organizations have a Sales & Operations Planning process in place but face the challenge of maintaining the compliance and active engagement of participants within the process. Visibility and formal review of the processes within S&OP is critical to strengthen the value that S&OP brings to the organization. This article provides insight to the tools and initiatives that can be implemented to improve and sustain the S&OP process.
There has been some discussion of late in IBF circles about Quick Response Forecasting (QRF). In my attempt to understand the concept, I have read a number of articles only to find myself a bit confused by proponents who discuss everything from Big Data, to point-of-sale data (POS), to “responsive” Supply Chains—each already having a place and a role in Supply Chain Planning, but none of which are conceptually new. On its surface, QRF seems to be a demand planning idea without particularly well-defined boundaries or purpose. After digesting the available literature, I think otherwise well-meaning folks are trying to define a process that already exists inside the Sales and Operations Planning process (S&OP). It is referred to as Demand Control (and sometimes SOE – Sales and Operations Execution) , and it is the transition point from more strategic planning to execution planning within S&OP.
The term “the great acceleration” was first coined in 2004 by Will Steffen and his team of scientists when mapping the massive change in human trends and activities towards the end of the 20th century. Population growth, urbanization, technological advances, and consumption are all part of his study, which had a profound effect on various aspects of life. Most organizations are now waking up to an analogous acceleration in drivers of change, ones that have equally disruptive effects, both upon life in general and business in particular. These accelerations are giving rise to nonlinear change, and we need to rethink about our forecasting, planning, and decision-making processes in this dramatically different context.
This article, which focuses on current demand management and S&OP practices, discusses expected changes in the next five to seven years in the areas of data management, omni-channel distribution, direct to consumer (D2C) delivery model, and online commerce. It throws light on the current and future framework of S&OP regarding its structure, process, planning frequency, and horizon. It also highlights the challenges that we will face with respect to people, process, and technology, as well as opportunities that lie ahead.
This article presents the opportunities for demand planning and associated functions as supply chain digitalization emerges, and the challenges associated with fully realizing its benefits at the enterprise level, for example, through enhanced Integrated Business Planning (IBP). It introduces a change approach, based on the Tipping Point insights and principles explored by Malcolm Gladwell that provide some practical illustrations of how this approach can be applied to support change programs in this field.