The Sales and Operations Planning (S&OP) process has been discussed forever. Discussions on S&OP discussions have been discussed forever.
But why do a lot of people still feel unsure on what exactly to include in an S&OP presentation?
Could the confusion actually come from all this discussion? All the cutting edge academic papers, software, debates are valuable of course. But maybe for most of us in the trenches what we need is a simpler approach.
We think so. So much in fact that generally, we’ve been able to run pretty effective one hour long S&OP meetings using very simple decks.
Sure, there are differences based on your industry. It’ll work for some and not for others. If it helps any, we’ve used these elements to manage multi-billion dollar supply chains. They’ve worked like a champ.
(Oh, and for tools needed, good old Excel and PowerPoint.)
The key of course is what’s inside the deck. Below are some of the basic elements we include.
1. Forecast Comparison
In a pure supply chain planning exercise, we take the forecast as given. It’s developed by forecasting experts and we work with an element of respect/trust in their expertise.
That said, our supply chain plan is only as good as that first input. So if this independent demand signal changes dramatically over a short period of time, then that’s something we’d like to discuss.
2. Forecast Accuracy
Similar to above. But in this case, it’s not about how much the forecast changed period-to-period. It’s about how the forecast compared relative to what actually happened.
If this is consistently off, then it’s also worth a discussion.
3. Months of Cover
For most people outside of operations, inventory levels and cycle times don’t immediately answer the question, “Why should I care?”
We’ve found that translating these data elements into months (or even days) of cover really drives the point across.
Describing the situation like below for example, tends to get people a bit more interested:
“Our inventory can support sales for the next two months, but our next delivery isn’t arriving for three months.”
4. Service Levels and Network Inventory
OK, this is a two-in-one, but together they tell a good story with little effort.
Our view is that as supply chain planners, you basically have to answer two questions:
- Did you deliver enough product to meet demand?
- How efficiently did you do this?
Service levels (fill rates and all its variants) addresses the first. If you’re consistently falling short of requirements, then you may be running the supply chain too tight.
Network inventory addresses the second. Generally, you can hit your service levels by holding a ton of inventory. But then, you may be taxing your company’s working capital more than necessary.
5. Key Site Updates (manufacturing, packaging, distribution)
We normally keep the structure for these pretty flexible. We just guide the data providers to call out events that impact their requirements.
Generally, in an S&OP we focus on events within the next 12 months. However, we often also ask for larger events predicted for the next 1-5 years. We make a note to discuss these medium term events outside of the S&OP meeting.
6. Sales & Marketing Updates
Same as above, but primarily looking at promotions, marketing campaigns or anticipated competitive activity that may spike/dip demand significantly.
I’m sure you use other data elements that have proven effective in your own meetings. Please share them below. I’m sure they’ll be helpful to others.
image: © iStockphoto.com/Camrocker