What is S&OP?
S&OP is a process that takes place in manufacturing firms who are serious about improving performance. It ensures that stock demand is carefully planned for over a long term period (around 18-36 months) and then ensures that this information is shared throughout the organisation.
To put it simply, it’s a process that promotes the co-operation across divisions and departments, so that manufacturing and supply teams can more accurately understand and plan for demands. As S&OP relies on teamwork and the entire business co-ordinating as one, it can be a tricky process when first undertaken.
Nonetheless, there are things you can do to ensure your S&OP process runs more smoothly.
Make sure everyone is on the same page
The starting point when creating a robust S&OP process is to ensure that all managers are on board. Round up leaders from all areas of your organisation and ensure they fully understand what this process is going to involve. It’s important to remind people that S&OP isn’t really about dramatically changing the way you work and what you do, more that you change when you do those things. Being mutually accountable for the positives and negatives is huge part of the S&OP process.
Share and share alike
A robust S&OP process will eventually mean that your entire business is working towards one set of numbers for a specific time period. However, this process takes time and it’s all about building from the ground up. Therefore, before you even decide upon numbers, you should get together and created a shared calendar with dates you can all work to. Whilst this might appear to be time consuming, working out when everyone is available or unavailable in advance, will stop problems arising from continuous cancellations further down the line.
Most businesses find it easiest to set their meetings and deadlines around the financial year, so you can use this as a basis for your calendar. Getting this bit right is very important for a robust process, as it will only be successful if all areas are fully committed to review dates.
Start with the forecasting basics
It makes sense to get the basics down before you start thinking about anything too complicated, as any starting point, no matter how messy, will help you to develop a more complex strategy later down the line. Remember, the S&OP process is not supposed to be a quick fix solution, so get your forecasting process going now, even if it’s just to give you a rough guide.
To give yourself an easier to understand and more manageable start, link all of the S&OP together on an excel spread sheet. This can serve as your preliminary business model and incorporates a number of areas such as current stocks, sales, monthly forecasts and manufacturing plans.
Don’t be afraid of change
To keep your S&OP process strong throughout the first few months, you’ll need to be able to embrace the changes that will inevitably happen. As you and your team will have to get to grips with a new way of thinking, there may be a period where kinks will need to be ironed out. This can sometimes make S&OP seem counterproductive but once you get to grips with the process, you’ll wonder how you ever lived without it.
A robust S&OP process doesn’t just come from the hard work you put in at the beginning; it comes from the continual process of improvement and advancement. You should aim to actively measure your plan against what’s actually happening with your business, so that you can track what’s working and what could do with improvement.
During your monthly meetings, work together to fix any problems that might have arisen and review what’s happened over the previous period. Ask questions like ‘what could be done better?’ or ‘what’s working for us right now and will this still be the case next month/year?’
Ultimately, to achieve a robust process you and your area leaders must be willing to work together to create and implement one business goal that benefits all areas. Without this unity, S&OP is doomed to fail.