Implementing an effective S&OP process requires effective management of personnel, systems, and process issues. Of these three areas, the change management aspects of personnel issues are often the most challenging. Organizational change strategies fail most frequently due to the inability of management to lead their teams through the transition process. Are supply planners and demand planners communicating? Is sales operations providing timely input? Are issues being resolved in a timely manner? How will disagreements be resolved?

As a corporate process, S&OP requires strong leadership and a keen understanding of change management.

Understand Change

There are two elements to organizational change: Personal transitions and Organizational transitions.

An old paradigm in change management was that it was only the organizational that was going through the change, de-emphasizing the personal aspect. But an organization is made up of a triad of people, process and technology. We understand that the only part of that triad that might have resistance to change is the personal. As a result, an organizational change strategy must focus not only on organizational transitions; it must also focus on personal transitions. From a leadership perspective, this means proactively understanding the affect on various stakeholders and leaders, for example looking at:

• Who in the organization is going to gain and lose power – S&OP team? Supply team? Demand Team? Sales. Has a fully powered S&OP team been created?
• Who in the organization might experience a positive or a negative careers move
• Who might be exposed when the changes show how poorly things were done in the past
• Who has the most to risk by making these changing and why

In order to understand, from each of their perspectives the perceived risk, time should be spent conducting interviews as well as a leader and…

We’ve all been there. The speaker is providing way too much detail. “Just get to the point!”

What’s the right amount of information?

In forecasting demand and supply, there really is a point of TMI (too much information). Detailed forecasting can be counter-productive. It requires more effort to forecast at a detailed product mix level than at a volume level. Similarly, detailed capacity planning requires more effort than rough cut planning. So where should we draw the line?

The planning horizon dictates the appropriate timeframes for mix versus volume planning. The planning horizon is defined as the period of time needed to purchase and receive raw materials plus the manufacturing time needed to produce finished goods. Within the planning horizon, detailed forecasts and plans are needed by the Operations side of the business to produce the right products in the right quantities at the right times.

Beyond the planning horizon, who needs the details? Nobody. So why are so many companies forecasting in detail so far out? Because they can. Planning tools enable detailed forecasting and easy aggregation well into the future. Yet, this technological capability should not lead to the conclusion that more detail is better. If nobody needs the detail, it is wasteful to dedicate the additional effort to plan across a greater number of items.

The solution is to plan at mix detail inside the time fence and at volume level outside the fence. A good S&OP demand forecasting and planning system should make it easy to plan at appropriate levels across products, customers, geographies AND time periods.