Too often, I’ve noticed a disconnect between an executive sales and operations planning (S&OP) process and the tactical, execution-level implementation of the plan. For example, the operations staff lacks the executive sponsorship necessary to provide input on process improvements or executive S&OP plans are not communicated to the tactical team for implementation. How do you reconcile S&OP strategy with tactical execution?
We see that companies are either too focused on execution without consideration of strategy or have a disconnected strategic and execution oriented process. In today’s situation, this is not sufficient.
Ideally, companies should adopt a continuous Sales and Operations planning process that spans the strategic & operational horizon. The company should also integrate the execution process tightly to obtain feedback in both directions and ensure that plans are actually converted into viable action. It may so happen that the execution may vary greatly from the plan, it is fine if that is the case, but only if the reasons are clearly understood.
Bringing strategy and execution together
There are a few key questions to ask in these situations
- Are our assumptions the reason why the actuals are so different from the plan?
- Are the assumptions that we used in coming up with the plan fundamentally incorrect?
Having the strategic and operational S&OP processes in the same integrated platform enables you to ask these questions and finding the answers in a highly systematic way.
Who owns S&OP?
Another important point to consider is the ownership of the S&OP process. Is the owner of the process someone who has a place in the boardroom and can make executive level decisions? Too often the S&OP meetings get bogged down with extremely detailed discussions which really should be discussed at the pre S&OP meeting stage. Executive S&OP meetings should be as the name indicates – really an executive level critical decision-making process.
Also, the output of the S&OP plan should drive a company’s income statement and balance sheets. Companies should create internal projects and SWAT teams, mapping the S&OP plan to the key financial documents with collaboration between finance and the supply chain. Upon completing this activity, both the corporate/finance and supply management organizations can gain very interesting insights, in terms of supply chain tactics that can impact corporate goals and vice versa.
