Four S&OP Pitfalls to Avoid for Supply Chain Success

All Sales & Operations Planning (S&OP) implementers have failed projects--especially as they begin their journey to S&OP maturity. Sometimes the problem starts with the schedule;...

By Sami Salminen | Manager | Chainalytics

Let’s be honest. All Sales & Operations Planning (S&OP) implementers have failed projects–especially as they begin their journey to S&OP maturity. Sometimes the problem starts with the schedule; sometimes with process adherence after project or technology deployment. Often, budget overruns come into play, due to unforeseen (but always similar) circumstances.

The Deadly S&OP Pitfalls

Sometimes the best lessons come from observing how others have struggled on their road to better supply chain practices. So if you’re about to implement an S&OP project, beware the four pitfalls that have given S&OP implementers late-night headaches, well, since the beginning of S&OP. These pitfalls are almost all easily skirted with planning and forethought:

  • Select the wrong business owner: Quite often, especially in companies with low S&OP maturity, development projects are driven by IT or another non-executive-level function that assumes that by installing an advanced planning tool, the S&OP business process is automatically bundled into their daily business practices. But running the S&OP tool without the related business process will be a miserable experience, providing limited ROI. Instead, choose a relatively high-level executive to be part of the transformation project–not an executive sponsor, but someone who can ensure employees adjust to a new way of working and take the driver’s seat in process design review and decisions.
  • Blind them with a never-ending panoply of process charts: S&OP process design is relatively easy and straightforward. But It is not at all difficult to make it the longest and most complex part of the implementation, producing massive amounts of process documentation with four or five vertical levels of nested process architectures – and showing off evidence of perfectionism in design work.   But this unnecessary complexity delays project implementation and related S&OP value, as it forces employees to struggle to understand and follow complex process flows that require both mindset changes and new daily working practices that can be potentially outside employees’ comfort zones. Instead of diving into complex details, the best approach to implementing process change is to start at a high level (think: steering wheel) with immediate business deployment and iteratively cycle deeper into the process architecture’s lower levels (think: tires).
  • Make sure to avoid those hard-to-please legacy lovers. Even a two-person organization may incorporate one legacy-loving person who is most assuredly blocking novel new ideas, uncomfortable with change or unwilling to lose their perceived organizational “powers.” Oftentimes, that person pays little attention to his or her corporation’s mission, organization, supply chain structure, competitive landscape, customer behaviour, margins or ethics. Instead of annoying or bypassing this person, thereby guaranteeing their entrenchment, consider special 1-on-1 quality time. This will help to make the person feel appreciated and help them start their mindset change to personal collaboration–ensuring they move beyond the theoretical process design and benefits listed on Powerpoint to understanding the value of the new S&OP implementation.
  • Never, ever contact stakeholders after project closure. Deliverables approved, project signed off? Check. Then run. And never look back, right? Actually, despite the fact that we often work closely with business owners through the first several phases of a complex S&OP project–to the point where they are seeing concrete benefits–it helps to have a formal feedback loop but also  informal chat after a few months of running the process and tools without hand holding. At that point, process improvement ideas often emerge and there’s opportunity for new development projects that will extend the value of the initial engagement for them, for example opportunities related but not core to S&OP like statistical forecasting, customer service or freight management via the Chainalytics Freight Market Intelligence Consortium (FMIC).

To make your S&OP project a success, put some real focus, time and thought into all of the above points in your project. The effort is worth it – in terms of your money and health and your company’s gratitude. Chainalytics Manager Sami Salminen has extensive S&OP process development, execution and management experience. Throughout his career, he has managed across multinational companies, cultures and projects–including demand and supply balancing, IT system development and ownership supply chain management business processes. Learn more about Chainalytics’ S&OP expertise

In this article