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03 Mar 5 Keys to a Successful S&OP Planning Run in APO

(By Mike Raftery)

Every company has a different definition of what an S&OP plan looks like. Sometimes that means the next 5 quarters, other times it means 5 years. Even as the goals can even be completely different as some companies focus on raw material requirements, production capacities or sales allocations. No matter what the end goal, here are 5 keys that will make your S&OP exercise in SNP a success.

  1. 6 P’s – Prior Proper Planning Prevents Poor Performance

    It is a planning tool after all. Your rough cut plan is hard enough to stitch together, however it’s even harder to do it twice. While it might be easy enough to do a second planning run it wastes time and adds more uncertainty to the entire process. Solid preparation is especially important when performing an S&OP run where large impactful decisions are made and the future of the business is mapped out. Preparation of data is a given, however the preparation of process is just as critical. A plan for running S&OP that is understood and agreed upon by all interested parties, not just the supply chain team is worth every minute spent on it.

  2. Plan for the unplanned

    Since your S&OP plan is mapping out the future horizon you are in essence mapping out the unknown and taking the first step of organizing educated guesses and lofty goals around the constrains of reality. Since the very nature of this task is a first sketch of a time frame there will be unexpected consequences and missed constraints and just flat out errors. Expect these misses as you are still in the rough draft stage. And even though you might not be able to anticipate the exact errors, at least set aside some time to resolve them.

  3. Perfect is the enemy of good

    Know what level of detail to expect going into the S&OP exercise so that the level of analysis is appropriate. This is not a plant scheduling exercise, nor is it a truck building run. This is an S&OP strategic level plan that needs to deliver certain directions to an organization. However, if you focus on the details or perfecting every last data point you will go down a rabbit hole that is hard to get out of. If your goal is monthly production then do not get fixated on the week by week plan. Keep in mind all of the data you are dealing with is a guess at best. So look for broad trends and pit falls. Find large issues and focus on options to solve them. If you get down in the weeds and the daily details in an S&OP exercise you will miss the big picture, which is why an organization runs S&OP planning in the first place.

  4. Focus on the message

    Time your most limited resource to make sure that you focus on the data points and analysis that really matters to your audience. If capacity is the focus of your organization then do not spend the majority of your time on raw materials. Specifically always keep in mind what data you need to deliver in order to build the reports, graphs, charts and power points that will need to communicate the results to others. These are the key data points that you need to get right, and be able to back up with supporting data and thorough analysis. No matter what your organization values make sure that you have a plan to collect, manage, report and communicate those data points by building them into the plan up front.

  5. Now what?

    IMPLEMENT! What good is a plan that sits in excel or even worse in a big pile of papers on someone’s desk. How will these plans turn into reality? How is your masterpiece going to be communicated to the organization? Make sure you know that the output must be usable, translatable, and understandable for the entire organization.

Data in and data out. Understand what matters to your organization. Collect the inputs to be able to analyze it thoroughly. And finally prepare the analysis with key data points to communicate and share it effectively. If you keep the big picture in mind by focusing on the key details that matter, your S&OP will pay big dividends in the future for your organization.