Opinion MAR07 HiRes
1
8/8/2019 Opinion MAR07 HiRes http://slidepdf.com/reader/full/opinion-mar07-hires 1/1 team, effectively negating or delaying receipt of anticipated benets. By accepting ownership of the S&OP process, the leader can manage by and with it, and make it mandatory for the individuals reporting to him/her to participate in and work the S&OP process to manage the business. This action will also encourage middle management and affected staff to more readily accept the process’ philosophy and practice. Some organizations we’ve encountered take over a year simply to design their S&OP processes. That’s not necessary. With proper coaching and direction, a company can expect its process to be up and running within three months/cycles for a signicant part of the business, and be fully operational within six cycles. Oliver Wight’s FastTrack S&OP, as an example, is a program that is designed specically to minimize the time-to- benet for a new S&OP installation. Recent studies and surveys by independent research organizations have shown that there is denitely an economic benet for companies that implement S&OP. However, there are heightened benets of improved productivity, sales revenue, forecast accuracy, on-time delivery, inventory reduction and internal communications for companies that perform S&OP really well. Opinion March 07 Business excellence 5 Sales & operations planning (S&OP) is in resurgence. It has regained interest in manufacturing, engineering and distribution because of the controls that it gives an executive management team, and the benets that can accrue from a properly implemented S&OP process. It has also become a standard practice for integrated business management. But the levels of results that are achieved through S&OP are directly linked to the dedication and quality of an organization’s leadership. Leadership, in my opinion, is the single, most important element that determines the degree of success of an S&OP process. S&OP is an integrated business management process through which the executive/leadership team continually achieves focus, alignment and synchronization among all the functions of the organization. The monthly S&OP plan includes an updated sales plan, production plan, inventory plan, customer lead time (backlog) plan, new product development plan, strategic initiative plan and resulting nancial plan. Done well, the S&OP process also enables effective supply chain management. A properly implemented S&OP process routinely reviews customer demand and supply resources and “re-plans” quantitatively across an agreed rolling horizon (typically 24-months). The re-planning process occurs at least monthly and focuses on changes from the previously agreed sales and operations plan. While it helps the management team to understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results. Companies that have an integrated business management process use the S&OP process to monitor the execution of the company’s strategies. It is essential that the person in charge of an organization actually lead the Management Business Review step of the process and review demand, supply, new product, nancial and resource projections and make the appropriate decisions to ensure the execution of the business strategy. One grave error that some organizations commit is to delegate/abdicate the implementation of the S&OP process to a cross-functional middle management team. Based on our observations, where S&OP is a middle management led process the achievements are not at the highest levels and often the business performance results fall short of expectations. This occurs because in a cross-functional middle management process any single senior level executive can interfere and over-ride the decisions that were made by the George E. Palmatier, a Principal at Oliver Wight Americas, Inc., is an expert in Sales & Operations Planning: [email protected] The need to lead Sales & operations planning (S&OP) is key to integrated business management, says George E. Palmatier, but responsible leadership is essential for success
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Transcript of Opinion MAR07 HiRes
8/8/2019 Opinion MAR07 HiRes
http://slidepdf.com/reader/full/opinion-mar07-hires 1/1
team, effectively negating or delaying
receipt of anticipated bene ts.By accepting ownership of the S&OP
process, the leader can manage byand with it, and make it mandatory forthe individuals reporting to him/herto participate in and work the S&OPprocess to manage the business. Thisaction will also encourage middlemanagement and affected staff to morereadily accept the process’ philosophy
and practice.Some organizations we’ve
encountered take over a year simplyto design their S&OP processes. That’snot necessary. With proper coachingand direction, a company can expect
its process to be up and running within three months/cycles for asigni cant part of the business, andbe fully operational within six cycles.Oliver Wight’s FastTrack S&OP, as anexample, is a program that is designed
speci cally to minimize the time-to-bene t for a new S&OP installation.
Recent studies and surveys byindependent research organizationshave shown that there is de nitelyan economic bene t for companiesthat implement S&OP. However,there are heightened bene ts of improved productivity, sales revenue,forecast accuracy, on-time delivery,inventory reduction and internalcommunications for companies that
perform S&OP really well.
Opinion
March 07 Business excellence
5
Sales & operations planning
(S&OP) is in resurgence. It hasregained interest in manufacturing,engineering and distribution becauseof the controls that it gives anexecutive management team, andthe bene ts that can accrue from aproperly implemented S&OP process.It has also become a standard practicefor integrated business management.
But the levels of results that are
achieved through S&OP are directlylinked to the dedication and qualityof an organization’s leadership.Leadership, in my opinion, is thesingle, most important element thatdetermines the degree of success of anS&OP process.
S&OP is an integrated businessmanagement process through whichthe executive/leadership teamcontinually achieves focus, alignmentand synchronization among all
the functions of the organization. The monthly S&OP plan includesan updated sales plan, productionplan, inventory plan, customer leadtime (backlog) plan, new productdevelopment plan, strategic initiativeplan and resulting nancial plan. Done
well, the S&OP process also enableseffective supply chain management.
A properly implemented S&OPprocess routinely reviews customerdemand and supply resources and
“re-plans” quantitatively across
an agreed rolling horizon (typically24-months). The re-planning processoccurs at least monthly and focuseson changes from the previously agreedsales and operations plan. Whileit helps the management team tounderstand how the company achievedits current level of performance, itsprimary focus is on future actionsand anticipated results. Companiesthat have an integrated business
management process use the S&OPprocess to monitor the execution of thecompany’s strategies.
It is essential that the person incharge of an organization actually leadthe Management Business Review stepof the process and review demand,supply, new product, nancial andresource projections and make theappropriate decisions to ensure theexecution of the business strategy. Onegrave error that some organizations
commit is to delegate/abdicate theimplementation of the S&OP process toa cross-functional middle managementteam. Based on our observations,
where S&OP is a middle managementled process the achievements are notat the highest levels and often thebusiness performance results fall shortof expectations. This occurs because ina cross-functional middle managementprocess any single senior levelexecutive can interfere and over-ride
the decisions that were made by the
George E. Palmatier, a Principal at Oliver Wight Americas, Inc., is an expert in Sales & Operations Planning:[email protected]
The need to leadSales & operations planning (S&OP) is key to integrated businessmanagement, says George E. Palmatier, but responsible leadershipis essential for success
