Stage Three: Integrate
Reaching stage three S&OP maturity is often referred to as the point when a company turns the corner and starts to shift their focus to outside-in capabilities. Stage three companies have developed standard and repeatable processes. Their demand plans consider new products and incorporate sales and key partner inputs to build a true estimate of the total opportunity. In stage three companies, demand plans are used to develop purchasing plans and constrained manufacturing plans, and companies analyze and address gaps between unconstrained demand and constrained supply.
Stage three companies have an S&OP process champion who sets strategy and helps to ensure participation from all key functions. The supply chain team plays the central role in collecting data, analyzing the data, and coordinating the S&OP process. Executives responsible for Profit and Loss are involved making tradeoff decisions.
Usually by stage three maturity cross-functional KPIs become more common which helps drive alignment and creates incentives to work towards common goals. The S&OP process is focused on a repeatable monthly series of planning meetings and the associated activities to build and analyze data culminating in an executive S&OP meeting. Stage three companies tend to focus on the mid-term planning horizon and at some level of product aggregation.
Setting Your Sights on Stage Four “Collaborate”
- Supply Chain Data Management: Clean, consistent, comprehensive, current, controlled and convenient data is a must. It is essential to establish repeatable and automatic data interfaces between the S&OP platform and the various enterprise and supply chain systems that feed and receive data.
- Advanced Sales & Operations Planning Solution: Basic planning solutions, spreadsheets, homegrown and ERP systems do not provide the advanced capabilities needed to facilitate more mature S&OP processes.
- Algorithmic-Based Analysis: To facilitate fast and more optimal decisions, stage three companies need to invest in algorithmic planning capabilities to determine impacts on the end-to-end supply chain.
- Multi-Horizon Planning: Stage three companies should start to extend their long-range planning horizon to enable full integration with multi-year strategic planning to ensure strategic plans are accurately translated to tactical and operational plans.
S&OP Process Maturity Checklist: Beyond Stage 3
- Fast simulations and what-if scenarios
- Actuals versus plan comparisons
- Financial and volumetric plans
- Product lifecycle planning
- Risk analysis
- Multi-horizon/region/division/segmentation planning
- Translation between detailed and aggregate plans
- Internal and external collaboration
- Supply chain master and transactional data management
A mature S&OP process supported by an advanced S&OP platform ensures business plans are synchronized and rooted in feasible supply chain network capabilities and resources and investments are deployed where they are most effective in achieving business goals.
The next and last article in this series “Climbing the Sales & Operations Maturity Ladder – Reaching for the Peak,” set for release in December, will explore the characteristics of the higher stages of S&OP maturity, actions to climb the maturity ladder and recommendations on how to run an effective executive S&OP meeting.