Dear S&OP, you have not solved the problem | Elementum

Dear S&OP, you have not solved the problem

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Dear S&OP, 

First of all, “A for Effort”. No one can say you didn’t try. For that, we salute you. The industry hadn’t seen much change in a while, and you built quite a movement. 

But you have not solved the problem. 

We’re all trying to deliver the highest service levels at the lowest cost. For 10 years, you touted the Secret Sauce to Supply Chain optimization. But today, companies are spending more than ever and customers expect “Prime” level service. The problem is…

Planning doesn’t mix well with reality. We run our monthly planning cycles with religious diligence, but The Plan is outdated as soon as the last person logs off the Zoom call. 

Demand goes up. A supplier shuts down. A canal gets blocked. And The Plan gets thrown out the window. “We need to be more agile!” executives lament.  All you can offer is: to go from monthly planning to weekly planning to daily planning.  Thanks. 

 

“There’s S&OP…and then there’s the real world.”  

– Gartner

 

The reality is…

Planning doesn’t make a supply chain agile. Imagine going into a football game with every play called and no audibles or time-outs. Hey, at least you have a plan, right? 

  • First Down – Real-world $#!T hits the fan. After a pandemic, global semiconductor shortages, a freak winter storm, you start to think that one-offs have become the rule, not the exception. Only 11% of manufacturers are able to consistently, accurately tie S&OP to execution. 
  • Second Down – Teams need to make real-time decisions based on new information, but they can’t. That’s what 63% of planners say, even after implementing S&OP. 
  • Third Down – The playbook is just too complicated.  S&OP is hard to implement. After year-long deployments, 66% of companies say their S&OP process still requires significant improvements. 

PUNT!

And here’s the dirty little secret: 

Planning doesn’t eliminate underlying problems. 

There are everyday inefficiencies lying underneath the surface of the supply chain –– late POs, shortages, late shipments, system failures. The day-to-day fires that Supply Chain heroes are constantly fighting. 

S&OP accounts for these issues, but doesn’t uproot them. These “small” inefficiencies multiply by thousands of occurrences per month and create suboptimal, rigid supply chains and a big gap between Planning and Execution. 

S&OP cannot bridge that gap. 

So, we’re going to bridge the gap between Planning and Execution.

The first step to bridging the gap is admitting that one exists. Repeat after me: “your plan is not perfect and never will be.” Good!

Next, you need to give your team the ability to “change the tires while the car is still going 70 mph.” That is, you have to uproot the underlying inefficiencies while making sure that the team is still able to manage issues and fill orders.

Most will attempt to do this by managing the issues with spreadsheets and email. It’s logical enough: the spreadsheets help you stay “organized.” The email helps you “communicate.” The problem is: it limits visibility, cannot scale, and will take way too much time. 

The gap cannot be filled with spreadsheets and email.

There’s an alternate approach. Bridge the gap with a platform. One that is specifically designed for you. One that is specifically designed for Supply Chain (but not in the green-screen, on-prem, 1990s type of Supply Chain). 

The kind of platform you can dance across. The kind of platform you can show your friends. 

The kind of platform you can trust. 

The Supply Chain Service Management Platform.

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Sources: Gartner, “S&OE: The Secret Ingredient for Delivering Planned Business Results”, Marko Pukkila, 2015

Nader Mikhail

Nader Mikhail

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