The Future of S&OP | Integrated Demand and Supply Planning

| By Brad Way | Manager, Integrated Demand and Supply Planning | Chainalytics |

Want better visibility into your inventory and upstream product availability? Need to get proactive around the range of possibilities for future demand? Determined to have a robust data and technology infrastructure that supports quick decision making? You need S&OP (Sales & Operations Planning), IBP (Integrated Business Planning), or BEP (Business Efficiency Planning)!

There must be an unspoken maxim that when a business process struggles to be effective, the industry changes the acronym. Advanced S&OP? S&OP 4.0? Joking aside, there are meaningful differences in how a company can structure its planning approach, so these different acronyms aren’t just fluff. And a well-designed, integrated and agile planning process can be a valuable strategic weapon to drive top line enablement, increased profitability, and significant business efficiency.

However, let’s take a moment to focus on the current struggle for cross-functional planning process effectiveness, which is a hot topic right now within planning circles. My experience suggests that these struggles are largely the result of internal politics, money, and time.

Let me be more specific. For supply chain planning meetings to be successful without requiring bottomless espresso, each meeting needs clear objectives and well-defined “decisions to be made” established ahead of time, supported by the data and analytics that enable in-meeting decision making. Far too many S&OP reviews have become backwards-looking status reports or require additional follow up to drive to action.

Now, to make the leap from a reactive and ineffective process to a proactive, agile and effective capability, investment is needed to enhance the related sub-processes, technology, and team. The money and resources to do so will come from your leadership. Yet your leadership faces significant pressure to deliver results today, not at some distant “point of maturity” down the road. A vicious cycle has developed. Because limited investment is being made, the process fails to live up to the value proposition. Because the process isn’t seen as adding value, leadership has limited appetite to invest. Sound familiar?

My previous blog focused on the criticality of the fundamentals in supply chain planning. Today’s discussion focuses on the importance of people and a new speed-to-capability option on the market – a new dawn for S&OP. Until recently, organizations had only two paths forward to advance their planning process maturity and effectiveness: either pursue the slower, internally-driven glide path, or leverage an externally-supported project to quickly inject S&OP talent and capability.

Unfortunately, many companies have been able to get only halfway up the mountain of value delivery. The slower, internally-driven path risks stalling and de-prioritization through lack of value contribution over a multi-year rollout. The external project-based approach is highly valuable for initial capability assessments, future state process design, technology implementation and change management but comes with a larger price tag and risks external resources rolling off before the capability is sustainable. Worse yet, once an S&OP process is labeled a failure, it’s even harder to reboot in the future. There is only so much C-suite appetite for continued investment without tangible return. More espresso?

A New Dawn

“Yesterday is gone. Tomorrow has not yet come. We have only today. Let us begin.” – Mother Teresa

The facilitation aspect of a cross-functional planning process must be driven by internal resources having the right context and skills to identify the key decisions to be made, create concise messaging, and broker the tough conversations. Companies must recognize that this is not a junior position and requires a high-EQ broker-facilitator who is able to build bridges between functions and help leadership map a path to the activities which best support the business strategy.

At the same time, the planning process also requires a significant amount of data and complex information to be collected, analyzed, and presented in order to inform the key decisions needing to be made. While planning technology has made a huge leap in the past few years towards increasingly intelligent decision support and visibility, there is still a considerable technical component to the skillset requirements for truly effective S&OP.

Finding resources who can straddle all three worlds – the high-EQ facilitator, the business strategist, and the technical and analytics specialist – is becoming almost impossible. Almost every major supply chain publication and conference for the past few years has highlighted the huge talent gap in the supply chain analytics area.

This talent backdrop, along with the pivot to cloud-based SaaS-structured planning technology, has given rise to an exciting new option for S&OP capability enablement. I believe that the future of S&OP is in “on demand” talent and advanced analytics through a composite insource-outsource resourcing approach. Within the next few years, more and more companies will look to employ purpose-fit Planning-as-a-Service capability models which pair internal facilitators with external analytics and technology experts such as Chainalytics, jointly delivering the required planning capability through a single integrated process.

Leveraging managed analytics services can help organizations close capability gaps, overcome the talent challenges, and increase the speed-to-value by providing high caliber, on-demand technical and analytical capabilities for as long as is required while leaving the internal process ownership intact. This strategy is a classic “core competency” model which taps in to the centers of analytics capabilities already in the market, while opening back up the talent pool for the process facilitator within the organization.

If you have a need for a rapid capability and are facing limited bandwidth or headcount, have challenges with recruiting or retaining the specialized analytics skill set needed, or have simply exhausted your leadership’s patience with the long internal path to maturity, you may want to consider adopting this composite S&OP capability model sooner rather than later.

I believe this is the beginning of a new dawn for S&OP, and while technology solutions have made a huge leap in the last decade and in many ways have enabled this new operating model, the final value unlock may actually come from the first piece of the puzzle – the people who make the process work.

Brad Way is a manager in the Integrated Demand and Supply Planning competency at Chainalytics. He has 20+ years of experience helping organizations successfully implement supply chain planning and forecasting strategies.

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