Why SOP meetings matter

BARRY ELLIOTT

Readers will recall that we started last week with a list of check-up
considerations for your Sales & Operations Planning (S&OP) process,
based on an article by our colleague, Doug Burns. The first seven points
covered items such as scope, level of detail, and inventory strategy. We
continue with the final items, as follows:

8. Who should participate? The general manager leads the S&OP meeting.
Top operations management who are concerned with sales, marketing,
product development, finance, and manufacturing, at a minimum, attend
the meeting and lead the pre-S&OP process.

Sales and marketing participation is critical. If your strategies start
with objectives for supporting demands from your customers, they are an
integral part of determining these strategies and, therefore, their
input is an integral part of the regular review process that updates
those strategies as well as sales plans.
Product development must provide current information for new product and
major product enhancement projects, especially if time-to-market and
product life cycles are critical.
Finance must provide input on the projected financial impact of changes
to the sales, production, and product development plans.
Manufacturing must accept the responsibility to meet the proposed
production plan. Consistency in achieving the plan requires effective
material and capacity planning and control processes to be in place.

9. Get S&OP going: How effective are your sales and operations planning
processes? The initial reaction we frequently get from top operating
management is, "We already do most of what you are calling S&OP." If you
evaluated what you "already do", would you find a great deal of
informality and/or limited and poorly integrated facts on which to base
inventory and capacity decisions? That's what we typically find if a
well-designed formal S&OP process isn't in use.

It will take three to six months to implement a formal S&OP process. It
can take longer waiting until "all" of the data and reports are
available before getting started. Don't wait; the first meeting should
be a brainstorming session. Issues that are typically discussed include:

- It seems too complicated. Why do we need to do this?
- Isn't it just another meeting?
- Do we understand S&OP?
- What data are needed?
- How long it will take to prepare the data?
- Who is going to do it?
- What are the pre-S&OP steps?
- Whose meeting is it?
- Who sets the agenda?
- Who should be in the meetings?
- What happens if we miss the meeting?
- How often should we do S&OP?

Continue to build on the process through a candid critique after each
meeting. Focus on future issues that can be solved. Participants must
come prepared, having taken action on open issues from previous S&OP
meetings, and be readily accountable for any additional action items in
their areas of responsibility. Be proactive to improve the process.

10. Symptoms of S&OP faltering: Companies that are doing S&OP
effectively will tell you they couldn't go back to the "old way". They
have found that S&OP is a team builder for management because it has
them consistently focused on anticipating and solving problems before
they become crises. Typically, this doesn't happen without overcoming a
number of stumbling blocks.

The following are serious symptoms of S&OP faltering:
- Anyone criticising it as a "pick-on-us" meeting (finger pointing).
- The general manager or other key managers are consistently absent (not
a key management process).
- Meeting time is spent discussing poor performance leaving little, if
any, time for future plans and issues (poor meeting management).
- Heated exchanges occur across departmental boundaries (silos and
personality conflicts).
- The data are found to be consistently in error or unavailable (poor
systems).

In Orchestrating Success, Richard C. Ling and Walter E. Goddard observe:
"Whenever we have an opportunity to sit in on a Sales & Operations
Planning meeting, we can quickly judge its effectiveness; it is always
very apparent, as well as impressive, when a group of individuals works
as a confident team. Three ingredients generate such meetings: timely
and accurate data, the right attitude, and a correct understanding of
the process."

We see two types of top management approaches in our experience, those
who view proactive inventory and capacity strategy development and
management as key management tasks and regularly address them. These
management teams invariably have effective S&OP processes in place and
in use. We see others where top management reacts from crisis to crisis.
These companies rarely have adequate S&OP mechanisms.

Weekly Link is co-ordinated by Barry Elliott and Chris Catto-Smith CMC
of the Institute of Management Consultants Thailand. It is intended to
be an interactive forum for industry professionals