There has been much interest in S&OP in the last few years. As with many hypes, all self-declared experts jump on top of the topic and explain to you why it is really, really important to do S&OP. And that you might have thought you were doing it, but it now turns out you have been doing it wrong and your only hope for enlightenment is by hiring one of these experts. And software suppliers have advertised with their modules and optimisation capabilities to make S&OP work. So what to do?
S&OP is indeed important, but not more (or less) important than other planning levels. When you have a great S&OP process, but a lousy order promising, you will perform lousy. When your order promising is great but your S&OP is below par, you might be selling the wrong product mix, or you might be producing it at costs that are too high. When your scheduling is not in order, your execution will be in chaos and what comes out of your supply chain will be a surprise every day – notwithstanding your great S&OP process with great software.
So what should you, and everyone do? Create a planning architecture that works for you and make sure all elements of it work correctly – by itself and in interaction with each other. You should focus on the planning process and when this process is complex, develop adequate support for it. Many systems that will support planning processes are a mix of algorithms and manual use, and S&OP is not exception. So, do not step into the pitfall of trying to automate, or ‘optimise’ this decision immediately. Another thing you should do is to make sure the S&OP planning process is about the right time horizon. This means that you should not focus your S&OP discussions on this and the next month, you should not forget the middle and end of your planning timeline. Furthermore, you should be able to create a forecast which is more or less reliable. When you cannot do this, just forget about S&OP and try to be flexible. There is a nicer word for this, called agile.