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Change Management and S&OP: Part II

In the last issue of BONEZONE, we covered the priorities involved in an implementation of Executive S&OP1 (Sales & Operations Planning) and pointed out that people were, by far, the most important element. This led to the conclusion that change management was critically important – more so than software, data, process or other parts of the implementation task.

If you missed that article, you may want to check it out because Part II builds on that. You can find the first installment, “Change Management in S&OP,” in BONEZONE Fall 2010.

Within change management, the foundation piece is understanding. Let’s explore that.

Education: The AHA! Factor

Education is a key element in people’s willingness to change. Education leads to the aha! factor. It’s what I call the “anti-WIIFM pill,” WIIFM meaning, “what’s in it for me.”

Education defuses the yeah-buts and helps convert them into yes-ands. So, the anti-WIIFM pill – Education –is a miracle drug. It’s safe; it’s effective and you can’t overdose on it. Education leads to understanding and awareness, and is fundamental to success.

Success requires informed people, those who understand the value of Executive S&OP and what it can do for the company. Only with that will the process be fully successful. People need to have understanding of the whats, the whys and the WIIFMs . Education needs to include answers to questions such as:

What’s this S&OP stuff all about?
Why should we do it?
How will it make things better?
Will I be able to do my part?
How about the other people – will they do their part?
What parts of my current job will go away?

Understanding requires not only information, but also dialogue: being able to ask questions and get good answers. People need the ability to discuss, to ask questions and, in effect, to “shoot bullets” at Executive S&OP. The atmosphere during implementation should encourage people to ask hard questions – very hard questions – about the process. Examples:

“How can you accomplish anything by looking at aggregate numbers? We don’t ship aggregated numbers; we ship SKUs. There’s no way this can help us.”

“I can see how it will work okay in the plants, but how about our contract manufacturers? I don’t think it’ll work with them.”

“This will never work because they (top management) will never agree to get involved.”

POW! POW! POW! Those are shots: There’s no way this can help usis a shot. I don’t think it’ll work with them is a shot. They will never agree to get involved is a shot.

Do the answers to these objections come from reading a book? Usually not. They come from being taught the concepts, the principles and the process in a group setting – and being able to shoot bullets as the need arises. Books can help, but they provide basic information and don’t answer specific questions.

Of course, when someone shoots a bullet, an answer must be provided – by the facilitator or someone else, then or shortly after. And the issue should be kept alive until it’s resolved to the questioner’s satisfaction.

Here are some other elements in the change equation.

  • Shoot the Messenger. While shooting bullets is positive and to be encouraged, it’s a totally different thing to shoot the messenger. If the corporate culture says it’s okay to blame the person who identifies a problem, then that will inhibit effective communication, conflict resolution, teamwork and trust.
  • Reward Systems. Another inhibitor is how people are measured and rewarded. If a key metric for the plants is tonnage, earned hours or something similar, irrespective of what products were needed by the customers and the supply chain, that will need to be changed.
  • “Attaboys” for Overselling the Forecast. Sales incentives that reward overselling the forecast can result in under-forecasting and hence, can cause serious stock outs.
  • Overforecasting to Insure Availability. This is often the result of salespeople getting burned from lack of product. The result is that they forecast higher than what they expected to sell, which most often results in bloated inventories when the forecasts don’t materialize.
  • The Silo Mentality. Also known as “us guys vs. them guys.” If the culture is to play things close to the vest and give out no more information than is absolutely necessary, that, too, will need to change.

1. Executive S&OP is the aggregate, volume planning element within the overall set of Sales & Operations Planning processes, as opposed to Operational S&OP which refers to the mix tools such as master scheduling, plant and supplier scheduling, MRP, Kanban, advanced planning systems and so forth. Here, I’ll use S&OP and Executive S&OP interchangeably.

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