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9 Naïve Notions About S&OP

In advance of OMTEC 2016, BONEZONE is looking back at some timeless articles and presentations from previous conferences that energized audiences and equipped attendees with actionable solutions. If you enjoy this article, you will want to attend Joe Mazzeo’s presentations at OMTEC 2016. Mr. Mazzeo, a retired General Motors executive, returns to OMTEC to discuss continuous business improvement through lean manufacturing principles and continuous personal improvement through leadership development skills. Core knowledge gained from Mr. Mazzeo’s sessions applies to Sales & Operations Planning and vice versa.

The following is a list of “deal breakers” – things that can get in the way of successful implementation of Sales & Operations Planning (S&OP). To ensure success, you’ll need to challenge these myths in order to get all of the key people on the same page.

Myth #1: “We don’t need S&OP in our department; that’s a ‘supply chain thing.’ ”

Reality: Yes, it is a supply chain thing – and a sales and marketing thing – and a manufacturing thing – and a finance thing – and an R&D thing – and, last but not least, it’s a top management thing. S&OP is a company-wide collaborative decision-making process, reaching up to the top levels in the business.

Myth #2: “We’ll never get S&OP to work – we don’t have enough teamwork.”

Reality: You’ve got it backwards. S&OP doesn’t require teamwork before you get started; S&OP engenders teamwork once it’s operating properly. It enables people to view the business holistically and thus see the other guy's problems. A company implementing S&OP and not getting improved teamwork means just one thing: they didn’t do it right.

Myth #3: “We don’t need S&OP; we’re doing Lean Manufacturing.”

Reality: S&OP and Lean Manufacturing are two very different things. S&OP is a medium- to long-term planning tool that provides visibility into the future, thereby avoiding surprises when demand shifts – up or down. People who know both S&OP and Lean say that they work best when they work together.

Myth #4: “S&OP is too rigid. It won’t work for us because our business changes too quickly.”

Reality: S&OP is all about change. It provides a window into the future so that companies can 1) see potential problems ahead of time, 2) take corrective action and 3) prevent potential problems from becoming real ones.

Myth #5: “We can’t use S&OP because we don’t have any manufacturing. We use contract manufacturers solely.”

Reality: S&OP doesn’t care who owns the factory. Actually, companies that don't own one probably need it more, because they generally have less control over the supply side of the business. Microsoft is a very successful user of S&OP in its Entertainment and Devices Division, and all their manufacturing is done via contract manufacturers. We also see S&OP used in banks, retail companies, engineering organizations and IT.