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Change Management and S&OP

Some years ago, I spoke with a gentleman from Ford Motor Company’s Lean Supplier Institute whose job it was to help Ford suppliers implement Lean Manufacturing. We were talking about making meaningful changes, and he said something I’ve remembered all these years, “The hard stuff is the soft stuff.”

Bingo! What he was saying is that the difficult parts of making change (the hard stuff) are not machinery or computers or software. Not at all. By far the bigger challenges are people’s attitudes, perceptions, mindset – the soft stuff.

Let me present two hypothetical Sales & Operations Planning (S&OP) project leaders, both of whom are bright, hard working and have a good track record. In describing the implementation plans at Company A, Alex the project leader says:

“We’re doing the software search right now. That’s going to take about three months, and another three months to fit it into our business and get the reports just the way we want them. Then we’ll start to involve the Supply Chain people, because they’re the primary users. We want to get that part of the process working really well before we try to bring the Finance people in to tie the financials into S&OP.”

Now let’s hear from Company L’s project leader, Lee:

“Implementing S&OP is primarily a head game; it depends so much on what’s in the minds of the people, primarily the top management group. We’re going to involve them at the outset, explain what this S&OP stuff is all about and that it won’t work without their continuing hands-on participation. Our goal is to get their commitment at the outset; only with that will we get the participation of the other essential groups.”

Priorities – The ABCs

The S&OP effort comprises three major elements: software tools, data and process, and mindset of the people involved. We can prioritize them by the classic Pareto ABC approach, just as we do with items in an inventory: the A items are really important, the Bs are the ones in the middle and C perhaps stands for cheap. The A items are given more attention, because of their importance.

And yes, C may mean cheap, but it can also mean “Can’t do without.” If you need a Class C component to make a shipment but don’t have one, then that item becomes important. Ditto for Class C products that are in the line because they’re needed by some of the company’s best customers.

So here’s the ABC approach applied to implementation:

  • C – Computer, primarily the software tools
  • B – Data and process
  • A – People: the mindset issue

They’re all essential, but the A item –people – is by far the most important. Thus it follows that most of the implementation effort should be devoted to the people. Most means more than half.

In the Spring 2010 issue of BONEZONE I listed a number of popular myths about S&OP, one of which was, “S&OP is really simple. We’re just going to get the spreadsheets working and then we’ll have S&OP.”1 We just saw an example of that mindset in the person of Alex from Company A. Let’s ask ourselves, what is Alex focusing on, the A item, or the B or the C?

Then let’s ask the same question about Lee, from Company L. Upon what is she focusing?

Okay, those were easy – Lee is focusing on the people, while Alex’s priority seems to be software and data.

Now for what might be a less obvious question. Which company has the higher chance for success with Executive S&OP? The answer clearly is Company L. Lee seems to understand the challenge very clearly.

People’s mindsets must be changed, and the only ones who can make that change are the people themselves. External pressure doesn’t really work. I’m reminded of a cartoon showing a sign on an office wall:

Employee floggings will continue until morale improves.

People will need help with the new initiative, whatever it may be. They must be given the opportunity to understand, appreciate and internalize. To buy in.

News flash! – change comes hard. Of course it does, and we all know that. We humans all have our own WIIFMs (What’s In It For Me?), comfort zones and sacred cows. We need help in making changes…some of us a lot of help and others, not as much.

In a business context, change means changing the way we do our jobs. We refer to it as organizational behavior change.