I must admit I was wrong. I recently helped pen an article in the Journal of Business Forecasting (JBF) Fall 2017 edition entitled “Why Is the S&OP Process Stuck in Third Gear?”. The truth is most Sales and Operations (S&OP) processes are not stuck at all – they don’t even get out the starting block and are stuck in park.
I believe one of the major reasons why so many companies struggle to get started, or not succeed at traditional S&OP, is they fail to understand the magnitude and scope of the task at hand. To help understand why so many firms fail at S&OP, I will explain not what S&OP implementation is, but what it isn’t.
- S&OP is not a supply chain procedure – it needs to be a business process.
- S&OP is not a project – it needs to be a continual development.
- S&OP is not about adjusting plans – it needs to become the way you create strategies.
- S&OP is not about change – it needs to be transformational.
There is a misconception about what constitutes change versus what it means to have deliver transformation. Many companies have a good idea of how to manage change, but most organizations continue to struggle with transformation. Change means implementing finite initiatives, which may or may not cut across the organization. Organizational transformation and a fully implemented S&OP process is altogether different. The objective of transformation is not just to execute a defined change initiative, but to reinvent the organization, change the culture and behaviors, and discover (rather than create) a new process and new way of planning.
You will need to be a model of “extreme leadership” to keep people energized even as the challenges mount in front of them.
Transformation Management Instead of Change Management
As opposed to change management, transformation is far more challenging for two distinct reasons. First, the future state is a concept you start with, and the final process is achieved through effort, and sometimes, trial and error. This makes it difficult to “manage” transformation with pre-determined, time-bound and linear project plans. Second, the future state is so radically different from the current state that the people and culture must change to implement it successfully. New mindsets and behaviors are required.
Understanding this distinction is crucial to knowing why some organizations fail to get the traction needed for transforming to an integrated business planning process or to a successful S&OP process. Treating your journey like a traditional change management project may provide incremental improvements which can be sustained with ongoing thought, effort, and persistence but it will be difficult to sustain. What you may need is a transformation management process that shifts the entire organization into a new way of thinking and planning that sustains itself.
Make continuous efforts to ensure that the transformation is seen in every aspect of your organization
Transformation management is a more complex process which varies according to each individual organization’s needs. There will be different approaches taken depending on a wide range of factors including the type of organization, the S&OP objectives and the external environment. To help you on your journey the following are the twelve process steps for transformational management and the factors critical for S&OP success.
Transformation Management 12 Step Process
1. Admit you have a problem: For transformation to happen, it helps if the whole company understands there is a problem and thinks we need a solution. Develop a sense of urgency around the need for new or improved Business Planning Process. This will help you spark the initial motivation to get things moving. If many people start talking about the transformation, the urgency can build and feed on itself.
2. Engage Leadership: Engage leaders and stakeholders, rather than seeking sponsorship, where the sponsor’s role is open to interpretation. Engagement is a process of being actively involved, and being seen to participate in the process at every level.
3. Form a Powerful Coalition: S&OP is about collaboration and you need a solid team. For transformation, you need to bring together a coalition, or team, of influential people whose power comes from a variety of sources, including job title, status, expertise, and political importance.
4. Listen First: Stakeholders have insights to provide regarding the transformation being proposed, and you provide the opportunity for those insights to be shared. Strive to listen and you may not only find good ideas that contribute to the overall vision but also a substantial amount of goodwill with people involved in the transformation.
5. Create a Vision for Change: A clear vision can help everyone understand why you are asking them to do something. When people see for themselves what you are trying to achieve, then the directives they’re given tend to make more sense.
6. Show Passion: You will need to be a model of “extreme leadership” to keep people energized even as the challenges mount in front of them. One the most important characteristics of a sucessful business planning process and transformation management is the ability to have a positive outlook and belief in what can be achieved.
7. Continuous Engagement: The “S&OP Journey” is a significant part of an everyone’s experience during transformation, and when managed well, it sets the right platform for motivation and expectations. Understand that communication is a marathon, not a sprint. You can’t say everything about the S&OP Process all at once. This means that you should focus on communicating small, focused messages on a regular basis to targeted audiences.
8. Training: Develop a new set of skills across the organization, including relationship building, interpersonal communication, conflict resolution and coaching/mentoring. This includes building out functional capabilities in areas like demand planning and finance and augmenting skill sets and professional training as well.
9. Be Able to Adapt: Put in place the structure for change, and continually check for barriers to it. Removing obstacles will empower the people you need to execute your vision, and it can help the transformation move forward. The ultimate vision may not change, but the route to success will require continuous adaptation to overcome obstacles and exploit opportunities.
10. Credibility: Nothing motivates more than success. Give people a taste of victory early in the transformation process. Within a short time, frame you will want to have some “quick wins” like improved planning for a holiday or key customer, or reduction of inventory that your company can see. Without this, critics and negative thinkers might hurt your progress.
11. Transparency: Setting expectations and providing transparency throughout the S&OP journey can go far in minimizing conflicts and keeping everything on track. With a transparent process, people know what is happening and why. They feel more involved and trust the direction you are going in.
12. Anchor the Changes in Corporate Culture: Finally, to make any S&OP process or any transformational project stick, it should become part of the core of your organization. Your corporate culture often determines what gets attention, so the impact and process must show up in everyone’s day-to-day work. Make continuous efforts to ensure that the transformation is seen in every aspect of your organization. This will help give the S&OP process a solid place in your organization’s culture. It’s also important that your company’s executives continue to support it. This includes existing staff and new leaders who are brought in.
The New Reality
Everyone agrees that change management is important. But many people underestimate the challenge of implementing a mature Sales and Operations (S&OP) process and the transformation that must take place inside the organization for its success. This type of transformation is far more unpredictable, iterative and experimental than traditional project or program management, and consequently entails much higher risk. The key elements needed to build success are understanding why you are changing, a clear vision of the final outcome, good stakeholder engagement and flexibility to adapt the process to meet the business need and strategic initiatives. Done well, transformation is a shift in consciousness. In fact, transformation creates a new reality.