S&OP/IBP: Clarity improves action readiness!

Last week I found myself in a roomful of supply chain professionals where, as Involvation, we’d been invited to chair a discussion on ‘S&OP: achieving and maintaining S&OP effectiveness… and keeping all disciplines on board’. The key issue is how to motivate people and increase their action readiness in terms of Sales & Operations Planning (S&OP) and Integrated Business Planning (IBP).

The concept of ‘action readiness’ is especially tricky to define. After all, it encompasses attitudes, behaviour and culture. The crux of the matter is: at which point are people really ready to take action?

S&OP is all about making decisions

One of the interesting points that emerged from the supply chain professionals’ discussions was that because S&OP/IBP is all about making relevant decisions, it must also be absolutely clear who is making which decisions and where. Furthermore, they concluded, a clear framework with clearly defined S&OP/IBP-related tasks and responsibilities improves people’s action readiness because everyone then knows where they stand.

Create a clear decision-making framework

During the session, one of the participants – an experienced supply chain director – hit the nail right on the head in my opinion. He suggested that it’s necessary to provide clarity on not only what is to be decided within S&OP/IBP, but above all what isn’t. Furthermore, he said, it should be made explicitly clear that the decisions made in the S&OP/IBP process must no longer be made anywhere else within the organization. Until that point is reached, there will be a lot of confusion which will detract from people’s readiness to make a real success of S&OP/IBP.

Clarity improves action readiness!

I completely agree with him. Clarity improves action readiness! Therefore, when it comes to S&OP/IBP, remember the following points:

  • Provide clarity on what is and isn’t to be decided within S&OP/IBP
  • Make it clear which decisions should be made by whom (and in consultation with whom)
  • That avoids confusion and prevents the decision-making process from becoming fragmented
  • The result: increased S&OP/IBP action readiness and hence effectiveness

Last but not least: spare a thought for what this means for the people involved. They may be given new responsibilities, but they may also have to relinquish existing ones. Some decisions will be made within S&OP/IBP and others won’t. Not everyone will find it easy to adjust, so be prepared to provide explanations and guidance.

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Albert Einstein