In his brilliant book “Leading without Commanding”, Filip Vandendriessche describes how managers often create their own problems. By managing on input rather than output, they create resistance rather than buy-in. This simple observation also holds important lessons for S&OP.
In a process where people make the difference, input management kills creativity and commitment. S&OP practitioners generally are middle to senior managers that are more than capable of figuring out how to get things done. By micro-managing them, the organisation risks losing their drive, valuable input and most likely over time their participation in the process.
Vision and inspiration required
So how should it be done? S&OP is a process that requires vision and inspiration more than explanation. Easier said than done, but fortunately Vandendriessche gives us a number of useful recommendations:
- Ensure consensus about the problem. Why does your organisation need S&OP and what problems should it address? What is the business value and what’s in it for all participants?
- Make an explicit distinction between input and output. Then manage on output and leave the “how” to the practitioners. If they ask for guidance on how to run an effective S&OP process, the S&OP manager should obviously listen and support wherever he/she can.
- Define goals and objectives that are verifiable.
- Ensure that incentives are aligned with these objectives. “An organisation does not achieve what it wants, but what it rewards”.
- Keep asking the question whether the business performance is acceptable and whether the current S&OP process is still effective in addressing sub-standard performance. Adjust the process and participation when necessary.
S&OP is a business, not a supply chain process. Ideally it should be owned and driven by the commercial functions, right? Maybe, but practice shows that in virtually all companies, S&OP is owned and driven by supply chain, not by sales. In fact, getting non-supply chain functions truly engaged proves to be the main challenge in all but a few instances. Surely, sales managers have less internal / process focus than supply chain managers on average. But it may also have something to do with supply chain’s process bias when talking about S&OP. By trying to input-manage sales, supply chain probably reduces sales’ buy-in to the process. In other words: by focusing on “their” solution rather than on the intended output, supply chain may very well create their own problem!