S&OP: “If it’s not in the system then it’s a rumor”

January 4th, 2011 1:10 pm Category: Enterprise Resource Planning, Global Supply Chain, Supply Chain Planning, by: Mark Rockey

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At Profit Point, we often repeat the mantra “People, Process, Technology.”  All three are important for the kinds of projects we work on.  You have to have good systems (the technology part) that support good work processes and people that follow the process and use the systems.  If your people are not committed to following the process and using the systems, you are going nowhere fast.

Recently we were discussing with a senior manager at one of our clients what makes for a good Sales and Operations Planning Process (S&OP Process).  Being someone who is more of a process and technology guy I was thinking that he might say something like “You have to have a well thought out work process that is clearly communicated to everyone involved” or “You have to have a system that is easy to work with that supports the work process well.”  WRONG!

The first thing he mentioned was that senior management needed to be openly committed to the process and systems.  He illustrated this for us by recounting what another senior manager at this same client said during an S&OP meeting with a large group.  The group was going back and forth discussing a “potential” order from a customer and this particular senior manager said “If it’s not in the system then it’s a rumor and we don’t plan and schedule for rumors.”

As you can imagine, this cut down on the chatter in the room quite quickly.  This client had spent a lot of time and money developing processes and systems that worked well and those two things are necessary but not sufficient.  You have to have leadership that says “We have a work process to follow and a system to use to support executing that process.  Follow the process and use the system.”

Next you have to have people who do exactly that!  If this is not happening then as I heard from another executive “Either the people will change or the people will change!”

You have to be able to trust the data in the system but really at its root this boils down to trusting the people who entered the data in the system.  As I was reminded, this starts at the top!

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  • Rich

    Mark,

    I like the “Either the people will change or the people will change!” quote.

    Rich

  • Roger

    Sounds like this could have been an issue with marketing and the manufacturing manager was saying that they won’t put in the effort to analyze non-firm “potential” orders.

    Unless MRP execution practices have changed a lot over the years it is often hard to commit to complex customer orders until they are actually in the system and the impact can be seen. As a production planner, I had to literally “fill the skies” many times to get parts in for orders that were just “dropped in”.

    Based on your experience, I would be curious to know how many companies actually run try-for-fit MRP regens prior to accepting short lead time customer orders.

    Roger Corbin
    North Point Associates, LLC

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