Introduction
S&OP is the process for allocation of resource within the firm .Every firm from the sole trader to the largest multinational has a S&OP process.
It may be called Enterprise Planning, Integrated Planning, Integrated Enterprise Planning, Business Planning, Integrated Business Planning, Advanced S&OP, Executive S&OP. It may be called nothing at all, just the way we do things around here. What ever it is or is not called caring for your firm’s unique process is critical for both efficiency and viability.
A Consumer View
As consumers, we all care about S&OP. We walk (or click) into a store and expect the shelves to be filled with the products we want, at the price we expect and no queues at the checkout. But our expectations are such that we only care to mention it when there are failures. Within a firm it is also easier to illustrate S&OP by means of failures. It makes for a better story.
S&OP in a nutshell
In the 17th century, the only source of nutmeg and mace were a few small islands near Indonesia. The valuable spices were transported half way around the world for sale exclusively in Amsterdam.
In Amsterdam, an analysis of the product line profits, resulted in a plan to cut down nutmeg trees and replace them with mace trees.
This was spectacular failure of sales and operations planning [if you forgive the anachronism, it was some three hundred years before the term was created]. Nutmeg the spice is a seed that grows covered in a bright red lacy outer layer of mace in the fruit of a nutmeg tree.
You may think that this was only an issue because of the long hazardous line of communication across war zones and pirate infested seas and the obsessive secrecy of the spice trade. However consider the story that Sheryl Sandberg COO of Facebook [Mission statement “To give people the power to share and make the world more open and connected”] told on a recent Masters of Scale Podcast. https://www.entrepreneur.com/topic/masters-of-scale
“I don’t love PowerPoint presentations in meetings for me, because I want them to be more discussions. So, I kept saying, “Please don’t bring PowerPoint, please don’t bring PowerPoint” at Facebook for years but everyone kept bringing PowerPoint. So, one day, probably more frustrated than I needed to be, I just said, “No more PowerPoint at any of my meetings.” So, then a few months later, I was getting ready to get on stage at the global sales conference—so all of our global people from around the world—and I looked at someone who was standing there—my friend Kirsten, who was in HR at the time—and I said, “What are the things you think they’re going to ask me about?” She said, “Well, everyone wants to talk about the PowerPoint thing.” I said, “What PowerPoint thing?” She said, “You know, the no PowerPoint thing, it’s very hard to do client meetings without PowerPoint.” And I said, “What ‘no PowerPoint’ thing for clients?” And I realized that my instruction, “No PowerPoint,” got translated through this large organization as Sheryl says, “No PowerPoint in client meetings.” So I got on the stage and I said, “One, I’m sorry, I didn’t mean that. Two, it is on me that if you all thought that, and that was a stupid idea, you need to speak up and tell me. Of course, you have PowerPoint with clients. Clients love PowerPoint. I don’t.”
Reducing the Nutmeg moments
All firms have these “nutmeg” moments when sensible decision based on a limited set of assumptions in one part of the firm have unforeseen but foreseeable negative consequences in another. The goal of effective Sales and Operations Planning is ideally to avoid such discontinuities or at least learn from them and ensure that they are never repeated.
The S&OP challenge is that in a large complex organisation the causes and effects of “nutmeg” moments can be separated by both time and place and are therefore difficult to isolate.
Building Dreams and Delivering Purpose
However, S&OP is not just reducing the negative consequences of decisions but is a fundamental part of the creative business processes. Antoine de Saint-Exupéry [The Wisdom of the Sands] expresses it poetically” “If you want to build a ship don’t drum up people to gather wood, don’t assign them tasks and work, but rather teach them to yearn for the vast and endless sea”.
If you care about the firm’s purpose, if you yearn for the vast and endless sea it is only through the S&OP process, that is assigning tasks and work that you can deliver that purpose. Without S&OP a purpose is merely a dream.
Another man’s purpose
Each firm’s S&OP process is unique and you cannot prescribe some generic approach.
In this blog, I draw on examples such as the sole trader caricaturist and the Lyons Tea Shops to illustrate features of S&OP processes. You have no need to care for the examples themselves but without some back story the S&OP process has no context.
I have found that talking about S&OP for firms in radically different industries to my own helps me see new things in my own by way of contrast. I hope that in exploring these examples you will find innovative ways to look at the S&OP you care about.
Image of Nutmeg & Mace from http://www.theculturalvoyager.com/grenada-the-tropical-spice-isle.html