Overcoming S&OP challenges: common mistakes and how to avoid them?

S&OP is a must for having a stable growing business. But we often see that common mistakes are made while attempting to implement S&OP (both automatization tools like SAP IBP for S&OP and the business process itself).

Today we’d like to share our experience with you to help you avoid mistakes.

According to Gartner, there are 5 S&OP maturity stages. Your company is doing this way just like a child is learning how to eat, walk, speak, and finally becomes an independent grown-up. If you’re a business owner you might be dreaming of the moment that your “child” is grown-up and you don’t have to perform daily micro-management solving unexpectedly coming issues. 

Here are these 5 stages in our vision:

1. Reactive. A company reacts to external signals with a delay. The focus is on operational processes and short-term sales. Each department works as a separate unit. 
2. Forecasting. Simple IT tools used to build plans. The demand plan and production plan are built in advance and discussed between key departments e.g. production and sales.
3. Integrated processes. Advanced IT tools allow integrated planning among sales, marketing, procurement, and production departments. Quick replanning becomes possible. The focus is on both tactical and strategic horizons.
4. Collaboration. Business partners can access planning data, IT tools support data exchange, and collaborative planning scenarios. Scenario modeling with P&L evaluation, and finance department involvement.
5. Orchestration. Integrated planning for all the supply chain elements, including business partners, and real-time data exchange. High involvement of TOP management and Finance Director in strategic decision evaluation. Supply chain digital twins and advanced IT tools. 

On emerging markets, companies are mainly on reactive and forecasting stages.
Stable markets and global international companies are mostly on stages 3-5, where 5 is reached only by real domain Champions.
Ok, Google, so what’s the difficulty? What prevents companies from implementing perfect S&OP and being more effective today?

• Poor communication among departments and not synchronized KPIs.

• No tool providing one single version of truth and clear responsibility of concrete employee for the planning results.

• Low attention to data quality.

• Not readiness to face business process change and low involvement in S&OP meetings. 

• Poor preparation for S&OP meetings.