When implementing S&OP, it can be hard to know where to start. If you are new to S&OP and currently don’t have a process, you might be hesitant to embark on a significant time-consuming project to find a process that works for you. If you already have one in place, but you need to improve some parts or the entire process, the idea of deconstructing and changing an established process may seem difficult, complicated, and not worthwhile.
The reality is that implementing a new S&OP process does not have to be a significant time investment and will not alter everything in your business overnight. Starting focused but small, and with what you have today, you can start to make these changes in a controlled environment and perfect the process before it affects the whole company.
When starting to implement a new S&OP system, pick one piece of the business to apply the new system to. This will be a product family that is tied to a constraint.
This pilot family should:
not be too big
not be all of the business
have some issues or challenges within it
not be too complex
The benefits of starting implementation with one family are that it is a quicker learning process, it will not agitate the whole business if challenges arise, and once the process is running smoothly for one family, there is a seamless rollout to the rest of the business.
Once you’ve selected your pilot family, you can begin pulling together your data for that family. To do this, use whatever data-collection system you currently have in place – if your production plan is currently on a corporate spreadsheet, use that! This is a good starting point to organize at a family level.
Compiling the data for the family means you can start discovering the story of that family. At DBM, we use the 5-Section Sheet to easily find the story. This layout forces you to put all the data together and check if it’s balanced. This includes your bookings, shipments, backlog, supply, and inventory. This pulls them all together to see how the plans that you have come together.
This will pull together a story, which may not be one that you like or your “ideal” story. You are trying to see if this story lines up with what you are trying to do in the business, and you can use this to identify any risks in the plan going forward. This is the beginning of your new S&OP process!
Using a monthly process, you can then iterate to improve your process. Each month, compare the actuals to your plan and see the results. Then, reassess your plan and assumptions, and any risks to the plan, then make changes to improve your performance in upcoming months. You can also evaluate your accuracy month by month, to see if you are improving accuracy and decreasing volatility.
This can also help you identify the source of your volatility- is it on the demand side, or is it internal on the production side? This determines where you need to start with improvements. Should I spend time on improving my forecasts, or do I need to spend time improving supply chain and production planning? The process will help you prioritize, ultimately improving performance in the upcoming months and capturing the true value from S&OP.
Once this process has been set in place for the initial family, you can then expand the process to other families in the business. It is recommended to only add a few families at a time, so that it does not become overwhelming. You will likely have family data to clean up to ensure it is accurate for the S&OP process. As you get familiar at understanding the story of each family, you will be able to expand to other parts of the business.
We highly recommend reading our Effective S&OP Series to learn more about the essential qualities of a good S&OP process and how you can do that within your process.