Why Measurements Matter in Sales & Operations Planning (S&OP): 3 Levels You Can’t Ignore

If your Sales and Operations Planning (S&OP) process isn’t delivering the results you expected, whether that’s tighter inventory control, improved service levels, or greater confidence in your plan, you’re not alone.

The challenge almost always comes down to one thing: measurement.

You’ve probably heard the phrase: " You get the results you measure."

But in S&OP, it’s not always that simple. There’s rarely a straight line between what you measure and the results of your plan.

So how do you know if your S&OP process is working, and more importantly, what to change?

The answer lies in understanding and applying the three levels of S&OP measurement.

3 Levels to Measuring your Sales & Operations Planning

In order to get results, you need to know that you have the right process in place, be able to measure its effectiveness, and finally drive results. 

Think of it as a building block approach:

1. Process – Are we doing the right things? 

2. Effectiveness – Are we doing those things right? 

3. Results – Are we getting the outcomes we want? 

Level 1: Process Measurements

• Use an S&OP assessment to check the basics of your process. We built one called the Clarity Compass. It will help you identify what aspect of S&OP you need to work on first.

• Use a meeting scorecard to make sure your monthly process is happening as it should. I recommend focusing on three areas.

1. Participation:

• Are the right people identified for each meeting and are they engaging?

• Look for consistent misses from parts of the organization

• Is accountability and responsibility clearly identified and communicated?

• Is there a need to address engagement with more education?

2. Data:

• Is everyone equipped with the right data for each meeting?

• Is it provided on time to support preparation for each meeting?

• What data areas are missing?

3. Schedule:

• Do meetings happen when scheduled, or are they consistently moved, or cancelled?

The purpose of the meeting scorecard isn’t to call out people that aren’t doing their part, but to identify where leadership needs to hold the proper accountabilities and provide the right tools and support to enable the process.

Level 2: Effectiveness Measurements 

Once you've got your process in order, you can now ask yourself: "Are we getting better at what we’re doing?"

• Establish tolerance bands for key metrics like bookings, shipments, and production

  
  

  

• Track whether you’re inside or outside those bands over time:

  • If you’re outside, dig into root causes

  • If you’re inside, start tightening the bands

    
    

The effectiveness measurement does two things:

1. Shows if you are getting better at your planning and forecasting, and if you are more in control as you are able to set your plans.

2. Help you identify what levels of buffers you need to put in place to manage the unpredictability of your plans. The greater the tolerance levels the greater the buffers.  

Level 3: Results Measurements

Finally, result measurements are the Return on Investment (ROI) that management is looking for when starting an S&OP implementation or improvement project, such as:

• Service levels (request date and promise date) 

• Inventory turns 

• Fulfillment rates 

To measure your results,

• Clearly define the measurement and document how they are calculated. 

• Take a baseline when starting to implement S&OP.

  • It will take some time for these to change, but establish the baseline and methodology early. 

• Assign accountability and responsibility for the measurement, so that the results drive the appropriate actions within your organization.  

• measure these by product family, not in aggregate. This will link your decisions and actions with the results.

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In our video, Why Measurements Matter in S&OP: 3 Levels You Can’t Ignore, you can learn more about how to measure your S&OP.

For more strategic insights, check out our series, Good S&OP on Youtube, to discover how you can create and sustain an effective S&OP process.

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