Executive S&OP: Best Practices
Updated: Jan 13
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Many organizations say they have an S&OP process, but the critical question to ask is whether it is effective. With the work and time invested into S&OP, you need to see results.
A good and effective Executive S&OP process is one where the person who is managing the business (Senior Executive, CEO, President etc.) is also leading the S&OP process. If this isn’t happening, the business needs to figure out why and change.
The very definition of S&OP is based on this principle:
S&OP is a management decision making process that provides management the ability to strategically direct their business to achieve a competitive advantage on a continuous basis.
Without executive engagement you are not unlocking the full potential for Executive S&OP as a decision-making management process. The following questions are a quick litmus test for Effective Executive S&OP:
Is your Senior Executive engaged? Do they require the monthly Executive S&OP meeting?
Does your team make decisions in the S&OP meeting (It’s not a report out)?
Does your S&OP presentation cover the entire business in 1 hour to 1.5 hours?
Does everyone walk out of the meeting on the same page and know what they need to do to execute the plan?
If you answer “yes” to the questions above, it is very likely you have an effective S&OP process. If the answers were “no,” what are the potential stumbling blocks to getting there.
In this article, we will briefly identify the key characteristics that enable executive engagement so that you can have a truly effective S&OP process. Over the next several weeks we will dig into each of these areas in more detail.
Best Practices for Effective Executive S&OP
What this looks like: The business is segmented into the right elements to support decision making. All the decisions (flow rate, buffers, accountability) are set by family.
Key points: Families are segmented by constraint. The families are consistent across sales and operations. Families are discussed in the same units of measure throughout the S&OP presentation.
What this looks like: The monthly process is regular and purposeful: a plan is created, then executed, results are assessed, then next month, the plan is redone or adjusted. The monthly cadence supports accountability and forward planning across the planning horizon.
Key Points: The planning process should move from unconstrained demand, to supply, to constrained demand, and end with the Executive meeting. The plan should be well documented and understood by the team.
What this looks like: As the culmination of the monthly process, the Executive Presentation – where the decisions are being made – is where the executive intersects with the process (prior to this being run by other resources). The structure and format must provide a clear “story” for the business (by family) in the past, present and future with supporting data.
Key points: The presentation follows a standard format that covers the S&OP plans family by family for Sales and Operations.