The DBM Approach
At DBM Systems, we understand that each organization is unique with its own set of challenges and circumstances. We do not believe in a rinse and repeat solution but we do provide a consistent approach.
Read on to learn more about our approach to performance metrics, and our standardized presentation called the 5-Section Sheet used to condense and display S&OP data quickly and effectively.
The 5-Section Sheet
Critical to S&OP success is being able to present data clearly that gets to "The Story". We have been using the 5-Section Sheet over the past 10 years to help companies do just that. To get beyond the data to understand what and why something is happening so they can make decisions.
The 5-Section Sheet organizes data in a format that fits almost any business model. There have been a few cases where we had to add some extra data, but the core data in this presentation has worked for businesses who build to stock (BTS), build to order (BTO), engineer to order (ETO), manage time-based services, manage large projects, or all of the above.
Why is it called the 5-Section Sheet? Well, because it has five sections: Bookings, Backlog, Shipments, Inventory and Production. These data elements are core to balancing demand and supply and managing the buffers in between. Using this standard format makes it easier to move from family to family or business to business in large multi-divisional organizations.
To learn more about the 5-Section Sheet and how it is used check out Duncan's book; Sales and Operations Planning: How to Run an S&OP Process Everyone Understands.
The Iterative Approach to Change
Get it half right the first time!
Rather than spend an inordinate amount of time designing the prefect solution, we believe you should make your first attempt as soon as possible and learn from it. Let’s assume you get it 50% right the first time – that would mean you also got it 50% wrong. Now on the second iteration if you fix 50% of the 50% that was wrong
you will now be 75% right. Following this logic, in the next iteration you would be 87.5% right and then 93.75% right, which may be as good as it gets.
We have found a number of advantages with the iterative approach. It is faster, people are engaged and take ownership, it fits with the People, Process, Technology continuum, and the right level of detail is dealt with at the right time.
In our approach to implementing S&OP, the data build is the first iteration. A few people are involved in putting the data together for the simulated S&OP cycle. This typically uncovers a lot of data issues that need to be addressed. The on-site class, where we go through a real S&OP cycle with the pilot family is the second iteration. The final iterations are the next few months of the actual S&OP process for the pilot family. The result is a solid S&OP process that can then be rolled out to the rest of the business.
Three Levels of Metrics
Process, Effectiveness, Results
Sports teams don't win championships by just deciding to play like champions. It takes time. You need the right players. You need the right plays. You need to teach everyone so they know the plays and their role so you can win as a team. Then you need to practice.
S&OP is really no different. You want S&OP to deliver results: reduced inventory, better customer service, increased market share, but these results take time. Unlike sports where wins and losses give immediate
feedback, it is difficult to measure progress on your S&OP journey. How do you make sure you are on the right track? There are three levels you need to look at: Process, Effectiveness, Results
First, you need to measure process. Are you doing the right things? This should be done with an assessment. You have to start by knowing where you are, what is good, and what needs to improve. As you continue on your S&OP journey you will want to revisit the assessment to make sure you are still on the right track.
Secondly, you need to measure effectiveness. Are you getting better at
doing the right things? If inventory accuracy will help you improve your customer fill rates, are you measuring your improvement as part of your monthly process. Effectiveness measurements are the ones that you should be using for your monthly feedback on how your improving. The next best thing to measuring wins and losses!
Finally, you need to measure results. Results are the reason why you are doing S&OP; inventory reduction, improved customer service. Start with baseline metrics for these KPIs. Then measure your progress along the way. Remember though, these are typically the last to change, and you will only see improvements when your S&OP process is linked with the rest of your planning processes.
People, Process and Technology
Effective Sales and Operations Planning requires all three but it starts with people. We have seen cases of technology driven projects that were over budget, late and under delivered in terms of business results. Automation the wrong processes without organizational alignment just doesn’t make sense.
We break the maturity of the S&OP into three zones, moving from the least mature in Zone 1 to the most mature in Zone 3. The Assessment Tool (which is part of our implementation approach) will identify your process maturity and determine which zone you are in. While you need People, Process and Technology in each zone, the focus changes as your process matures.
Zone 1 – The focus is People. In Zone 1 you need to identify the roles and responsibilities and educate the players in the S&OP process. You will need a starting point for the process and some technology to support it, but the important part is that the technology cannot get in the way of making progress on the People.
Zone 2 – The focus is on Process. In Zone 2 you are improving and refining the
process based on the lessons learned in each cycle. There will be people and technology issues to address but most of the energy goes to process improvement.
Zone 3 – The focus is on Technology. In Zone 3 you have a mature working process and it is time to look at how to apply technology to make it more efficient and deliver additional capabilities.