S&OP… IBP… WTF?

S&OP… IBP… WTF?

 

While we have been intimately involved in the creation, development and use of these types of processes over the last 20 or more years, we think the name game is getting out of hand.

Of course, labels and terminology are fine for people who know what they mean (consistently, in both context and content), but jargon is always dangerous.  And it’s the dependence on this jargon, and the confusion it causes for others, that we have a problem with.

Sales and Operations Planning (S&OP) set out to do just that when it was first developed: balancing the demand and supply plans for a manufacturing business; with a predominant objective of driving stability and efficiency.  But over the years, more and more things have been bolted onto this demand and supply balancing process to the point where, in many organisations, it is collapsing under its own weight.

In an attempt to reposition the process, Integrated Business Planning (IBP) was born, as a more all-encompassing label.  The problem is not in the intent, but in the execution.  Most applications of IBP are built on the same basic S&OP structure (in fact, IBP is often referred to as ‘advanced S&OP’) and many applications are driven with the same supply chain bias.

As Edward de Bono says:

It’s no wonder that three of the biggest barriers to getting S&OP and IBP established are that: (i) people think it’s a functional supply chain project, (ii) it’s difficult to get sales, marketing, finance – basically anyone outside of supply chain – interested, and (iii) while leadership from the most senior levels is required to drive the necessary environment and behaviours, most senior executives cannot see the link between the ‘process’ and their strategic objectives.

The problem is not so much with the labels themselves, but with the many definitions and resulting mismatch between the various interpretations and the business expectations.  This is particularly acute when operational supply chain processes are touted as a way of executing strategy.

Let’s let go of the baggage of the old jargon – what we need is ‘joined-up decisions’.  Sure, it’s another three-word descriptor, but it’s not another TLA; we will never abbreviate it to JUD… we promise!  And we’re sorry if it sounds a bit like consultants b?//$#!t – it may well be, but it can’t be any worse than ‘Integrated Business Planning’; that just sounds like it was produced by one of those random management-speak generators!.

Joined-up decisions gets to the heart of what’s needed to align the many moving parts of a complex organisation and focus on the decisions and actions to progress towards your goals. Connecting across organisational boundaries, linking strategic choices and tactical actions, and integrating long, medium and short-term horizons is critical to this alignment.

Some of you will be thinking “well that’s what ‘S&OP’ is all about, you dummy”.  But that’s because it’s the way you understand it.  Unfortunately, the label and, more problematically, the whole way these things get communicated and ‘taught’ (often in ‘classroom’ type settings) are great antidotes to insomnia and often don’t engage the audience or explain the subject in a way that motivates people to change their attitudes or behaviour.  Stop any man or woman in the street – or more to the point, any salesperson in the field, marketer or accountant in the corridor, or operations manager on the shop floor – and ask them “what does ‘S&OP’ do for you?”.  If you do get more than a blank look, it will probably be something about ‘spreadsheets’ and ‘meetings’ accompanied by a groan.  If ‘decisions’ doesn’t make it into the response, you’ve got problems.

Still not sure that adding yet another name to the mix will help?  Fine.  But don’t let the use of an existing label stifle, or completely switch-off, your own thinking and creativity about how to adapt this, communicate it, and make it stick in your organisation.  Be particularly wary of those faithful crutches for the lack of creative thinking – ‘best practice’, pre-developed ‘templates’ and ‘one-size-fits-all’ solutions that often accompany these processes.

Come at the subject from a different angle – Joined-up decisions; taking action to make your ideal world your real world, faster.