December 16, 2015 Duncan

Do Executive Management Teams Get The Information They Need To Make Good Decisions From Their S&OP Processes?

Maybe it’s because many S&OP processes (or IBP / SIOP etc.) have been set up by people with a detailed operational planning and control background rather than by people with a wider business perspective that we see so many massive S&OP ‘decks’. Huge effort goes into assembling 80, 90 or even 100 page documents full of data that the creators believe the leadership team will be interested in. Charts of capacity utilisation by machine type, inventory projections by pack size, forecast accuracy reporting etc. All data that is potentially useful at the right level of the business (perhaps in the Supply Review meeting), but not default information for Executive Management. That team needs to make decisions about particular business issues that are cross-functional, complex and important. To do that job well, the Optimisation process (Integrated Reconciliation as many know it) needs to set the overall business context, and then provide enough detailed information about each individual issue that needs to be resolved that meeting for the leadership team to make a good decision.

So the standard ‘deck’ whether on paper or electronic should provide the context, and be supported by specific ‘issue’ presentations. For a standard ‘deck’ I would look for between 10 and 15 pages circulated as a pre-read to cover the following:

  • Assumption changes, and decisions already taken that drive the latest forecast
  • New issues arising
  • Decisions taken in each process step that are not yet showing in the numbers
  • Summary of risks in the numbers and opportunities yet to be tapped
  • Latest business forecast including P&L, balance sheet and cash
  • External changes and implications summary
  • Strategic dashboard (Balanced Scorecard etc.)
  • Business issues tracker/radar chart showing all the issues being worked on, and highlighting decisions to be taken this meeting

Having set the context in advance, the Executive S&OP meeting can focus on the two or three big decisions that need to be taken that month. Working their way through presentations on individual issues that establish the facts, record different opinions, provide root cause analysis, identify and evaluate potential different response options, and recommend a preferred option. Not wading their way through a 100 page deck trying to spot the issues.

As an old Chairman of mine once said, “By the time the Board had worked out what the issue was, we were too exhausted to do anything about it.”

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