Page 371 - Orlicky's Material Requirements Planning

350 PART 3 Managing with the MRP System

DISCOVERIES LEADING TO BREAKTHROUGH S&OP

We have summarized the breakthroughs in S&OP knowledge and demonstrated the
sequence in which they were discovered (Figure 20-12).

Discovery 1: S&OP as the great unifier. The desired outcome was one view or a single
set of numbers, which was the considered antidote to multiple sets of numbers.
This pursuit of the Holy Grail created dysfunction in the organization.
Discovery 2: S&OP as the great reconciler and integrator. It is not possible to get an
agreed-on latest view unless the different views are reconciled. There must be
recognition that different views add value to the process and provide a greater
understanding of the latest business view. In addition, when multiple markets
and supply points are involved, the S&OP process has to be integrated in a time-
ly fashion. These two factors are the reason behind why we changed the pre-
S&OP term to integrated reconciliation, that is, reconciling different views across
functions, countries, and regions.
Discovery 3: S&OP as the great aligner. Reconciliation involves making apparently
conflicting things compatible or consistent with each other. In the early days, we
tried to align S&OP with the budget only. Unfortunately, this led to behavior sup-
porting a 12-month view at the beginning of the fiscal year but became shorter
term as the fiscal year progressed. The breakthrough came with S&OP as the
great aligner; this was when we realized that it must be aligned beyond year end.
The future involves the product portfolio and the strategic intent of the business.

FIGURE 20-12
Evolution of Strategic Intent and
S&OP from left to Business Agenda
right.
S&OP
“The Aligner”

S&OP
“The Reconciler”
Single Number S&OP
“The Unifier”

Multiple Sets
of Numbers

Evolution of Sales and Operations Planning