Page 377 - Orlicky's Material Requirements Planning

356 PART 3 Managing with the MRP System

FIGURE 20-17
Managing
Small-business New Activities
S&OP.
the Portfolio
and Demand
Integrated
Reconciliation
of the Business

Managing
Supply and
Resources

The first step is a combined managing new activities, portfolio, and demand review;
this output is analyzed in a managing supply and resources step. The results of this eval-
uation then are discussed in the third step—integrated reconciliation of the business.
Most of the players in the first two steps attend the third step, which is normally chaired
by the managing director or owner of the business. The three-step process is also applic-
able in global, regional, and country environments. In businesses such as these, there are
developed markets, which probably need the five-step model. There also are developing
markets, which are likely to need only a three-step process. Managing the S&OP transi-
tion from developing to developed market is important.
Our recommendation is that smaller businesses should seek to engrain the culture
of a formal S&OP process at an early stage of growth. New people joining the business
as it grows have little choice but to act in a joined-up manner; new recruits with an incli-
nation to functional behavior will recognize the danger of this silo optimization behavior
if there is an existing process for integrating the business with S&OP. Another reason for
implementing S&OP early is because implementing when the business has grown large
enough to exhibit functional behavior will be more difficult. Developing a positive cul-
ture is one thing; making a cultural change is significantly more difficult.
A good analogy is that of training a climbing rose around an archway or up a trel-
lis. Putting in the framework (i.e., arch, trellis, or S&OP framework) while the rose is
small will enable the growth to be managed in the right direction with minimal training,
pruning, and tying back of loose branches. Putting in the framework when the rose is
mature is altogether more difficult. It involves lots of pruning, training of wayward
branches going in opposite directions, many scratches and heartache, and time.

SUMMARY

This chapter traces the evolution of S&OP from its inception in the late 1980s, when the
primary objective was a medium- to long-term stable production plan, to the twenty-first
century, when several successful businesses are using it as a dynamic business perfor-
mance management process that enables and tracks their progress against their future