Page 378 - Orlicky's Material Requirements Planning

CHAPTER 20 Sales and Operations Planning 357

portfolio and strategic intent. These businesses are maximizing the potential of S&OP by
increasing profits and generating cash.
The foundational benefits of improved customer service and lower working capital
are still important, but today, more advanced companies have built on a robust opera-
tional foundation and now use the latest view from S&OP to generate the quarterly fore-
cast for corporate headquarters. These businesses no longer have annual budgeting as a
separate exercise. They also demonstrate strong cross-functional behavior throughout the
organization, and executive management is focused on long-term sustainability.
The evolution of S&OP, by examining it as a series of breakthroughs, has provided
us with knowledge of what is important. Moreover, by understanding the big picture, we
can learn the optimal way of successful implementation. S&OP evolving through time is
shown (Figure 20-18).
Evolution from multiple sets of numbers to an S&OP process aligned with the future
business agenda has taken place over 20 years. Unfortunately, some practitioners have
tried to implement S&OP in the same direction as its evolution—left to right. They
believe that their S&OP process eventually will align with the business and strategic
agenda, but this usually takes far too long, and senior management loses patience. More
often than not, the process becomes associated with one of the evolution steps and does
not progress. A common problem is the objective of a single set of numbers when execu-
tive management wants to see a range—including highs and lows. Management then
treats S&OP as a sideshow and sees S&OP the unifier as a false promise.
We believe that the powerful message in S&OP evolution is that you align the
process with the strategic agenda and future portfolio from the outset. We have experi-
ence with many clients showing that you can approach any S&OP implementation,

FIGURE 20-18
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