Steelwedge Software

For S&OP to be successful, do all functional areas of organization need to have the same goals/objectives?

Posted: 07 Nov 2010 09:31 PM PST

S&OP presents many challenges to business enterprises to implement and sustain a world-class S&OP process. One common thread is the need for effective collaboration. What sounds simple, in general terms, is often difficult when the details come into play. Details may include different goals and incentives for disparate functional groups and individuals and inadequate tools to facilitate meaningful collaboration. Functional groups have unique goals and performance indicators. Sales may be driven to achieve high revenue targets while the Operations group may focus on minimizing labor costs and inventory levels. Finance seeks to manage cash flow, minimize costs and maximize profit. Units of measure may differ from one functional group to the next. Some plan in units, others in dollars. Forecast horizons can vary from current quarter to planning horizon to fiscal multiple year projections. The key point here is NOT that all groups and individuals should share the same focus and effort. To the contrary, best practice enterprises heavily leverage the unique talents of their employees. Sales sells and Operations drives the supply chain. That said, it is critical that the enterprise has a single, consensus plan that is feasible and all parties agree to execute against that plan. Companies that fail to achieve one agreed plan, are prone to falling well short of optimal inventory levels, customer service targets, availability of desired inventory and company financial goals. A less tangible, but very important by-product of a missing consensus plan is a culture that pits individuals and groups against one another rather than acting as a cohesive team. From my work at Steelwedge with several clients, it's been very pleasing to see how the Steelwedge tool promotes cross-functional interaction. Users exchange quantitative and qualitative inputs in an environment that pulls together information in a way that had not previously been…

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