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Overcoming the “Catch 22” of Sales and Operations Planning Implementation
Joe Shedlawski, CPIM
R.A.Stahl Company
• Introduction
• Why Engage Top Management
• The Elements of Successful S&OP
• What's the Challenge (Catch '22’)
• How to Engage Top Management
• Discussion
Agenda
Introduction
A catch-22 is a paradoxical situation from which an individual cannot escape because of contradictory rules
What is a Catch 22?
Why Engage Top Management?
Top Management’s Role:
“Keep the Herd Moving, Roughly West”
Energy Alignment
Accomplishment Accomplishment
Executive S&OPA process to raise and reconcile
disagreement/conflict, agree upon, & communicate THE company game plan
Sales/Marketing(Units or $ by Family)
Operations(Units/hours/
Material)
Finance(Gross Revenue)
Product Development(New Product Issues)
Implementation Alternatives
Hard Benefits
• Customer service UP• Inventory DOWN• Obsolescence DOWN• Freight cost DOWN• Order lead times DOWN• Supplier lead times DOWN• Time to launch new products DOWN• Plant productivity UP
Soft Benefits
• Enhanced teamwork• Improved communications – institutionalized • Better decisions with less effort and time• Better $$$ plans with less effort and time• Greater accountability and control• Enhanced execution of strategic plans• Window into the future• Energy alignment: Keep the herd
moving roughly west
The Elements of Successful Executive S&OP
•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Months•Middle Mgt. Responsibility
•How Much?•Rates•Market Facing Families•The Big Picture•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Responsibility
Volume
Mix
Demand Supply
ProActive Behavior
ReActive Behavior
Top Management’s Place
What’s the Challenge?
Keeping that herd moving roughly west is more of a cultural challenge than a
technical one!
• Interpersonal relationships reflect the culture of an organisation
• The sum of those relationships defines the organisation’s culture
• These relationships reflect a web of implicit and explicit agreements throughout the organisation
Culture
Success with Executive S&OP consists of:
• 10% technology• 30% process definition and discipline• 60% culture change
Research (AMR study, 2010)
Cultural Changes:Pre-S&OP
• Lack of involvement by Top Management
• Acceptance of poor data
• Silo mentalities that inhibit interdepartmental collaboration
• Reactive decision making
• Post-S&OP• Inter-functional
collaboration, with open trust between departments
• Data-driven decisions• High level of cross-
functional discipline Proactive approaches to demand and supply plans
* How S&OP Changes Corporate Culture: Results from Interviews with Seven Companies
Stahl/Mello; Foresight Journal: Winter 2010
In Executive S&OP, it’s necessary to voice disagreements! Management must:
• Create a culture that allows the Ugly Moose to be put on the table -- so that they can completely and effectively resolve disagreements and conflict, setting proper:– Policy– Strategy– Risk assessment– Performance measurements
Before it’s in the MIX Space!
Top Management’s Role
• Disagreement has two parts:– Substantive issue– Emotion behind that issue
• Disagreement becomes conflict when the emotion is not completely addressed
• Lasting conflict resolution must deal with both elements of disagreement
• Doing that effectively can be learned:– With a motive to do so and
– A framework on which to work
Conflict Resolution *
* “Getting to Resolution” Stewart Levine
• If Top Management does get involved from the very beginning:– There is risk of personal or organisational discomfort that
comes from changing the culture– BUT that is necessary to bring about lasting results
• If Top Management does not get so involved and committed:– There is less personal risk of disruption– BUT there will likely not be any substantial business
improvement
Top Management’s Catch 22
* Overcoming the "Catch 22" of Implementationby Robert A. Stahl and Joseph F. Shedlawski
Foresight Journal Spring 2012
How to Engage Top Management
“A detailed plan may be comforting, but it’s not a strategy.”
“The Big Lie of Strategic Planning”Harvard Business Review – Jan/Feb 2014 by Roger Martin
The Problem: Executives know that strategy is important. But almost all find it scary, because it forces them to confront a future they can only guess at. Strategy making is uncomfortable. The Solution: Reconcile yourself to feeling uncomfortable, and follow three rules:
1. Keep it simple2. Don’t look for perfection3. Make the logic explicit
• Identify and enlist an Executive Champion; someone with executive influence, willing to “put skin in the game”
• Connect the hard benefits of executive S&OP to successful implementation
• Follow a path of low risk/low cost• Obtain quick results to build confidence • Provide feedback on progress/success• Generate local ownership and enthusiasm
Engage Top Management
Low Risk Implementation Path
1 2 3 4 5 6 7 8 9Months
Bu
sin
ess
Imp
rovem
en
t
Phase IPilot Demo
Phase IIExpansion
Live PilotDemonstrationGo/No-Go #2
Phase IIIFinancial
Integration
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Low CostLow RiskHigh ImpactQuick Results
During Change: Immerse in the Detail• Lead educational process• Manage cultural changes• Assure proper resources• Approve procedures• Insist on clear targets (goals)• Participate• Measure progress
Leadership’s Role
Ongoing: Remove from Detail• Insist on meaningful participation• Insist proper homework be done• Raise and resolve disagreement and conflict• Make clear decisions• Hold people accountable to process and to
results• Encourage and expect realistic improvement• Lead management development• Measure performance
Leadership’s Role(Continued)
• Mandate the fundamental concepts and principles of executive S&OP
• Demonstrate a willingness to air disagreement
• Assure resources to develop necessary and appropriate tools
• Track progress – process discipline, cultural, key performance measures
• Reward success
Corporate Role*
* S&OP Principles: The Foundation for SuccessRobert A. Stahl and Thomas F. Wallace
Foresight Journal Fall 2012
Discussion
