 |
 |
 |
 |
 |
 |
 |
Doctor's Note (November): Are You Getting Your Money's Worth?
Based on a recent survey, the average company spends almost 50 person-days a month running its Sales and Operations Planning (S&OP) process. At a nominal employee cost of $800 per day, this is almost $40,000 per monthly S&OP cycle. The question that management needs to ask is; “what am I getting for this?” The answer is not simple. Well run S&OP processes avoid problems, but companies reward people for fixing problems and not for avoiding them. Given the pressures on performance and costs, employees tend to focus on solving the current crisis and avoid tasks that have no immediate and visible payoff.
Given that routine tactical planning is necessary, the challenge is how to find the 50 person-days each month for an activity that sometimes has no perceived immediate benefit. It is true that most people will gladly give you 15 minutes of their time. A couple of hours are of course a different matter! We have a better chance of getting the required time for planning if we can divide the required work into shorter increments. How do you do this?
The key ingredient is to “bring the data to the point of decision making.” It is not sufficient to make the data available, or provide a platform so that a decision maker can access it – rather, the data has to be provided in a way that can be readily consumed by a person and used immediately. The entire cycle of evaluating the data, thinking about alternatives, and making a decision needs to be less than 15 minutes for the typical person. If it is going to take longer, the task will likely be delayed.
This was brought home to us recently at a client company. The relevant supply chain planning data has been available at the client in a central repository for quite some time. However, very few users would proactively access the data when they needed it. Rather than spend the time, decisions continued to be made based on “judgment” and outdated information. However, once we created an infrastructure that delivered the relevant data on demand through the web, there was a dramatic (and unexpected) change in the extent to which people used the information.
We have seen similar results in collaborative demand planning. Participation is much higher if a process is set up so that folks can provide overrides throughout the month. This allows them to divide the work content into small slices that they can fit into their schedule. Traditional processes that require all overrides to be handled in a day or two within a structured demand planning cycle are notoriously weak in participation.
As employees feel increasingly pressured, the S&OP manager must look at creative ways of getting the necessary time from the participants. In our experience many small tasks are easier for people to digest than a few large activities.
