While browsing the website of a supply chain planning solution rated “leader” by Gartner, I came across the workflow below, designated as a reference for IBP best practices. I won’t give the name of the solution in question for charity’s sake, but you should know that it’s very expensive and has been adopted by some very large companies.
An obsolete monthly sequence
How, in 2025, can we still promote a sequence that takes place over a full month, with decisions to be made at the end of the month on the basis of information from five weeks ago?
Does anyone realize that these days, in the space of a month, world trade conditions can change completely, and that the environmental conditions of a company can be turned upside down?
Apart from extreme geopolitical turbulence, competitive situations, the failure of suppliers or customers, or the vagaries of new product launches mean that within a month, at the time of the management review, decision-makers may find that the data submitted to them is obsolete.
What’s the first thing an executive committee has to do when it realizes it’s being asked to make decisions based on obsolete data? It’s usually to postpone any arbitration! In our experience, the one-month sequential S&OP is a decision-making-preventing machine…
Gartner proposes a similar sequence, or even worse, by inserting a “Pre-S&OP” meeting before the Executive S&OP.
The advantage of the Gartner diagram, however, is that it describes an iteration, without specifying that each stage takes a week. The diagram even describes iterations in each of the stages, within an overall iteration of the five stages, fed by a financial iteration. There’s nothing to say that these different loops can’t run faster or even be constantly spinning. All these iterations are a bit head turning, don’t you think?
There was a time when data was not available
I’m an early adopter of S&OP. I introduced this process at the end of the 80s to the companies to which I contributed. At that time – the 80s, 90s – in the 20th century – we had to work sequentially for reasons of data availability. Just to find out what sales we’d made the previous month, it would take us a week. Computer support for operations was rudimentary. A few years later, in the 2000s, more information was available in the company’s ERP systems, but we still had to work sequentially, because we had to extract the data, grind it in Excel, reload it into the system, and so on.
This is no longer the case. If you have structured your information system correctly, everything is within reach. So why do leading supply chain planning solutions still offer a sequential approach?
The inertia of constituted bodies
Simply because these solutions are no longer as visionary as they once were. The S&OP / IBP process has been standardized, so we follow this standard, formally or informally. This isn’t a shock to the APICS/ASCM-certified people to whom we sell the solution, it doesn’t call into question the educational framework in which they grew, and most of the major consulting firms on the market sell the same sequential process. So, let’s protect our business and the business of our partners by staying in line.
We’ve all heard of working in sequential mode with a deadline per stage. For example, some manufacturing companies have multi-stage production processes, and only plan one stage per day, or even one stage per week. The result is long lead times, frozen periods, and a limited ability to adapt to changing conditions.
S&OP in pull mode
When we introduce pull flow into these companies, to develop their agility and adaptability, we remove these intermediate sequences and delays, in favor of a pull flow signal generated in real time and permanently available.
It’s time to apply this common-sense principle to S&OP. If your company is well equipped:
- Changes in the product portfolio and events are continuously maintained in the company’s system, with the possibility of several alternative hypotheses.
- Actual demand and forecasts are permanently maintained and available – as are the assumptions underlying the different forecast alternatives. Collaborative tools do not require a formal monthly demand review – or multiple ad-hoc reviews can be triggered at any time.
- Supply projections and assumptions are constantly updated, maybe nightly. These projections are executable: they are compatible with the industrial operating model, as they are directly simulated based on operational control data.
- All this is valued in real time and can be compared with financial targets at any time.
- All management reviews have access to the latest current projections, and arbitrations can be submitted to the management committee at any time.
Perhaps it’s time to realize that old-fashioned S&OP/IBP is no longer adapted to our world, and that technological evolutions allow us to develop the company’s adaptability through a permanent alignment between strategy and operations, as we try to do with Intuiflow…
