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What is the right S&OP Frequency?

By Bernard Milian
Timpani Drum

In the plants I worked in, I started orchestrating S&OP processes in the late 80s/early 90s. I always considered that it should be a monthly process – without necessarily asking too many questions. In a factory, it’s natural to have reviews for each shift, daily, weekly, and monthly. A yearly budget, possibly a quarterly review.

In this time frame, S&OP naturally took its place monthly, while MPS was reviewed every week, and daily scheduling was reviewed.

It was not feasible to do S&OP more frequently. To do so, the data had to be extracted and processed using a spreadsheet. This was before the era of Excel. Having the management team’s attention once a month was not so bad. As for involving the sales teams in an update of the forecast sets, once a month was already a challenge…

I always thought that an interval of less than a month was inadequate. How can we achieve a successful pilot with only a review once a quarter? So much happens in a quarter!

As I’ve aged, I’ve experienced a larger range of companies and situations. This has made it more challenging to remain certain of things.

It is beneficial to take a step back and review a situation on a monthly basis. However, this does not mean that everything needs to be done monthly. And sometimes you want to make strategic decisions on a different tempo.

An operating model that delegates decisions  

The Demand Driven operating model creates a digital representation of our operations. This is known as a digital twin. This model also makes S&OP less directive. It is no longer a matter of defining what supplies or production to put in front of the demand.

It is now a matter of determining when to adapt the operating model because conditions have changed significantly. The operations teams are responsible for determining supplies and production. This is based on actual demand and within the defined model. 

Conditions must change drastically for us to need to revisit the model. If this does not happen, there is no need to consider new scenarios. The operating model should be left to work, and the operations teams should drive continuous improvement.

Continuous improvement of the model requires more time than a month. Examples include reducing batch sizes, lead times, and variability. Adjusting settings accordingly is important, but one must not fiddle with the knobs too nervously.

If your conditions do not change significantly, spacing out monthly S&OP process reviews becomes relevant.

More fluid information systems

Our modern information systems allow for a more fluid organization by providing a continuous relevant view. Business Intelligence and Intuiflow’s end-to-end solutions are making it easier for companies to manage their inventories, demand, and supplies. This was previously a laborious task that took days or even weeks to complete.

We always have this data at hand, any time. If we have a better forecast for the promotion in Spain, we can update it directly. Our supplies may become tight. To ensure accuracy, we update times and dates based on feedback from suppliers and the status of production.

This visibility allows for continuous adjustment rather than rebuilding from scratch once a month. It, therefore, allows us to adapt our flows on an ongoing basis, if necessary. 

Performing S&OP processes more frequently becomes possible.

Involving stakeholders

During the covid crisis, several companies testified about implementing “weekly S&OPs.” When you look at their testimony, none of them completed a comprehensive S&OP cycle every week.

Companies generally implemented visibility into key elements to monitor the situation. Additionally, they involved their top management in a weekly decision process. This enabled them to adjust the company’s trajectory at a time when strategic decisions needed to be made more frequently.

The challenge of S&OP is to bring together stakeholders, functions, and the management team to make decisions. This will help prepare the company for the future. It should be incorporated into the corporate governance process. The organization of the process depends on your challenges and the context. For your company, currently, what is the right frequency?

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