Sales and Operations Planning (S&OP) is a continuous business process that enables firms from hospitals to electronic component manufacturers to respond to emerging situations in an intelligent manner that maintains a balance between demand and supply. The intelligence is achieved by collaboration and alignment throughout the organization supported by software across five major activities. The focus of this article is to make clear improving responsiveness is a journey unique to each organization where two critical success factors are agents of change and understanding real optimization.
What is the Maturity Model Buzz?
Aside from the terms big data and analytics, the most common buzz word in supply chain solutions is "Maturity Model". As a 40+ year veteran of campaigns to bring better analytics to bear on key organizational decisions, my immediate reaction was: another buzz word with more hype than substance glossing over or ignoring a rich set of outstanding prior and current work that can be an inconvenient truth. Words of wisdom such as - how can we move forward, if we don't know where are going – seem obvious and a dangerous simplification! Yet, there is some excellent work under this banner – one is the Institute for Operations Research and the Management Sciences (INFORMS) analytics maturity model with its simple goal of helping organizations do an honest self-assessment that reveals how well they are using the new techniques of analytics (presentation INFORMS leader - Aaron Burciaga.)
It's the journey
The fundamental challenge that underpins the maturity model has been around since the dawn of civilization – how to make effective use of information and decision technology to improve organization performance (and support scientific discovery). To obtain helpful hints for readers, I turned to mentors: Peter Lyon and Gary Sullivan – both retired (but active) after years of proven success as agents of change at IBM making the impossible – possible – resulting in substantial improvements in IBM and its customer responsiveness – a term coined by Nick Donofrio, retired IBM senior executive for manufacturing. They identified three ingredients: journey, agents of change, and real optimization.
Sullivan observed: Maturity is a value judgment suggesting that the organization has been deficient in the past. The better term is journey. What the organization did in the past worked fine or was the best that could be done with the current technology or organizational readiness. Although there are lessons to be learned from other firms' journeys, each journey is personal– and the most innovative work is yet to be done.
Lyon, meanwhile, noted maturity implies a fixed sequence of steps with a known start and end. Any senior manager of strategic systems (the position he held for many years) is aware that you have a general direction and objective and one intelligently adapts along the journey to generate ROI for the firm. He pointed to Grant's Vicksburg campaign and stressed that successful adaptation requires an experience group of agents of change.