Myth #1: “We don’t need S&OP in our department; that’s a ‘supply chain thing.’”
Reality: Yes, it is a supply chain thing – and a sales & marketing thing – and a manufacturing thing – and a finance thing – and an R&D thing – and, last but not least, it’s a top management thing. S&OP is a company-wide, collaborative decision-making process, reaching up to the top levels in the business.
Myth #2: “We’ll never get S&OP to work – we don’t have enough teamwork.”
Reality: You’ve got it backwards. S&OP doesn’t require teamwork before you get started; S&OP engenders teamwork once it’s operating properly. It enables people to view the business holistically and thus see others problems. Improved teamwork is a by-product of S&OP.
Myth #3: “We don’t need S&OP; we’re doing Lean Manufacturing.”
Reality: S&OP and Lean are two very different things. S&OP is a medium-to-long term planning tool that provides visibility into the future, thereby avoiding surprises when demand shifts – up or down. People who know both S&OP and Lean say, “They work best when they work together.”
Myth #4: “S&OP is too rigid. It won’t work for us because our business changes too quickly.”
Reality: S&OP is all about change. It provides a “window into the future”, so that companies can 1) see potential problems ahead of time 2) take corrective action and 3) thus prevent potential problems from becoming a real ones.
Myth #5: “We can’t use S&OP because we are a contract manufacturer.”
Reality: It doesn’t matter who owns the factory. Actually, companies heavily outsourced probably need it more, because they generally have less control over the supply side of the business.
Myth #6: We’re a large company. I think we’re too big for S&OP.
Reality: Are you bigger than Microsoft for example? Or bigger than Procter & Gamble? We see these companies, and a growing number of others, using S&OP very successfully in their operating businesses. Further, in these companies, the results from the operating units’ S&OP processes are rolled up, communicated to the corporate CEO, and form a key component of the corporation’s earnings calls to Wall Street.
Myth #7: “We have to get our forecasts a lot better before we think about S&OP.”
Reality: This thinking is backwards. Almost always, implementing S&OP helps to improve the forecasts. One reason for that is, for the first time, people start to view forecasting as a process. They see that it plays a vital role in the overall S&OP process and hence they see it as much more important than before.
Myth #8: “S&OP is really simple. We’re just going to get the spreadsheets working and then we’ll have S&OP.”
Reality: The spreadsheets, graphs, and the data they contain are necessary, but not the most important elements. Of greater significance are the mindsets of the people who will be using. Implementing S&OP successfully is largely a matter of change management. It is people intensive, and that’s where the emphasis needs to be during implementation.