Learn more about Tom Wallace   In this Newsletter: Words from Wallace: No Money? No Problem.   Bullets from Bob: Overcoming the Perception of Precision New Book: Sales & Operations Planning: The How-To Handbook,3rd Edition

View Previous Newsletters NO MONEY?  NO PROBLEM. Are you in a budget crunch? Have the “recession blues” got hold of you? Do you have some exciting improvement initiatives all ready to go, except for the spending freeze that was just imposed by the corporate office? Well, cheer up. There is a high-impact, high-yield opportunity that can be implemented at very low cost and very low risk; it can provide major improvements in customer service, financial planning, operations, and quality of work life. In case you haven’t guessed by now, I’m talking about Sales & Operations Planning and specifically its top management component: Executive S&OP.   The primary costs in implementing Executive S&OP are not monetary but rather people’s time. So it may be a good fit for your situation: a) you don’t have any money because of the spending freeze and b) some of the people in your company may have a bit of spare time due to major projects being on hold. Here’s a key point. In a business of average size (up to $1billion in sales), Executive S&OP can be implemented: in under a year for very few dollars with no full time project people and with little outside consulting help So now some of you may be thinking: “How is that possible? How can something so worthwhile cost so little? Sounds like smoke and mirrors to me.”

Well, maybe not. Let’s take a look at each of the above four points: You can do it under a year. The implementation path, developed by my partner Bob Stahl, is a proven process to implement Executive S&OP – successfully – in about 8 to 10 months. The adjacent figure  shows three-phases: a Live Pilot, an Expansion phase (where the remaining product families are cut over onto Executive S&OP) and Financial Integration. There’s no need to spend lots of money on software; most successful companies use Excel or similar. We recommend that you implement using spreadsheet software, and then bring in S&OP-specific software later should you see a need. Our experience is that average-size businesses don’t need a full-time project leader; rather a very good person on a half-time basis works quite well. It’s important for that project leader to keep a portion of his or her operational job, to stay close to the real world. You will need a project team, and each member will need to invest about 20% of their time to Executive S&OP over teh first 90 days. A little bit of really good consulting support can be helpful; a lot of consulting of whatever quality normally degrades the chances for success. What’s a “little bit” of consulting? About a dozen days, maybe a dozen and a half, over the life of the project. Some companies may have an employee who already knows Sales & Operation Planning very well, perhaps having participated in a successful implementation at a sister division or a prior employer. In this case, it’s not necessary to bring in an “outside expert” but rather to utilize the “inside expert” who’s on the staff. Okay, so it can be low cost. But why is it low risk? Because you start with an Executive Briefing, at which point a decision is made by top management to proceed with a 90-day Live Pilot. That’s all. You’re not betting the ranch, nor are you committing to a full implementation of the process, merely the 90-day Pilot. Bob calls this Go/No-Go Decision #1. Following the successful operation of the Live Pilot, it’s time for Go/No-Go Decision #2: proceed with Expansion and Financial Integration. So there it is: you don’t need to “bet the company” nor do you need big bucks. And the benefits are huge. So what are you waiting for? If you get started soon, you may have it mostly implemented before the recession is over. For more on this implementation process, click here to  read chapters 6 thru 8 of Sales & Operations Planning: The  How-To Handbook, 3rd Edition. Thanks for listening. Tom

Learn more about Bob Stahl   Overcoming the Perception of Precision Making Executive S&OP work is not an extension of past experience. It is not doing the same things better, but rather doing things differently to be better. This means change, and that sometimes is hard to do. One of the more difficult issues is to overcome the ‘perception of precision’ that many companies have – the notion that if more certainty in a forecast is desired, more granular detail is necessary. Actually, the opposite is true. If you’re too close to the forest, all you see is trees and become distracted by the detail. This is not to say that no detail is necessary, but full granular detail is a non-value-adding distraction. One company I know, getting started with Executive S&OP, derived their aggregate family forecasts by rolling up the detail. Well, it soon became clear that that highly detailed forecast was just wrong, even to a casual observer. The forecasters needed to learn that “less is more.” Executive S&OP needs to be roughly right and not precisely wrong. While there is much data to be managed in an Executive S&OP implementation, it must be understood that human judgment and simplification will beat a formula every time. The role of the computer is to enhance human judgment, not replace it. In a future column, we’ll talk about how that’s done. Bob

Order this book   Our new book -- the THIRD EDITION of Sales & Operations Planning: The How-To Handbook is selling like hot cakes! If you already have the first or second edition, you may feel that you don't need this book. But you may want to think again. The Third Edition contains a substantial amount of new material: a totally new approach to implementation: low cost, low risk, high impact  colored displays of the S&OP graphs, capacity reports, and financial projections software selection criteria risk management "Reports from the Field" describing how real-world companies implement and use  Executive S&OP. Here's a quote from a satisfied reader: "Executive S&OP could be the single most important process executive leadership owns to create agility and responsiveness to market conditions. The experience Wallace and Stahl offer the practitioner provides an effective roadmap in driving executive and operational adoption of a critical process for today's business." -  Jack Childs,  Vice President, Value Engineering, SAP America