A Practical Roadmap for Business Growth
Turning your strategy into operational excellence may well mean sailing into uncharted waters. To explain it, let’s use an example of someone who’s done just that, Christopher Columbus, who’s often cited as discovering America. Now whether he did, or didn’t ever land in North America, let’s assume that was his plan to begin with.
Chris Columbus & his roadmap to Sales & Operations Planning (S&OP)
The first thing old Chris did, was to think of a strategy to get there. He’d have charted the way, thought about supplies, how many crew members he’d need and how long he’d be away from his beloved wife.
He’d then have created a more detailed plan on how to fulfil this strategy. Where would he sail to first? Where could he re-stock? What were his contingency plans? He’d have packed the ship, double checked the cheese and wine rations and set off.
En route, old Chris ran into some bother. For example, it’s widely noted he landed in the Caribbean a few times, but may have never actually set foot in America. This is what we call ‘managing the plan’. How could he steer back on course? How could he align to the original plan?
Maybe his charts were wrong? Or the man in charge had drunk too much rum? We’ll never know. But if his team had known of S&OP, his claim on American soil might be substantiated to this day.
If you want to close the gap between your ideal plans and real results better than Chris did, keep reading. We’ve got something that can help.
Define your supply chain strategy
Horizon: 3-5 year
Defining and reviewing your supply chain strategy should be done every year. Your supply chain strategy should be an operational perspective of your overall business strategy. You should highlight the next 3-5 years of business planning and base your thinking around this question: What do we need to do to realise our ambition?
How can you achieve success?
To create an actionable plan, you need to translate the growth part of your strategy. There needs to be ownership of budget and a willingness to make your plan SMART (specific, measurable, achievable, realistic, and timely). That means detailed planning, with immovable deadlines, personal ownership and the right investment.
Crucially, the only way you’ll know if you’re being successful is to measure and analyse along the way. As you know, what you think’s going to happen, and what actually happens, are two different things. So you need to analyse risks and measure results.
The pillars of operational effectiveness
The key to an effective supply chain strategy is translating business goals into smaller, unique tactics.
Whether these are based on operational resources, financial obligations, inventory planning, production or distribution, the main requirement is to be future-proof.
Can you deliver on the goals of the business?
And is each pillar propping up the ambitions of the business? Or will one in particular buckle under the pressure? You need to validate your supply chain partnerships and contemplate your product development and portfolio.
Create the tactical plan
Horizon: 1 year
Your supply chain tactics should revolve around your higher-level supply chain strategy. Put simply, what can we do this year that will make our supply chain strategy a success?
What’s your position in the market?
Don’t be sidetracked by solely focusing on new products. They play just a small part in your overall portfolio and product management. Are any current products not driving value? Does your pricing strategy need evaluating? Is there a better service offering which might drive new business?
Setting KPIs around your strategy
Rhythmic reviews are crucial to ensuring that your supply capabilities can meet demands. There’s little use in making products no one buys. And even less sense in benchmarking, or even employing staff around an outdated portfolio. If your tactics are right, your KPIs will deliver in line with your supply chain strategy.
Closing the gap
Managing the gap is one of the most important elements of your tactical plan. That is, simply, are you under or overperforming on a product range, division or region? If a particular division is overperforming, how do you take full advantage? If one specific product is underperforming against budget, how can you reverse its fortunes?
Find your focus
Focused initiatives as part of a solid integrated business planning (IBP) process ensure you’re able to make a success of your tactical supply chain plan.
Manage the plan
Horizon: 1 year
Review: Weekly/ Monthly
Where are the gaps in your plan? How can you spot them as soon as possible and adapt your supply chain tactics to abate any deficiencies and capitalise on opportunities? Where should you focus your effort/time/ resources?
Speed, agility & robustness of vision
You must have access to information that shows where you’re over and underperforming. This is crucial in order to make robust and accurate decisions.
Your planning will be inefficient if it’s propped up by Excel spreadsheets
Increase efficiency and accuracy by giving yourself the agility to shorten the planning cycle with fast visualisations and plans.
Your executive team should be heard last
After demand & supply issues, inventory policies, KPI reviews, highlighting risks or crucial items and suppliers… your key focus is on managing the gap. In essence, allow your executive team to tackle problems and maximise opportunities with greater agility. Their job is decision-making, not fact-finding.
So who’s in charge?
The plan is. Not one individual or the diary obligations of your busiest stakeholder. You should be speedy, open, collectively minded and free of the constraints of legacy methods. Access to information, for all, is key. Everyone should have the same numbers to help the S&OP process run as smoothly as possible.
Execute according to plan
Review: Daily / Weekly
Is your operation truly demand driven? Are you eradicating bottlenecks in the day-to-day running of the business? Are you offering the service you desire, whilst optimising your supply chain cost?
The missing link
S&OE is the vital bridge between rhythmic planning and dynamic execution. You should account for short-term problems like unforeseen demand spikes or shipping delays, and push every team in the process in the same direction. Sales becomes familiar with issues in Production, and Supply knows where sales are ramping up. Your executional structure should solve issues and execute plans to the nearest detail.
Automate where possible
If you’re able to dynamically automate parts of your process, then do so. Anywhere you can save time and resources, you’ll be thankful of the freedom to focus on more time-consuming tasks.
Focus, focus, focus
Focus is always the most important attribute in executing your supply chain plan. Slick execution can’t happen if your team isn’t fixated on delivery. And make sure every decision that’s made is done with the most in depth insights possible. That means incisive supporting information which considers impact and outcomes.