discussion on abbreviations.
Figure 4. Relationship Between a Mature S&OP Plan and Agility
In our research, we use nine
characteristics to define a
mature S&OP process:
1. Clear Strategy. It is
hard to know where
you are going unless
there is a clear
strategy. S&OP is a
means to actualize the
plan. Without clarity of
the mission, cross-
functional teams
flounder.
2. Balance. Mature
S&OP processes
balance the interests of
“sales” and
“operations” with a
focus on the “&.” In our
research, we find that
75% of companies are
out-of-ba lance reducing the Company’s ability to achi eve alignment or improve agility.
3. Organizational Discipline. Driving cross-functional teams requires a precise schedule, roles, and
deliverables. Within mature S&OP processes, process discipline is omnipresent.
4. Defined Governance. The process operates outside of order lead times, and the profit center
manager acts as the leader. The focus is on the future. (This is often twelve to eighteen months.) It
is never a focus on the current month or optimization within the order lead time.
5. Balanced Scorecard . Within a mature S&OP process, there is a balanced scorecard that ties to
corporate strategy. Based on our research, we find that market value (either price to tangible book
or market capitalization) is higher when the scorecard balances growth, customer service, inventory
levels, cost, and asset utilization. Strategy drives the weighting of the factors. Results drive
continuous improvement.
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