Friday
Mar052010
S&OP and Forecast Accuracy Poll: Part 1
Friday, March 5, 2010 at 3:53AM
I posed a rather simple poll on LinkedIn regarding Sales & Operations Planning (S&OP) and Forecast Accuracy. I then posted an announcement of the poll, to generate participation on many of the appropriate LinkedIn Groups I belong to. I also invited people to discuss the topic on the group sites. In a short time we had 60 respondents, 10 comments on the poll site and over 45 discussion posting on the various LinkedIn Group sites.
The Poll was, as evident, simple. I send out a few e-mails via LinkedIn to people in my network. Out of this and Group postings, we got the results above. 71% of the respondents, 42 people, reported that Forecast Accuracy improved. The majority, 43% or 26 respondents, reported Forecast Accuracy increases of over 10 points attributed to S&OP. Only three respondents said that S&OP made forecast accuracy worse. Oddly, two of these three “No, S&OP made it worse” responses came from VP level executives at large companies. I was not sure what to think. As the poll unfolded, however, the responses shifted to the very positive.
In the discussions and comments, there were two themes that emerged. The first, and actually motivated the topic of my last blog posting, was that senior management leadership was an important factor to the success of S&OP. That is absolutely correct in my estimation. To quote Ishikawa again, well actually to paraphrase, “If there is no leadership from the top, stop promoting” S&OP. It really made me ask if this was the case with the first two respondents. These VP level respondents at large corporations probably experienced exactly this scenario. It was decided to implement S&OP, resources were no doubt assigned, and the entire project delegated. As there was no leadership from the top, interest quickly waned and the program became ineffective and evidently eroded Forecast Accuracy. Sure, this is a lot to surmise from a one question poll, but it is a very plausible scenario.
The second major theme I saw was an expression that S&OP was not so much about forecast accuracy. Many of the comments basically downplayed the question and spoke to the other, more important attributes of a good S&OP process. S&OP is designed to coordinate the various functions in the Demand and Supply Chain. When done right, S&OP facilitates the cooperation of Sales, Marketing, Finance, and the Supply Chain. This is why top management leadership is so very important. Top management “encouragement” is needed to get these functions agreeing to both demand plans and subsequent actions.
So, what about Forecasts? The general feeling was that the benefits of implementing S&OP is more about the process and coordination. It is about doing things right and well, and good results will occur. It is about not focusing so much on Forecast Accuracy. It is about working the process well, and guess what, forecast accuracy goes up.
The Poll was, as evident, simple. I send out a few e-mails via LinkedIn to people in my network. Out of this and Group postings, we got the results above. 71% of the respondents, 42 people, reported that Forecast Accuracy improved. The majority, 43% or 26 respondents, reported Forecast Accuracy increases of over 10 points attributed to S&OP. Only three respondents said that S&OP made forecast accuracy worse. Oddly, two of these three “No, S&OP made it worse” responses came from VP level executives at large companies. I was not sure what to think. As the poll unfolded, however, the responses shifted to the very positive.
In the discussions and comments, there were two themes that emerged. The first, and actually motivated the topic of my last blog posting, was that senior management leadership was an important factor to the success of S&OP. That is absolutely correct in my estimation. To quote Ishikawa again, well actually to paraphrase, “If there is no leadership from the top, stop promoting” S&OP. It really made me ask if this was the case with the first two respondents. These VP level respondents at large corporations probably experienced exactly this scenario. It was decided to implement S&OP, resources were no doubt assigned, and the entire project delegated. As there was no leadership from the top, interest quickly waned and the program became ineffective and evidently eroded Forecast Accuracy. Sure, this is a lot to surmise from a one question poll, but it is a very plausible scenario.
The second major theme I saw was an expression that S&OP was not so much about forecast accuracy. Many of the comments basically downplayed the question and spoke to the other, more important attributes of a good S&OP process. S&OP is designed to coordinate the various functions in the Demand and Supply Chain. When done right, S&OP facilitates the cooperation of Sales, Marketing, Finance, and the Supply Chain. This is why top management leadership is so very important. Top management “encouragement” is needed to get these functions agreeing to both demand plans and subsequent actions.
So, what about Forecasts? The general feeling was that the benefits of implementing S&OP is more about the process and coordination. It is about doing things right and well, and good results will occur. It is about not focusing so much on Forecast Accuracy. It is about working the process well, and guess what, forecast accuracy goes up.
Reader Comments (1)
S&OP improves forecast accuracy by incorporating sales market intelligence into the forecasting process. Improves sales accountability to forecasts.