The People Part of S&OP: Part II

In the 1950s, coal mining productivity in the UK decreased.  Ironically, productivity went down because of the introduction of machinery specifically designed to improve productivity.  Why did the machinery not increase productivity?  While the machinery was designed to improve productivity, the people part of the system was still operating under the status quo.  No wonder productivity went in the wrong direction.

Out of this experience, a new discipline was born:  Socio-Technical Systems.  All major and complex business processes are Socio-Technical.  Socio-Technical Systems is a process design and improvement methodology designed to integrate the social or people parts of the process with the machinery and computer systems part of the process.  This has evolved into what today is called Change Management.  We like the moniker Socio-Technical System better.  To us, the name says exactly what must be integrated and optimized:  The Social System and the Technical System.  

It is exactly this Socio-Technical interface that makes or breaks ERP implementations.  It is also this interface that makes or breaks S&OP implementations.  

The basic method in Socio-Technical System optimization is to identify the Socio-Technical Gaps.  The gaps occur when the process is designed to work one way and the people in the process believe it operates differently.    This was the problem in the British coal mines in the 1950s.  It is the major problem of ERP implementations that do not deliver the promised ROI.  It is also the key problem at the core of failed S&OP implementations.

Our experience has shown that the biggest Socio-Technical gap in distressed S&OP processes is the role of management.  Overwhelmingly, management in such cases have delegated the S&OP responsibility to part of the Supply Chain.  S&OP must be management led.  S&OP requires the prepared and active participation a various functions of the enterprise.  They need to work together to achieve consensus plans.  Only senior management can provide the incentive and impetus for all the functions to participate positively in the S&OP process.  

What is the role of the management team?  At the beginning, they need to be seen at the various meetings for the first six months to a year.  They do not have to be in every meeting but moreso pop-ins, sitting in the back, to show that S&OP is important to them.  They need to include S&OP to the agenda.  Each functional head needs to hear how S&OP is going from their staff.  What is going well?  What needs to be improved?  What are the conflicts in the function that prevent participants from being prepared for or able to participate in the S&OP meetings?

The key role of the management team is in the executive meeting.  This is where the biggest impact is made.  The team needs to take this meeting seriously from the very onset.  They need to follow-up on all actions collectively and by function.  This is the best way to re-enforce the new process and help close the gaps.

What are your experiences in the implementation of S&OP?  Share your experience of how top management helped make or break S&OP.