Weighing in on S&OP vs. IBP naming debate

Posted on December 6, 2015

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We at DCRA Inc. recently posted a few responses to Neils Van Hovs Blog on IBP vs. S&OP naming debate

Neils

Alot of long worded responses done with what appears to be good intentions but what is missing in all this WHAT IS PROBLEM you are attempting to solve ?

I would state the REAL underlying problem in 90% of the clients we see at DCRA Inc. is they believe GAAP or IFRS accounting via their ERP systems are the way to manage a global manufacturing supply network – period. The know but don’t fix the fact that these ERP systems are grossly manipulated, backwards looking and do not not the ability to time phase material plans cross organizations without huge buffers of inventory and capacity.

They also are reinforced by the training of most accountants who focus on overly precise metrics to drive controls but miss the accuracy of the whole system. My favorite is the warehouse manager so proud of how much inventory he stores, accountants proud of how he so precisely measures said inventory but the system missing that the warehouse could largely be bypassed by flow of inventory to customers. (e.g. Radio Shack vs. Amazon)

Thus what you need is in reality an “alternative financial and operational measurement system” that will be recognized and utilized by major players in an enterprise.

If you believe the above is the REAL problem then we can intelligently decide how best to make the introduction to invoke CHANGE ? How to engage those who think they already have it all figured out with ERP, what to call the program, the change initiative, the systems, how to measure, how to prove, how to get top down and even more important bottom up support !

In our experience at DCRA Inc. and my experience decades prior with large strat consulting and leading supply chain technology providers this program is best defined in business terms of strategic advantage, cashflow, working capital consumption and customer service improvements ! Then slip in an elegant measurement system that is very difficult to corrupt and vary narrowly defined ( S&OP with time phased material planning) under the cover of darkness. Show some results and momentum will win the day.

Starting with either S&OP or IBP as the initiaitve is a looser in 99% of the cases I have seen – period. And yes 99% of the so called S&OP technologies are also losers as they are big, complicated, expensive, IT investment traps as they are there only to cement in the change you make but are not slick partners in change management to redefine thinking and build support !

See more ideas, case studies and approaches at http://www.sopbook.com

The more things change the more they stay the same

Jon

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