The S&OP Umbrella

by Richard Walker and Jonathan Sussman

“On any given day, billions of people use products of the company to look good, feel good and get more out of life.”  As you can imagine, satisfying the daily demands of two billion people under hundreds of different brands requires a diverse, complex, and sophisticated business strategy.  Interject into this the desire to do business more efficiently and serve customers better and supply chain professionals can quickly get overwhelmed on what the priorities really are and how best to achieve those objectives.

The solution is a robust S&OP process built on the right amount of automation and process discipline.  The scope of this white paper will focus on our work across the company in our home care, personal care, refreshments, ice cream, and grocery businesses.  The results we have built to date are substantial but in our view, it only scratches the surface of what S&OP can deliver for a business if implemented in the right way.

The Nordic Syndrome

In a few words, S&OP is about moving a lot of people with different objectives toward a common goal.  Sometimes this happens on its own.  In Scandinavia, the company’s food division had everything moving the way it was supposed to.  Folks just understood what to do and when to do it as they had been doing it well for so long.  They had a process but nothing was what we would consider formal – people just worked well together.

All that changed however when the office was moved.  As part of the company’s global consolidation of its businesses, there was a lot more centralization and in the Nordics, each of the businesses moved to the new city. However, the people in the Foods business did not want to move and consequently, that lack of a formal S&OP process became a real issue for the business. Essentially we had to go back to the beginning and recreate a new process with them.

The lesson here is you can only operate a bowling alley for so long without a pin sitter.  Organic knowledge transfer, although effective, is slow to build and is no substitute for a well-defined process, aligned leaders and executors, and a set of tools that enable a good day’s work.

The Umbrella

The S&OP Umbrella consists of

  • Handle – You must maintain a firm grasp on the process
  • Backbone – Systems and automation that make that process executable
  • Canopy – Buy in from leaders and “do-ers”.  The canopy is critical in keeping the bad times in check and ensuring a swift wind won’t turn things inside-out.


Without the support of the highest levels of leadership, you might as well go home now.  S&OP is a fundamental change to the way business is done and if leadership doesn’t understand, isn’t interested, or doesn’t support it then there’s no point in moving forward.

Obtaining the buy-in of leadership is possible but leadership has to be willing to hear and act on the unpleasant truth.

How many times have you or your leadership scolded someone who told the unpalatable truth? “Our innovation is no longer viable.” How many times have you scolded someone that provided seemingly great news? “I beat my forecast”.

They should be treated the same.

It’s safe to say that people generally don’t like bad news and when we hear such news we have a tendency of shooting the messenger.  Needless to say this incentivizes people to avoid giving less than stellar news.  It could even cause folks to bend or break the truth to provide a rosier picture.  This is tantamount to the death knell of an organization let alone an S&OP process.

You shouldn’t frighten people into providing you answers you like, you need to empower them to tell you the unpalatable truth.

Leaders need to understand this to truly move forward in S&OP.  When things are bad leadership needs to hear about it and S&OP is a great mechanism to provide that feedback.

The challenge of telling the truth is prevalent in almost all organizations.  It’s human nature to not want to be the bearer of bad news.  What makes an organization and an S&OP process great is managing that challenge and putting the proper process in place to make telling the unpleasant truth easier.

Operations in Eastern Europe

Perceived Problem: The local board was frustrated by the inability of the business to forecast accurately even in the near term.

Actual Problem: The business was able to accurately forecast BUT the mindset of leadership wouldn’t allow them to tell the board the truth.

Solution: All it took was a set of consultants within the company without any preconceived notions about the business to point out the board’s behavior of rewarding good news and punishing bad.

Within two months the behavior of the board was greatly improved and so was the quality of the forecasting process. They started to welcome the bad news so long as it came with options to mitigate the risk and they started to question the good news by reviewing the results and holding people to account for delivery of their numbers.


The status quo may be ok, but if it isn’t you need to be ready to change it.  S&OP thrives in an environment of continuous improvement.

What kinds of mindset changes are necessary to move S&OP from an idea into part of your company DNA?

You need to be Roughly Right, not Precisely Wrong

There is a strong desire to get things right and for good reason.  Issuing the PO on time for the right quantity is critical for satisfying that customer order.  Unfortunately, in any good S&OP process getting something precisely right is nigh on impossible so why spend immense amounts of time trying to do it?

As far as S&OP is concerned, roughly right is better than precisely wrong.  Organizations and individuals need to understand this inescapable truth in order to be successful in S&OP

What you have been doing isn’t bad, but there may be a better way

We’ve heard it all before – “We’ve always done it this way, why should I change now”.  Most of the time you just move on, it’s not worth the ensuing battle.  In any good S&OP process, if you run from the battle, you’ve lost the war.

Questioning the status quo is necessary to move forward.  And although you may not change tomorrow, next month, or next year you need to be aware of the status quo and be prepared to deviate from it to be successful.  The fantastic thing about S&OP is, if done correctly, it makes changing the status quo easy.  S&OP processes can naturally highlight gaps and offer solutions that alter mindsets and ways of working.

Also, don’t be afraid to defend the status quo, you may have been doing it right all along.

No, this isn’t just another meeting

We’ve always taken this part personally and it can be challenging to get past – “Argh, another meeting, I have too many already” or “how’s this different than what we do already”.  It is highly de-motivating for the implementers of S&OP when folks view the process as a burden.

To counter this argument you need to be clear about what’s being added but also what’s being taken away.  A good S&OP implementation should optimize the inputs, agendas, and outputs of your meeting flow.  Participants should walk away from the meeting thinking this was concise, logical, and addressed relevant issues requiring resolution.

Don’t get frustrated – it takes time for any new process to coalesce and become part of the organization’s ways of working.

Trust me, Gaps are good

This reminds us of the challenge of giving bad news but in this case, we need to move the needle with lower-level management and the operational folks.  They’ve been in the habit of providing what’s been asked for rather than the truth.  They constantly get bombarded with “Why don’t forecast equal target?”

As implementers of S&OP, we have learned and are teaching others to embrace the philosophy that “gaps are good”.  This starts with the S&OP team, permeates to leaderships, and cascades through the business.

One monumental red flag of a poorly operating S&OP process – it’s devoid of gaps.

Hit your Forecast

Hitting the forecast is paramount.  Forecasts are the signal to the business to make or not make, to spend or not spend, to buy or not buy.

    1. If you beat your forecast but miss your targets this is not a moment for celebration.
    2. If you miss your forecast but hit or beat your targets maybe you can allow yourself a quiet drink
    1. If you hit your forecast and beat your targets it is time to break out the champagne.

Operations in Western Europe

The company’s leading country in terms of S&OP has a mindset of continuous improvement around the process. They have recognized that we are operating in a volatile world and therefore the process needs to be both robust enough and flexible enough to manage the vagaries of both internal and external change.

For instance, as one of the company’s biggest countries with a complex retail environment, they initially put in extra meetings to manage the complexity of their forecast process. However, as they have got more skilled and knowledgeable in how best to operate S&OP they are now looking to simplify the process and where possible forecast at a more aggregated level of the customer hierarchy.

One of the keys to their success is that they have lived the mantra of “Gaps are Good” through the various local senior leadership changes that have occurred in the last few years. This has allowed them to address the gaps to their targets at an early stage, 4 months out not 4 weeks out. Belief in the quality of the numbers being provided by the process is key to this and has now allowed them to look to simplify where possible whilst still retaining the same level of control and quality over the forecast.


Don’t use analysis as an excuse for inaction.  Decision-making is just as much an art as it is a science.  Make a decision, execute, and learn from whatever mistakes you may have made later.

At times leaders and executors can get so bogged down in the data and the analysis that they miss their window of opportunity for action.  How many times have you been in meetings where the decision you came to make was postponed to next week’s meeting.  It’s easier to maintain the course but it’s not always fruitful.

Make sure your meeting behaviors are what is needed within the context of how your business runs.

  • Have you got the right people in the meeting to make decisions?
  • Are the inputs all available on time?
  • Have you got an agenda?
  • Who owns the meeting?
  • Who is taking the minutes?
  • Is everyone clear on the outputs?

This may all sound so basic but it is key to operating an efficient S&OP process. It will take time to land in most businesses and you will very likely go through a normal change process where things may well get worse before they get better.

However, the right S&OP Process will lie somewhere between a democracy and a dictatorship. People need to be part of the change but there comes a point where a decision needs to be made and everyone has to align to this for the process to operate effectively. A benign dictatorship if you like!


A good process should be like breathing – you shouldn’t have to think about it.

Processes are a focus of all S&OP implementations but creating the proper balance of discipline within an S&OP process can be challenging especially when there’s an overarching desire for standardization.  Standardization and operational realities have derailed previous S&OP implementations within the company.  These failures led us to embrace differences.  It is ok to be different as long as the overall objectives and high-level processes are consistent.  From this foundation, we constructed our S&OP processes.

  1. Understand what you have – This is important to ensure S&OP is not a burden to the business and understand what meetings and existing processes can be scrapped, added, and modified.
  2. Start with general tenets and work your way down to the details.
  3. Don’t get too detailed.  This is probably the hardest part, defining everything in detail gives us a plan on how to proceed.  The problem with that is it removes flexibility which is important for S&OP.  We’re not talking about the process for issuing a purchase order here…this is about managing a business and, in many cases, several different businesses which operate differently.
  4. Construct a process to address 95% of cases and have good exception management to get you to 100%.
  5. Embrace being different where it makes sense to do so – it is what makes good processes great.

Sample Process Classification Chart – Important to understand the complexity and customization each process/business unit has.

This should be used as a basis for tracking process compliance and measuring success within the S&OP operating environment.  Additionally, this matrix is useful when identifying tools to support the process.

An S&OP process flow example

Systems and Automation

S&OP puts a great deal of emphasis on tools and for good reason; the right tool holds the umbrella together.  It links the Process with Leadership, Mindsets, and Behavior and makes changes executable.  A process that cannot be executed isn’t worth the paper it’s printed on.  It is paramount that systems and automation are considered during any S&OP implementation and the level of complexity of the process matches the level of business complexity.  If these are misaligned it results in an inadequate process that forces participants to find creative workarounds.  These workarounds either bridge the gaps in under-designed systems or create shortcuts in over-designed ones.  Either way, if these workarounds are unplanned or unmanaged the process will get out of control.

Understanding this, we did our best to marry each process with the right tool and level of automation.  For the most part, we were able to merge our existing S&OP processes within our existing toolset – SAP ECC, SAP APO, Connect/TeraData, and SAP BW.

There were a few exceptions, specifically around Demand Review and Supply Review.  We found these processes to be the most diverse because of the different business units involved.  Therefore we determined that we required something highly flexible and customized.

Demand Review

Building off our forecast data, we created a customized Demand Review Tool (DRT) that enabled us to:

  • Support six-year view of demand history and forecasts
  • Customized, dynamic charting, and visualizations
  • Customized hierarchy
  • Assumption Management – Adjustments to the plan, not reflected in the system can be captured and modeled
  • Multiple Units of Measure
  • Track Process Compliance
  • Easily change as processes and businesses evolve

Supply Review

Again, using existing data from SAP we created a customized Supply Review/RCCP Tool.  This tool enabled us to leverage data from Demand Review and apply it on the fly to Supply Review.  Here are the capabilities:

  • Views of Current Production Plan
  • Infinite Scenario Building Capability – colored cells indicate adjustments to the plan.
    • Modify Available Hours, Rates, and Load
    • Add Plants, Lines, and Products
  • Incorporation of volume from Demand Review into the scenario
  • A multi-use output that can support S&OP and long term capacity planning
  • Ability to quickly modify as the business changes


S&OP truly is a change in the way business is done; it’s not one of those programs that you set and forget. You need to constantly work at S&OP to keep folks engaged and moving down the right path. As an organization, the company is continuing down the path of self-improvement. We are working to incorporate innovation to execute the process better. This is one of the biggest consumers of cash in the business. Additionally, we’re looking at more tightly integrating transportation and warehousing and moving closer and closer to IBP. Either way, we’ll be sure to bring the umbrella — and you should too.

Edited by Steven Garcia