Written by Crystal Lee
When re-planning is ingrained in a business’s IBP/S&OP process, management teams are able to more efficiently forecast future performance, resolve conflict, and make necessary adjustments.
Major League Baseball experienced a truly revolutionary shift in talent evaluation in the past two decades. Previously, MLB franchises depended solely on the ability of scouts to see an amateur baseball player and accurately predict a future all-star. This was, of course, prior to the emergence of Moneyball. Now Major League Baseball franchises are as likely to utilize IVY league educated data analysts to evaluate talent and performance as they are to trust actual scouts who have been around the game their entire lives. However, it is no longer adequate to ask if an MLB club has an analytics department. Now, the issue is who has the best analytics team?
The same is true for manufacturers with Sales & Operations Planning. Just like utilizing analytics in baseball no longer guarantees a leg up on the competition, S&OP has gone from being an industry best practice to an industry standard practice. The question is not whether your business is utilizing S&OP, but rather whether you are fully leveraging it through a more advanced Integrated Business Planning, and ultimately optimizing your business plans with it.
One way to maximize the benefit of your planning process right away, is to insist that it become a (re)planning process.
Make it nimble enough to keep up with the blistering pace of change in most markets today by planning and re-planning as things change month over month. Good business planning is not a “set it and forget it” exercise. Rather, companies must understand how they are tracking to their plans, and account for new information and assumptions as they develop. Instead of leaders holding their collective breaths for quarterly reviews of the forecast in order to determine if the plan was successful, regular, monthly forward-looking re-plans bring a more robust planning culture.
A culture marked by continuous improvement and update of future projections based on new, substantial, assumptions. Management teams that instill a culture of re-planning can see how a plan is performing on a monthly basis, while also looking ahead to resolve risks, go after opportunities, and make adjustments necessary to capture results.