Where they meet
The meeting where the call gets made.
Most businesses have a monthly planning meeting. Fewer have a monthly planning decision. The difference between the two is the whole of S&OP.
This is where the demand side and the supply side meet. It covers three of the fourteen capabilities: S&OP, IBP and Executive Governance. Together they give planning a monthly cadence with real decision rights, a defined escalation path, and one set of numbers that the board and the floor are both looking at.
Definition
What separates S&OP from a monthly review
Sales and operations planning is a monthly cycle in which the demand view and the supply view are reconciled, the gap between them is quantified, and somebody with the authority to do so decides what happens about it. Integrated business planning extends the same cycle to the financial plan, so the operating plan and the financial plan are reconciled to the same numbers rather than to each other after the fact.
The test is not whether the meeting happens. It is whether a decision that was uncomfortable got made in it. A cycle that surfaces a gap, presents it, and carries it into next month has reported on the business rather than planned it, and it will produce a deck every month indefinitely without changing anything.
Capabilities on this page
- 01S&OP
- 02IBP
- 03Executive Governance
The cycle
What the cycle is made of
Four reviews, in sequence, each answering a question the next one depends on. The names vary between businesses. The order does not.
Demand review
The demand side agrees one number and states what has changed since last cycle, including where it has been leaning and by how much.
Supply review
The network is tested against that number. Where it cannot be met, the constraint is named rather than absorbed, and the options are costed.
Reconciliation
The gap between what is wanted and what is possible is quantified, and the trade-offs are prepared as options with owners rather than as issues.
Executive review
The decisions that exceed the authority of the planning team are made, on the calendar, by the people whose authority it is. This is the step most cycles are missing.
What breaks
How the cycle fails
Almost always at the last step, and almost always for the same reason.
The meeting reports rather than decides
The gap is presented accurately, nobody in the room has the authority to close it, and it is carried forward.
This is the single most common failure and it is a governance problem, not an analytics problem. Better numbers presented to a forum with no decision rights produce a better description of the same outcome.
Finance and operations run separate cycles
The financial plan and the operating plan are reconciled at quarter end, by explanation rather than by planning.
Two cycles produce two truths, and the board and the floor end up looking at different businesses. Integrated business planning is the name for running one cycle instead, and the hard part of it is the calendar and the ownership rather than the arithmetic.
Escalation has no path
Hard calls get made in a crisis, by whoever is available, and the decision is not recorded anywhere the next cycle can see it.
A defined escalation path is what makes the difference between a decision framework and a habit. Without it the same trade-off is re-argued from scratch every time it appears, and consistency becomes a function of who is in the room.
What changes
What changes when it works
The calendar acquires authority.
- 01A monthly cycle with named owners for each review
- 02Gaps quantified and carried to a forum that can close them
- 03Decision rights written down, not inferred
- 04One set of numbers for the board and the floor
- 05An escalation path that exists before the crisis
- 06Decisions recorded where the next cycle can see them
The engagement
How an engagement touches it
The assessment looks at where the decisions actually get made, which is often not the meeting named after them. Operating model design then puts the calendar, the decision rights and the escalation path on paper, and the execute stage sits inside the cycle with your planners, in the meetings where the trade-offs get made, alongside the people who will own the exceptions afterwards.
The test we hold ourselves to is whether the cadence runs without us in the room. Anything else is attendance rather than capability.
Which capability is load-bearing decides the sequencing, and that question comes before this one. The full argument is set out in why a better forecast does not move service levels. The people who would do the work are on the practitioners page.
Questions
Questions we get about S&OP and IBP
What is the difference between S&OP and IBP?
S&OP reconciles the demand plan and the supply plan on a monthly cycle. IBP extends the same cycle to include the financial plan, so the operating plan and the financial plan are built against the same numbers rather than reconciled afterwards by explanation. IBP is a wider scope on the same cadence, not a different meeting.
Why does our S&OP process not change anything?
Usually because the cycle has no decision rights at the end of it. If the forum that sees the gap cannot close it, the process will surface the same gap every month and carry it forward every month. That is a governance gap rather than a process gap, and better numbers will not fix it.
Who should own the S&OP cycle?
Someone senior enough that the executive review is theirs to convene, and independent enough that they are not reporting on their own number. The specific title matters less than those two properties, and getting them wrong is the most common reason a well designed cycle stops working within a year.
The rest of the map
The other three
- Demand PlanningDemand planning is where a business decides what it expects to sell. Done well, everything downstream has something firm to stand on. Done as a monthly argument, everything downstream inherits the argument.
- Supply and Inventory PlanningThe supply side is where a demand number becomes a commitment. It is also where the difference between a plan and an aspiration stops being a matter of opinion and starts being a matter of cost.
- Performance and RiskA plan is a claim about the future. The loop is how a business finds out where the claim was wrong, early enough to do something, and without turning the finding into an argument.
All fourteen capabilities, grouped, are on the services map.
Get Started
Where is your planning organisation today?
Every engagement starts with an honest assessment of current maturity. Let's find out where you are, and what the next capability should be.