S & OP Maturity Model:
Stage 1, Marginal Process: The companies in this stage do not have any formal meetings for the S&OP planning process. Even if there are meeting scheduled, then are frequently canceled or are given very less importance. This results in different plans being created by different functions across the organization with no or little collaboration. Each of these functions act as individual “silos” with their individual goals, which more often than not are conflicting to the goals of other departments resulting in locally optimal decision makings and higher supply chain costs. Even the supply plan is not aligned with the demand plan.
The use of software technology is at a minimum, mostly limited to the use of spreadsheets as each of the functions develops their individual plans and there is no integration whatsoever.
For companies in Stage 1 to move to Stage 2, they need to have a more formal meeting process, with each of the functions actively involved in working towards a common plan.
Stage 2, Rudimentary Process: Companies in this stage have formal meetings for S&OP, however the participation is minimal and there is very little integration in the planning process. There is a lack of a consensus based plan due to minimum interaction between the functions, or a lack of preparedness for the S&OP meetings.
The demand side functions develop multiple demand plans through the use of Demand Planner applications which are then transmitted to the supply side. The supply side in turn reconciles these plans and develops a supply plan aligned to it. This supply plan is generally not shared with the demand side.
For companies in Stage 2 to move towards Stage 3, it is very important to have support from the management team. The management team needs be first convinced of the need for a well designed S&OP process, which is then transmitted to the all the functions by the management so that the S&OP meetings are given due accordance. The intent should be towards arriving at a single consensus plan by the concurrence of the supply and demand plans.
Stage 3, Classic Process: Companies in Stage 3 have an established formal S&OP process and have their supply and demand plans aligned. The S&OP meetings are held at regular intervals as decided and find full participation and support from all the functions. The planning process is totally integrated resulting in a single consensus plan.
Companies in Stage 3 can move to Stage 4 by having more frequent S&OP meetings and a constant emphasis on the building sustained relationships with as many suppliers and customers as possible.
Stage 4, Ideal Process: This Ideal stage should be used as a benchmark by companies for achieving further improvement. In this ideal state scenario, S&OP meetings are generally event-based and are done only when there is a need to make amendments to the plans. The supply and demand is continuously monitored in real time, which in effect makes the decision making very fast and proactive. The moment an imbalance is detected between the supply and the demand, a meeting is immediately held involving all S&OP attendees on a global basis usually through the use of advanced technology. Thus the plan can be quickly modified and put into action.
Furthermore, there is extensive collaboration with the suppliers and the customers, which gives ready access to information to align the plan with those of the external agents i.e. the suppliers and the customers.
As emphasized earlier, to make the best use of this maturity model, a company first needs to do a “as-is” analysis of its S&OP process and then make a sustained effort to move to the next stage. It should then identify the gaps, perform a cost benefit analysis, identify the quick hits and target these first.