Fixing Imbalances Before They’re a Crisis

Imbalances between demand and supply scream for attention – but when it’s too late -- when you’ve failed to ship to a customer on time, or have excess inventory already in the warehouse. In both circumstances, there’s not much you can do to fix the problem – it’s history.

The trick is to anticipate imbalances out into the future, before they have become a crisis in the short term. That’s what Executive S&OP is fundamentally all about – displaying imbalances in a credible way so they can be seen and fixed while you have choices. The difficulty is that imbalances in the future barely whisper for attention. It’s the discipline of a well-defined and credible Executive S&OP process that demands the attention necessary to anticipated and act on imbalance -- before it has become a short-term crisis.

When severe imbalances are allowed to happen in the short term, there’s not much else that an organization worries about or works on. Additionally, finger pointing begins:
•    If only you could forecast better, we’d be OK
•    If only you could produce more reliably, we’d be OK
•    If only the suppliers would deliver on time, we’d be OK
•    If only . . . if only.

Properly functioning, Executive S&OP does the proper prior planning necessary to allow the routine things (making shipments) in the short term to happen routinely. When this is the case, then and only then, can the other parts of Executive S&OP become productive. Yes -- balance between demand and supply is the first among equals. Without it, little else matters.

Best in the New Year
Bob Stahl