How to Build a Great S&OP Process with Francisco Cadena

LS International

The sales and operations process is today, a fundamental tool to align priorities across functions within current multi-national organizations due to the complexity they have. It’s also key to understand how Operations has become central in today’s companies.

In order to understand this process better and why it’s so important, but also how to build it, we have invited Francisco (Paco) Cadena. He is a Supply Chain leader with over 25 years’ experience in companies like Procter and Gamble, Novartis and Revlon and he’s known to be an S&OP expert.

In this Podcast, we cover:

  • What is a Sales and Operations Process
  • How to build a great S&OP Process
  • Why and how to engage your senior stakeholders
  • The evolution of S&OP in the next years

Daniel: Hi, I’m Daniel Torres Dwyer and welcome to LS International’s “Career Success Podcast”. The sales and operations process today is a fundamental tool to align priorities across functions with current multinational organizations due to their complexities. It is also key to understand how today operations have become central in the working and decision-making processes in today’s companies. In order to understand this process better and why it is important to companies and how is the right way to actually build it, I have the pleasure to have Paco Cadena with me here today. He is a supply-chain leader with over 25 years’ experience in companies like Procter and Gamble, Novartis and Revlon, and he is well-known to be an S&OP expert. Hi Paco! Thanks for joining us today!

Francisco: Thank you, Daniel, thank you for inviting me to your podcast.

Daniel: It is my pleasure and our pleasure, and as I said in the introduction, S&OP processes have become central to organizations and I have described it as a process, which is not probably saying much, so how would you, Paco, define S&OP or the Sales and Operations Process?

Francisco: Well, as you have already pointed out depends on many industries, they will have a certain definition. From my perspective and my experience how I define it, is a decision-making process that connects the strategy with the execution and it relies a lot in the collaboration of the multiple functions that participate within the company, and it helps connect those costumer needs with the business capabilities, the capacities, everything from materials, inventory, supply plans, you name it, I mean those things are part of a decision-making process that will help the companies move forward and deliver the results.

Daniel: And why is this S&OP process so important for organizations?

Francisco: I would agree that it is key to linking that company’s strategic and portfolio plans to the execution dimension. This is a way of making a decision, a CEO of a company or any leader within any of those businesses, they need to consider many different pieces of information, they need to take risk, they need to make sure they are getting closer to the results, so the way they do it is S&OP. So, the important thing is having that connection, doing the allocation, the alignment of the resources to have a single plan or a clear range of where the business is going to move, the levels of risk the teams are taking, all of that together will help the leaders of the organizations to make the right decision in order to move forward.

Daniel: Is it their way of simplifying complexity?

Francisco: Complexity is something that is more and more evident nowadays, the companies are getting more complex not only in the sizes of their portfolios, but in the number of channels and costumers that they are delivering to, and now even more with everything that is online, adds to the number of challenges. It is a way to manage complexity and manage it in a way that is data-driven, but you can really make sure that you are taking all the different aspects and intelligence that you can gather to make that decision.

Daniel: How do you build a great S&OP program-process?

Francisco: Oh, that is a great question, it is a big effort for the whole organization. I would say that in order to build a great S&OP process you need to have a great leadership, that would be the first. Leadership is important not only for the person or persons that are taking the implementation of it, but it is advocacy, sponsorship from top management, there is all the strong analytics, can also deliver great compliance and be strong from the business point of view and a technical point of view there is a lot of importance in the compliance, so then you are always delivering standard sets of stats, which will deliver you the results. More importantly it requires a good business understanding, to have a great S&OP process you need to know the drivers of your business, you need to know what channels, you need to know your costumers, you need to know your N2N dynamics, your capabilities, how fast and how flexible you can react to the business needs. Of course, it requires a great somebody that is going to be the champion in pushing the process and then really help with that alignment and cross-collaboration with the multiple functions that are participating. All of those elements from strong leadership, advocacy, analytics, compliance, and the good business understanding, are considered to be a good and strong S&OP process.

Daniel: Yeah, and you mention getting people on board, getting the other functions to participate in it. We all know that one of the challenging things in today’s business is basically to get people to collaborate with you even when you are not their manager. How do you maybe personally, get people from other functions on board as part of the process?

Francisco: There is an important selling process, there is education that you need to conduct in an organization. I am amazed by how many people know S&OP from their own experiences or are actually doing some of that work, so it is not something that is completely new to them. So, a part of the education is delivering some results, you can use pilots to do the selling, you can say, well if it is something you haven’t tried before, let’s do a test and it could be a market, a channel, a costumer, and that will be the way that you start showing the organization that there are results, better alignment, a much better utilization of the resources, and that is a way of doing it. I have done it in multiple locations, and that helps a lot, because there is the evidence that the process is going to work, it is not only a document or a training session, this is going to be magnificent and this is going to work perfect. So, making it work, and doing it in a way that is going to be evident to the organization is one way to getting people on board. And as I have mentioned it takes education, and a good understanding, again of the business drivers, understanding the supply-chain capabilities, those are different elements that you need to have a conversation with everybody, who is involved, who is going to make the decisions, who are the contributors to every single step of the process, those are ways of getting people on board. The last one I would day, is delivering results with the support of the top management, so I think people will feel satisfied with the fact that you are delivering a process that will give overtime consistent results. Getting them on board is important, because if not they will feel like they are losing power, as it is a multiple-function collaboration, bringing them together and repeating and reeducating individuals and teams I think is the way I have been successful in bringing people on board.

Daniel: That is great, and now at least we will know how to build an S&OP process after this explanation. How do you see this process evolving in the next 15 years, as we know that the world is changing faster than ever, I know it is a clique, but it is true, how do you think this process will change?

Francisco: S&OP has had some evolution in the 1980’s or some of the companies who where doing it till now there has been some changes. The process itself I see there are some human aspects of it, that are not going to change as this is about making a decision, as I mention in the beginning there is a connection between strategic thinking and portfolio execution, so if you are doing that in your day-to-day life and if you are looking at what you want to do in the future, and where are you today, you need to make a plan, to look into all those things. Perhaps the mental process from the individuals might not change that much. Nonetheless, the utilization of the businesses, everything related to bringing all the capabilities, to the S&OP: the data pulls, the many paths of getting information…there is a tremendous amount of information that is know available in order to improve and enhance the decision-making process. As of how I see it evolving, there is going to be a point where you are going to be saturated with data, so the future is related to more computer support, more digitalization, artificial intelligence and all the machine-learning tools, that are now available, that is the way you are going to make all those decisions. There will be new indicators in order to coordinate individual decisions into the process, and that is what is going to get you to the better decisions which will maximize the results of the organization. So in the next 15 years, there will be better ways of getting information on the consumption on products, behavior of the consumers and once you connect those two things, you can predict, and really move ahead of that, you will have a seamless process where the decision-making can be done at every single point in time so you can adjust and maximize the results. Many companies I think are doing it monthly, and even weekly, in the future I think there will be no time-frame, you need to make a decision now, you are going to have all the data available, and everybody is going to have the same information, these are going to be the democratic years if data, not only for a few. With that broader view, I think that is how that evolution is going to go, even if it is 10 or 15 years.

Daniel: Ok, then on this very positive note, because I wasn’t sure if thing are going to get better or more complicated in the future, it seems like you are optimistic Paco, so we will leave it at this. Thank you so much for joining us!

Francisco: Thank you very much again Daniel, I enjoyed being on your podcast!

Daniel: Thank you to our listeners and see you in the next edition of the” Career Success Podcast”, bye!