As many S&OP practitioners will confirm, building broad advocacy for S&OP deployment is a critical foundation for a successful and sustained S&OP deployment. Such advocacy is, of course, important in all significant change initiatives but several characteristics of S&OP mean that advocacy and engagement is critical;
S&OP is a highly cross-functional process which requires significant process and cultural change
Awareness and understanding of S&OP is often very limited outside the supply chain function
Effective deployment often requires a sustained change effort over many months to deliver impactful and sustained business value
A key differentiator in deployment success is the ability to address these themes through sound advocacy and engagement approaches. For this reason, learnings on this aspect of change management are of great practical value to businesses embarking on S&OP deployment or enhancement.
There is often considerable discussion on how to engage the Commercial function in S&OP as they play a key role in the process (and rightly so). However, the Finance function can provide valuable and hugely influential advocacy to support the execution of S&OP. The Finance function should be seen as a key partner in the S&OP process due to the roles they typically deliver in organisations;
- The Finance team often have an overall leadership role for business planning in the organisation. This invariably includes financial planning (‘budgeting’) but often also extends to a wider remit of broad business planning (typically on a 3-year horizon) and also strategic planning which may extend planning scope to a 5-10-year outlook. S&OP, in its mature state, is an enterprise-wide planning process which ultimately aims to align operational, tactical and strategic planning and also (in the form of Integrated Business Planning, IBP) drive financial planning directly as an outcome. It is therefore clear that, as S&OP impacts on the organisation’s core approach to planning, Finance as a key driver on planning must be at the heart of this change.
- The Finance function are also routinely tasked with supporting decision-making at a senior management level. This involves building clear situation analyses, quantifying these in robust financial form and presenting options or scenarios for decision-making. Finance are therefore already accepted as key actors in enterprise decision-making and recognised as providers of key enabling information. A core element of mature S&OP is the regular discipline of the process to create insight and drive executive decision-making and therefore the experience and expertise of the Finance team in this area provides another key driver for any S&OP deployment to leverage this capability.
- The Finance team also routinely work cross-functionally in order to understand business dynamics (both internal and external) across the organisation, monitor financial performance and create financial plans by reconciling inputs from across the enterprise. This experience in working across functions again makes the Finance team a key partner and advocate in any S&OP deployment where building cross-functional collaboration is a pre-requisite for an effective execution.
So, it is clear that Finance can bring significant capability and influence as a potential advocate for S&OP adoption, but what is in it for them?
In short, being at the centre of S&OP deployment provides the Finance team with the opportunity to drive quality and increased efficiencies in their traditional planning role. Importantly, it also provides opportunities for the function to further develop and enhance their role as business partners to key decision-makers across the organisation.
As outlined above, the Finance function is typically tasked with overseeing a range of business planning processes. In order to facilitate this, the team are often required to work across functions to gather insight on performance and the business outlook and then to analyse and challenge these inputs in order to build scenarios and decision-making options for executive leaders. It is not unusual for the Finance team to find that this information lacks transparency and context, and it requires significant resource to challenge and ‘unpick’ data so that a reliable and clear picture can be provided for decision-making purposes. This information is also rarely provided proactively which places further burden on the Finance team to synthesise robust decision-making support at short notice.
For these reasons, the adoption of S&OP offers many benefits for Finance such as;
The transparency on business performance and outlook created by regular monthly S&OP meetings
The cross-functional nature of S&OP means that the scenarios created and discussed in the S&OP cycle are already reconciled across functions
The discipline of the monthly S&OP cycle ensures that an ongoing, proactive view of performance and outlook is continuously created
The S&OP process also supports the concept of finance business partnering, an approach now commonly used to bring finance support closer to business decision-makers. This ensures that the finance function evolves beyond its traditional stewardship and statutory accounting roles to more directly support business decision-making. S&OP facilitates this by engaging finance teams to participate as key partners in S&OP discussions on a monthly cycle. This exposure and participation enhances business understanding in the finance community and allows finance staff to develop both a deep understanding of business dynamics but also sound business acumen.
Participating in the cross-functional S&OP process also helps the Finance team to develop and reinforce strong cross-functional working relationships.
The adoption of S&OP is therefore an attractive initiative for the Finance team, and this can be leveraged effectively when seeking broad enterprise engagement in the process. This means that in addition to communicating the higher-level corporate benefits of S&OP, it is important to position the finance-specific benefits of S&OP adoption, which both offers quality and productivity gains for the current planning role of Finance, but also offers the opportunity for an enhanced business partnering role in line with the strategic evolution of many Finance teams.