Is the Traditional S&OP Process Outdated and Heading to Extinction?

Last week on Talking Logistics, I had a very thought-provoking conversation with Tony Martins, VP of Strategic Services at Halo Pharmaceutical. Tony is a unique supply chain executive — he not only sees the potential value of social networking in transforming supply chain processes, he’s also a thought leader and visionary in this area, publishing his ideas and models on his blog, Cyber Supply Chain.

Tony speaks from experience. In his previous role as VP of Supply Chain at TEVA Canada (a subsidiary of TEVA Pharmaceuticals), he deployed a social networking solution that greatly facilitated the way employees across various departments and geographies communicated and collaborated with each other to resolve problems and exceptions quickly (see “Want a Fast-Response Supply Chain? Facilitate People-to-People Communication”).

Since then, Tony has continued to expand his thinking on how supply chain processes and workplace structures need to change in response to today’s highly dynamic business environment (a topic Jordan Kass from C.H. Robinson also discussed in a recent Talking Logistics episode, “Why Supply Chain Innovation Matters in a Fast-Changing World”). For example, a concept Tony’s written about is managing in NOW mode, which he defines simply as “If it’s happening now, you deal with it now.” In our conversation last week, Tony contrasted working in NOW mode with the “traditional, cyclical, monthly” S&OP process, which he thinks “is condemned to disappear in the next 5 to 10 years, maybe sooner.”

Here’s a short excerpt from his comments:

The problem [with the traditional S&OP process] is that it takes three weeks, usually, to deal with something that already happened last month. And you’re doing demand planning with data that is old. By the time you get to the third week of the month, demand has already changed. The world doesn’t stop moving while everybody is having these meetings and producing these [graphs and reports]. The data you see on the graph on the third week of the month is already obsolete. I remember many times going to these sessions with the standard graphs and then having to bring additional graphs to bring everybody up to date on what happened the past few weeks. [This process] doesn’t make any sense, not for the world that goes very fast.

So, do you agree with Tony, is the traditional S&OP process outdated and heading to extinction? More broadly speaking, do companies need to rethink and transform business processes and workplace structures that were designed for more static (less dynamic) business environments? Is greater use of social networking and virtual workplaces part of the solution? Post a comment below and share your viewpoint! Also, watch the rest of last week’s episode to answer this important question: Are you working in a Company of Yesterday or a Company of Tomorrow?

Also, if you are attending the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference in October, don’t miss the opportunity to engage with Tony Martins in person. He will be participating, along with Craig Dickman (CEO at Breakthrough Fuel) and Bruce Welty (CEO at Quiet Logistics), in the mega session I am moderating Wednesday morning, October 23 on “Mega Trends Impacting the Supply Chain.” I hope to see you there!