I never knew what those three letters strung together meant until I was looking for an inventory planning expert ten years ago. Bob Stahl was the third person I contacted and I was hanging onto every word he was conveying about inventory management. My client agreed, and he was quickly hired as our S&OP expert to take our merchandising planning to a whole new level.
Interview Highlights
S&OP is Still Relevant
According to Bob, S&OP is as foundational as double-entry bookkeeping. The only thing that has changed is how it is used and implemented while adding simplicity to the process.
Balancing Demand and Supply
- negative consequences when demand > supply
- negative consequences when supply > demand
Demand Anticipation
- the focus is not on predicting
- forecasting is not a precise science
- we are no longer a WWII supply-driven economy – why demand anticipation comes first
- size of the business does not matter
- focus forecasting or fitted forecasting is just an assist to S&OP
Removing Complexity
- the volume view
- the mix view
- S&OP is the volume view
- executives focus on the volume view
- managers focus on the mix view
The 3-legged Stool
- market view
- customer view
- modeling view
Sometimes, the distribution will be part of the 3-legged stool. The key point is that any single view does not tell the entire story.
The 60-30-10 Rule
- data competency leads to 10% of S&OP success
- taking data and using it for a disciplined approach leads to 30% of success in S&OP
- the final 60% is about changed behaviors
Other Relevant Key Points
- S&OP works during pandemics
- S&OP co-exists with strategic planning
- D.A.M – the demand anticipation meeting
- the reason Bob likes working with consumer products businesses
Bob Stahl’s Books
Bob is the co-author with Tom Wallace on four books on S&OP. I you want a quick introduction on S&OP, start with The Executive’s Guide down below. The other three are more operational in nature.
Other Books, Articles and People Mentioned
Reconciling differences is difficult in any setting, especially in an S&OP-mindset-driven organization. Bob’s favorite book in his area is Getting to Resolution by Steward Levine.
As we were discussing the compatibility between S&OP and strategic planning, Bob mentioned an HBR article by Robert Hayes. The 1985 article is entitled Strategic Planning – Forward in Reverse?
While discussing the 10-30-60 rule which I thought was brilliant, Bob stated that Lora Cecere, a long-time supply chain improvement expert, inspired this mental model. Lora is also a writer and is the Founder and CEO of Supply Chain Insights. My favorite book of Lora’s is Supply Chain Metrics that Matter.
Bob also has great S&OP content on his website.
Bob Stahl is a Class Act
Yes, we make mistakes. Our interview with Bob was our second. That’s because we botched the audio. I was embarrassed to ask Bob to redo the interview. Let’s see – kind, considerate, understanding, and more. That’s how Bob responded when we asked for the do-over. Millions of thanks, Bob.
Great podcast. I really enjoyed listening. Bob is a client of mine who I have worked with for many years. He is a bright, talented man and you did a great job of getting the best out of him. I learned a lot about someone who I have known for a long time. Thanks for sharing.
Greg, thank you very much.
Concur – I cannot say enough about his enthusiasm and expertise on S&OP. One other point I took for granted after listening to him – he’s very humble.