ADAPTIVE SALES & OPERATIONS PLANNING (DDS&OP)
Adaptive Sales and Operations Planning is the integrated business process that provides management the ability to strategically define, direct and manage relevant information in the strategic relevant range and across the enterprise. Market Driven Innovation is combined with Operations Strategy, Go-to-Market Strategy and Financial Strategy to create strategic information and requirements for tactical reconciliation and strategic projection to effectively create and drive adaptation.
GET THE BOOK! Dick Ling, Carol Ptak and Chad Smith Institute introduce their new book on Adaptive S&OP.
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Adaptive S&OP completes the Demand Driven Adaptive Enterprise framework and restores the original promise of Sales and Operations Planning for modern circumstances. Below is the basic Adaptive S&OP schema.​
Adaptive S&OP is centered around Strategic Integrated Reconciliation which is defined as:​
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The combination of relevant informational components in the strategic relevant range to produce, monitor, and adapt a company's business plan for the protection and promotion of ROI now and in the future.
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As with the the operational and tactical side of the DDAE framework Adaptive S&OP utilizes a model. This model is an attempt to define what the business is, how it operates, and what it can achieve given certain conditions and scenarios. The model is defined by a set of assumptions across the three areas of governance, market potential, and strategic capability.​
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GOVERNANCE: What are the management rules, policies, restrictions, and expectations over the strategic time frame?
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MARKET POTENTIAL: What will be the composition of our offerings and customer base? In other words, what will we sell over the strategic time frame?
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STRATEGIC CAPABILITY: What is and will be the defined capability of the DDOM in the strategic time frame?
GETTING READY FOR ADAPTIVE S&OP
Companies cannot simply turn on Adaptive S&OP. You cannot enable a strategic adaptive loop without a corresponding and intersecting tactical adaptive loop. Thus, there are some critical prerequisites that must exist to make the process work properly. Each organization will have to follow a path to meet the requirements to enable Adaptive S&OP. This path is evident in the stages of maturity of a Demand Driven Adaptive Enterprise. Adaptive S&OP does not appear until the fourth stage.
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DDI has a powerful suite of educational products designed to support an organization's journey through the DDAE stages of maturity. You can learn about all of these products in our EDUCATION SECTION.
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Below you find basic explanations for each of the five prerequisites for Adaptive S&OP.
THE DDAE STAGES OF MATURITY
THE REQUIREMENTS FOR ADAPTIVE S&OP
REQUIREMENT #1: Understanding the VUCA World and complex systems
Big disruptions are going to happen to your company and business and supply chain models cannot be based on return on asset maximization strategies that ignore this basic fact. While the VUCA World presents a daunting mountain to climb, it is a climb that nonetheless must occur if a company expects to survive and thrive in the modern industrial global economy. Either companies learn to proactively identify, manage, and mitigate the limitations this world presents, or those limitations will push many more organizations right out of existence. The evidence is quite compelling especially during the 2020 pandemic—conventional approaches are failing to adequately address the challenges of the VUCA world.​
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REQUIREMENT #2: A commitment to flow-based efficiency
Cost is simply a calculated output of a period of activity. Cost is not to be managed, but rather simply calculated and reported. What is to be managed is flow. Flow drives ROI, or conversely the lack of flow ruins ROI. This means that leadership must understand the dangers of managing to cost-based efficiency and the basic merits of managing to flow-based efficiency. These two management modes of operation do not reconcile and cannot be effectively compromised to a better economic position. Any attempted coexistence will simply cause distorted, conflicting, and oscillating behavior that will impede flow and adversely impact ROI.
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REQUIREMENT #3: A flow-based operating model
Adaptive S&OP assumes at least the partial implementation of a flow-based operating model and the basic assumptions underlying it. A commitment to these assumptions all but defines a commitment to flow-based operational efficiency. Without this type of operating model, assets will continue to be misaligned from actual market requirements, obscuring relevant information, increasing waste, impeding flow, and raising the organizational threat level in the VUCA world.
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REQUIREMENT #4: A tactical adaptive loop
The adoption of a flow-based operating model requires the ability to practically adapt the model based on past performance, impending challenges, and planned changes at the product, resource, or strategic level. This is accomplished in the DDAE model through the four tactical elements of the Demand Driven Sales and Operations Planning process. DDS&OP becomes a critical bidirectional translation process between company direction developed at the strategic level and the range of potential capability inherent in the DDOM. Without this “tactical transmission,” strategy remains too remote and disconnected from real operational capability to drive effective and timely adaptation.
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REQUIREMENT #5: A defined strategic direction
The final starting prerequisite for Adaptive S&OP is that there is a defined strategic direction. This is a prerequisite that should be familiar to those who have been involved in any S&OP process. Strategy can be expressed or implied, but every company must have a strategy. Senior
management should clearly articulate the strategy, or the subsystems will assume what the strategy is, opening the door to invalid assumptions (with all the best intentions), aligning actions to different strategies, and risking organizational alignment and coherence. The senior management team is ultimately responsible for envisioning and articulating the desired future state and how the company will adapt and innovate to get there.
LEARNING MORE ABOUT ADAPTOVE S&OP
This immersive one day workshop led by an Endorsed DDI Adaptive S&OP Instructor will expose senior leadership to:
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The basic history of S&OP and its primary objectives
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The prerequisites of relevant information in order to put a company on a path of growth
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The inability and failure of conventional approaches to produce relevant information
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An organizational framework called the Demand Driven Adaptive Enterprise Model
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The seven elements of Adaptive S&OP
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How to begin to implement the DDAE Model
This seminar is designed for executive teams looking to dramatically change the trajectory of their organization and overhaul the way the business connects strategy to operations and operations to strategy. The seminar is typically delivered on an in-house basis to executive teams.