OBTAINING SPECIFIC ANSWERS FROM STRATEGY

       In our third and final segment of the discussion regarding inputs from organisational strategy to supply chain management in general and Sales &Operations Planning (S&OP) in particular,we will discuss some specific examples that should be addressed in the context of a business algorithm.
       As we have been suggesting, the business strategy needs to be very clear and communicate with great specificity "how" it is intended to be executed.There is a place for brief, high-level summaries of visions and strategies but there must be substance behind those.
       In one case we experienced recently,a "Strategy on a Page" document gave a clear indication of the organisation's overall vision and the top-line financial objective of EBIT (earnings before interest and tax) growth rate but not much more.
       In the business algorithm, presented in the diagram, one can find the sorts of drivers that can more directly affect one than EBIT itself. These then lead us to the specific points that must be addressed and specified in an effective strategy.(This diagram, by the way, comes from some very nice work done by one of our clients in Australia.)
       Functions and personnel need more detail about things such as the following:
       What do we expect from core business and/or existing SKUs?
       What do we expect from new product development?
       What do we expect from business efficiencies and cost savings?
       Which segments or channels or the market do we expect to grow and therefore intend to invest in to achieve this goal?
       What factors should be considered as we generate gap closing initiatives?
       Volume increases are expected to come from where?
       What does being low-cost producer mean for manufacturing and across the supply chain?
       From where are we expecting cost reductions fromG&A?
       What are the terms for capital available and the restrictions?
       What are the specific growth targets by brand, business unit, channel and account?
       Exactly what are the performance targets across the business?
       How can we achieve alignment between resources, demand and opportunities?
       Are policies aligned with the strategy?How will we make customers knowledgeable regarding our strategy or policies?
       Is the strategy interpreted into the shorter term business plan accurately?
       What are the expectations regarding performance measures for aspects such as brand health and penetration, NPD contribution, budget control, resource productivity or success rates of NPIs.
       Of course, these are just the start of the sorts of specifics that are required to manage in this new, tighter, integrated way.
       As with the S&OP process itself, the documentation of the requirements can and should evolve in due course over the first months following implementation.
       Weekly Link is co-ordinated by Barry Elliott and Chris Catto-Smith CMC of the Institute of Management Consultants Thailand. It is intended to be an interactive forum for industry professionals; we welcome all input,questions, feedback and news at:bjelliott@abf1consulting.com cattoc@cmcthailand.org