Unlocking the Greatest Management Secret

We have long believed that Integrated Tactical Planning is the 21st century's greatest management secret in that best of companies simply “execute” all the time without stopping to think about whether they are doing the right thing at the right time. Our experience and observations suggest there is scant evidence of consistent methods and standard terminology to define best practices and that many companies do not know what these practices look like. In writing this book, we have been able to release some of the great practices we have deployed when we were in the industry ourselves and, more recently, some of the stunning successes we have had engaging with our clients. One of the standout findings through our research is that every Oliver Wight consultant would insist that there is a weekly replanning process deployed to support a company's monthly management process. Full stop. This may sound simple and reasonable, but where is the background literature to support how this is best achieved? Even when speaking with our software alliance partners, there is some functionality designed within the application, but it is nonstandard terminology and typically a silo functional view at best. We intend to make Integrated Tactical Planning an industry standard term and elevate its understanding from ad hoc to defining something that all companies can, and indeed, should be doing. Most important, we would like to share the benefits realized by clients who have embarked on the Integrated Tactical Planning journey to offer a perspective on how it might help your organization and improve the lives of customers whom you ultimately serve.

Who is this book for? This is intended as an executive synopsis of Integrated Tactical Planning for senior executives to understand the fundamentals so they can inspire their teams with the knowledge of its effectiveness and maybe identify the missing ingredient in truly freeing up management's time to spend more of it on strategy and other value‐add activities. People who are in planning roles will also find it useful, especially if they are frustrated and struggling to get cross‐functional buy‐in to what they know needs to be improved. This book will reveal concepts that have been shown to work across a range of industries and sizes of organization.

Demystifying Terminology

The sales and operations planning (S&OP) process has had a massive impact on business since Oliver Wight first introduced it in the 1980s. In the early days, S&OP was designed to align the Sales outlook with the Production plan and resulting inventory. As one consultant back then was noted saying, ”It is designed to stop the ‘blood on the conference room floor’ caused by the misalignment and misunderstanding of perspectives, when sales and operations people get together to prioritize plans.”

S&OP has become the standard for defining a robust monthly management framework that brings together often‐competing plans, perspectives, and goals. The fundamentals introduced by Oliver Wight, such as, “one set of integrated plans and numbers,” being the “decision‐making forum for the business,” “management by exception,” and “bad news early is better than bad news late,” have stood the test of time.

More recently S&OP has evolved to be known as Integrated Business Planning, which is designed to include all other plans and functions that were not initially included in S&OP. It now truly does integrate all plans and functions in a business and is seen as the management process for running a business, big or small. It includes product and portfolio management, financial evaluation of the plans, and, most important, alignment with strategy. Indeed, you could argue that the modern version of Integrated Business Planning is designed to operationalize strategy.

The terminology in this book may be a bit daunting if you've not experienced an S&OP or Integrated Business Planning process before, not to mention the myriad technical terms used in the planning and supporting processes. Therefore, we have included a glossary at the end of this book, and the APICS Dictionary is also a good source of information about standard processes and terms.

If you are familiar with the term S&OP, we'll be using Integrated Business Planning from here on, and although they are not 100% interchangeable, for the purpose of this book, we'll assume that it means the monthly management framework. We will explain a little more in Chapter 2 but have intentionally kept references and descriptions of Integrated Business Planning to a minimum, because this book is about Integrated Tactical Planning.

The Rationale

There has been something missing from the monthly management process that has, in many cases, suboptimized the outcomes, which is, how to aggregate longer‐range plans and align them with what is being done day to day? One of the hallmarks of Integrated Business Planning is that it is designed to focus on the mid‐ to longer term of at least 24 months. So, who is looking after the short term? These are time‐critical issues and processes, but if you have designed only a monthly management process then how does this work? That is where the weekly Integrated Tactical Planning process fits in.

It is a change in mindset. Rather than create a great plan out in the future and then “hope and pray” that it actually happens, the Integrated Tactical Planning process will take said plan with both hands, watch over it, respond to its needs, and then deliver it safely to execution. Another Oliver Wight truism, which is relevant here, is ”silence is approval.” This means that if senior management doesn't hear anything, then they can safely assume that everything is still on track.

The Benefits

One of the most notable differences between a monthly planning process and a weekly planning process is obviously cadence. If you're running it weekly, each year there are 52 improvement opportunities, as opposed to 12 at most for a monthly process. From start‐up of Integrated Tactical Planning to the delivery of sustained improvements in performance metrics, working capital, and cross‐functional teamwork can be as quick as 12 weeks. In fact, many of our clients tell us that they start getting benefits in the first 4 weeks. One process lead at an agri‐business company commented, “The sales lead loves the new process because it has eliminated at least 12 phone calls a day, and the gap we identified 4 weeks ago between the demand plan and the projected harvest volumes allowed us to purchase from other suppliers early and closed the supply gap cost‐effectively.” Integrated Tactical Planning helps foster confidence in execution and credibility from customers who view the organization as a reliable partner.

Of course, if there is only the weekly Integrated Tactical Planning process without the longer horizon monthly process, ultimately, there will be a loss of direction and connection to direction setting and strategic trade‐offs, so both monthly and weekly processes are needed. It is, however, important to recognize that they have very different purposes and objectives. On a final note, some companies have tried to blend both weekly and monthly processes into one, by running a weekly S&OP process or breaking their monthly numbers into weeks. This doesn't work. Just from a purely numbers perspective, it more than quadruples the number of data points and creates a level of detail that is often unworkable. It often causes people to drop the long‐term view or aggregate the short‐term numbers to too high a level to properly see the issues.

Acknowledgments

This book would not have been possible without the dedication of a number of people. The Oliver Wight International Board is to be thanked for seeing the value of elevating the understanding and awareness of the Integrated Tactical Planning process and approving the plans for publication of this book. The following people were particularly instrumental:

• Rod Hozack for doing the background research, identifying the gap in our offerings to clients, and sparking the concept for further development; he also brings a wealth of experience in product and portfolio management and strategy deployment

• Stuart Harman for being the co‐developer of the process in Asia Pacific and bringing his experience of performance measurement and continuous improvement

• Todd Ferguson for seeing the vision and possibilities and bringing his depth of knowledge in demand planning, execution, and forecasting

• Dawn Howarth for bringing her deep understanding of operations, manufacturing, supply chain, and her brilliance in editing the copy down to be truly focused and razor sharp