Beyond Budgeting meets Executive Sales & Operations Planning
Management across industries are paying more and more attention to two management frameworks. Beyond Budgeting and Executive Sales & Operations Planning (S&OP) are powerful practices in their own rights, and organizations can benefit from their similarities.
Management processes centered around budgeting, and were a command and control for management, that monitors and measures, and rewards and controls around these measures. So BBRT created the Beyond Budgeting management framework to transform organizations, getting companies away from traditional budgeting, putting focus on people — and empowering people to go after stretched goals.
Bjarte Bogsnes, VP at Statoil, has been active in this space, helping his organization and others adapt this framework. Beyond budgeting focuses on people and dynamic forecasting, which allows people to quickly react to opportunities, dynamically allocate resources to optimize, and drive ambition to action. Read his amazing post – Towards more self-regulating management model
Executive S&OP, a term coined by Tom Wallace, is a management framework and decision making process designed to:
- Balance demand and supply
- Link finance and operations to support profitable alignment
- Drive management to great visibility and robust decisions
Wallace has helped many companies realize the value of reliable forecasts with this framework.
As a planning practitioner, I follow these thought-leadership concepts very closely. And I have noticed several similarities worth noting:
- Performance Excellence: Both frameworks are geared towards performance excellence.
- Forward Looking: Both looking ahead, not behind.
- Empowering People: Both expect people to be prepared and proactive, empowering people to make decisions quickly and collaboratively. This is not “command and control;” its “empower and win.”
- Cutting Edge: Both frameworks make traditional budgeting redundant via real time, rolling and dynamic forecasting that quickly react to ever-changing business climates.
- All Encompassing: Both focus on organization-wide alignment and collaboration, allowing for integrated business planning and decision making
- Focus on Targets and resources : Both focuses on setting targets that companies can better and evaluate resources readiness to meet those targets. Executive S&OP focuses on Sales and Operations, preparing operations to have the resources (men, machine, material, etc.) to meet the targets, while Beyond Budgeting focuses on Target setting and resource allocation in a dynamic manner, empowering the people to make quick decisions.
Couple of point of differences.Executive S&OP focuses on a monthly calendar, planning for few months ahead in rolling cycles, but able to react to events that can help drive opportunities or mitigate risks. Beyond Budgeting actually propagates, completely getting away from a calendar and looking at leveraging opportunities on hand.
Beyond Budgeting has enjoyed adoption across many industries. Executive S&OP users tend to be manufacturing companies, but the framework can work well for just about any industry.
Beyond Budgeting to meet Executive Sales & Operations Planning
The real power of these two frameworks lies within their many similarities. While getting away from calendar is extreme, this is where bringing the best of them together can be very useful. I wrote this blog to show how companies can use these great concepts to drive a culture of better forecasting, greater readiness and faster responsiveness.
Your comments are welcome …