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Sales and Operations Planning

Sales and Operations Planning. Process Overview. S&OP Process. Build an integrated, collaborative decision process that guides the execution of the Supply/Demand strategies for the entire business.

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Sales and Operations Planning

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  1. Sales and Operations Planning Process Overview

  2. S&OP Process Build an integrated, collaborative decision process that guides the execution of the Supply/Demand strategies for the entire business. • To Update and Synchronize changes in the market and/or business strategy. This monthly process provides for and addresses: • Variances--Past months, current month, End of Year • Market conditions • New Products • Alternate Plans • Conflict Resolution • Contingency Plans • Business “buy-in”

  3. S&OP Process Issues with Variability

  4. Variability Issues and Buffers in a Make to Stock Environment Order Cycle Time Forecast Order Insertion Point Deliver Source Make Supplier Customer Material Inventory Filter Production Flexibility Filter FG Filter Back Order Filter Market Demand

  5. Variability Issues and Buffers in a Hybrid Environment Order Cycle Time Forecast Production Plan tuning Order Insertion Point Deliver Source Make Supplier Customer Material Inventory Filter Production Flexibility Filter FG Filter Back Order Filter Market Demand

  6. S&OP ProcessVariability in the Supply Chain 1. It’s not normal 2. With this shape even the best point is only 50% accurate. 3. Must change the shape Plan Frequency 2 3 1

  7. DEC S&OP ProcessVariability in the Supply Chain Plan 1. It’s more normal 2. With this shape 90% is possible. 3. Still has special causes Frequency 2 3 1

  8. S&OP Process Objective • Agree on upcoming demand/resource match that balances needs of business and customers. • Understand and fix the problems – continuous improvement of the S&OP process. • Review results of implementing plan and adjust. It is a collaborative process for making decisions.

  9. What is the S&OP process?

  10. Basic S/D Planning Process No S&OP Business Planning Sales Planning Production Planning Capacity Planning Forecasting & Demand Management Master Scheduling Detailed Planning & Execution Systems

  11. Basic S/D Planning Process With S&OP Business Planning Sales & Operations Planning Sales Plan Operations Plan Capacity Planning Forecasting & Demand Management Master Scheduling Detailed Planning & Execution Systems

  12. Basic S/D Planning Process and InteractionsNo S&OP Customer Order Forecast Order Information Plan Sales Sales Forecast Account Information Order Sales Plan Market Marketing Commit Demand Forecast Business Strategies Plan SC Order Information Operations Master SC Plan Plan Source Plan Make Plan Deliver Deliver Distribution Return Plan Return Goods

  13. Basic S/D Planning Process and InteractionsWith S&OP Customer Order Information Feedback Plan Sales Sales Forecast Account Information Order Sales Feedback Plan Market Demand Forecast Order Information Marketing Commit SOP1 Demand and Sales SOP2 Supply /Resource SOP3 Decision Meeting S&OP Team Business Strategies Plan SC Order Information Operations Master SC Plan Plan Source Plan Make Plan Deliver Deliver Distribution Return Plan Return Goods

  14. Strategic Planning Business Planning Master Scheduling Detailed Planning & Execution Plant Scheduling MRP Supplier Scheduling S&OP Bridge Business Strategy Executed Business Strategy Formulated The Bottomless Pit of Good Intentions Caused by different time horizons (Qtr v. daily), misalignment of goals, functional silos, lack of information (visibility)

  15. Strategic Business Objectives • ABC Customer List • Raw Material • Market Segment Growth • Pricing • Inventory Business Unit Leaders Operations VP OWNERS Sales VP mm,09,yy mm,12,yy mm,15,yy S&OP Decision Meeting Supply/ Resource Planning S&OP Process Demand & Sales Planning Production Schedule FEEDBACK FEEDBACK FEEDBACK • Demand Plan to Resource # Detail • Will include How Much, When and Where • Plan selection or proposed Hybrid • Input into the Process for Improvement • KPI review • Supply Plan Alternatives that best satisfy the Demand Plan OUTCOME S&OP Process

  16. Institutionalizing a PracticeThe Results Ineffective or Misleading Companies (Count) 1- never or does not exist. 2 -sometimes, 3- frequently, Institutionalized Effective 4- mostly, 5- always or definitely exists Process Performance

  17. Levels of Detail in Planning Total Company Business Strategy Business Plan Business Unit S&OP Product Family Product Subfamily Increasing Level of Detail Decreasing Forecast Accuracy Sales Plan Model / Brand Operations Plan Package Size Master Schedule SKU (Resource #) Execution Schedules SKU (Resource #) by Customer Orders Delivery Schedules SKU (Resource #) by Customer by Location

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