9 Joint supply and demand planning to ensure balance 10 Measurement of the process 11 Supported by integrated supplydemand planning technology 12 External inputs to the process FIGURE 1 SUCCESS FACTORS OF SALES &What is Sales and Operations Planning (S&OP) and why do you need it?At a recent seminar Steven Thacker explained 👇 TIMESTAMPS (in case you want to skip) 👇As a highlevel executive strategy system, S&OP starts with gathering data about variables such as sales forecasts, cash on hand, and inventory From there, a formal meeting for demand planning ensues to build forecasts without input
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S&op demand planning meeting-Demand Planning is just one of five steps of the whole S&OP process The Demand Planning step uses the statistic sales forecast and the experience ofS&op sales and operations planning Sales and operations planning (S&OP) is a well understood practice within supply chain S&OP represents a 3 to 18month strategic horizon, in which organizations model out plans for entire product families based on demand forecasts
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The Sales and Operations Planning (S&OP)1 process is well known and understood in the world of supply chain management In most companies, the monthly S&OP meeting brings executives from all major operational departments – sales, marketing, materials/procurement, manufacturing, transportation, and finance – together toSales and operations planning (S&OP) is a business management process where leadership and executive teams meet to ensure each business function is aligned to balance supply and demand S&OP requires crossorganizational collaboration to create detailed forecasts for predicted salesSales and Operations Planning (S&OP) A integrated business process that drives collaboration, focus and alignment across multiple divisions and departments in a company 5 • Demand plans • Financial goals • Supply plans • Inventory quantities • New product plans S&OP brings together Inventory 6
Demand Planning is an Integral Part of S&OP S&OP is a collaborative process to arrive at a balanced demand and supply plan Using collaboration to arrive at Demand Planning provides a better signal to the S&OP/IBP process S&OP Strategic Plan Master Schedule Demand Plan Production and Material Plan Three to five year strategic plan for the familyThese are often weekly meetings to prepare for the monthly S&OP executive meeting, where the big decisions are made;Planning volume mix demand supply Thus SIOP is a monthly formal balancing of supply and demand through a six to twelve month planning horizon by aggregate product families It generally includes incoming orders (bookings), backlog, shipments, forecast, finished goods inventory production and capacity
Take S&OP to the next level with new approaches such as dynamic inventory planning and more Reconciling Perspectives 23 Exploring the central aspects of demand alignment By Bradley McCollum Explore the strategic objectives of demand alignment and the key factors ofOn a monthly basis or at least quarterly, the S&OP team should have formal meetings with customers to keep track of changes in their strategic thinking and forward planning The alignment also includes gathering and interpreting customerdefined performance metricsS&OP manager typically runs meeting Team includes VP sales, VP marketing, VP SCM, VP finance, VP operations, VP product management
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S&OP, or sales &The devil is in the detail Accurate S&OP planning entails processing lots of data This takes time, so data is often out of date before the plan is even ready An alternative is S&OP solutions using prescriptive analytics that overcomeTypically, the key meetings include the Demand consensus meeting, Supply Collaboration Meeting, the General Manager Review meeting, and the Operations Review meeting In most organizations, there will be an executive Sales and Operations Planning meeting
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While inventory optimization and S&OP use the same demand plan, inventory optimization has typically been implemented as a standalone process In fact, many inventory optimization software packages have builtin demand planning capability This functional duplication with S&OP further attests to the practical exclusivity of the two processes•S&OP is about coordinating the Volume •Data has always been a challenge •Always been Fragmented, Incomplete, dated •Limited by tools and Computing power Demand Meeting Supply Meeting Gather Data S&OP Meeting Pre S&OP MeetingThe S&OP process focuses on the tactical horizon, typically from 3 to 18 or 24 months When developing the process timing, the key point in the calendar is the existing business planning meeting This has to become the executive S&OP meeting, and the process steps leading to that have to be backward scheduled accordingly
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The demand consensus meeting is one of the most important steps in sales and operations planning (S&OP), with the resultant demand plan serving as a critical input for all other S&OP process meetings Without a demand plan as aEven though the HANA engine allows running simulations directly at the S&OP meeting, it is still recommended that focus is on decisionmaking and information rather than dataSales and Operations Planning (S&OP) is an offshoot of production planning and owes its evolution to practitioners of operations management It is looked at as an extension of aggregate planning
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Operations planning, is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction With an eye on financial and business impact, the goal of S&OP software is toAPICS defines S&OP as the function of setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc, as expressed in the overall business planStep 5 Approve and Release Executive S&OP Meeting Once the demand and supply plans are reconciled and finalized, the result is presented to the executive team during the monthly Executive S&OP meeting The output of the meeting is an
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S&OP stands for sales and operation plan and sales and operations planning at the same time It is both a plan and the process that creates, implements, monitors, and continuously improves the plan The S&OP process involves a series of meetings to meet a consensus A demand and production plans that reflect the results of demandside sensingThe second week focuses on supply planners' efforts to balance the unconstrained demand with the constrained supply planning Meetings are held before the official sales and operations planning meeting to resolve any demand and supply imbalances with alternative supply chain options Case Study – Manufacturing Company S&OP ProcessApprove or change recommendations from the pre S&OP meeting for demand and supply plans, authorize any changes to plan (new machines, hire additional labor), review key performance measuresWho?
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Sales and Operations Planning (S&OP) is a corporate practice intended to deliver superior supply chain execution by leveraging a deeper alignment with other divisions beyond supply chain most notably sales, finance and production The practice usually revolves around a monthly process starting from the sales forecasts and ending with quantified production plansDemand Planning Translate demand in net requirements Supply Planning Review production capacity and ability Pre S&OP meeting Resolve issues, recommendations and alternative plans Executive S&OP meeting Single companywide plan Page 7 What is S&OP Organizational position Marketing ManagementS&OP process owner Demand planning team Supply planning team PreS&OP team Sets top management expectations, authorizes necessary resources, and clears obstaclesLeadership accountability answers the question Leads the monthly S&OP planning process, manages conflict, and guides the S&OP teams toward consensus
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Therefore, it's essential to have the right people present During the meeting, attendees review tactical plans in every area to ensure alignment with the company's business planOPERATIONS PLANNING (S&OP) PROCESSThe consensus or preS&OP meeting provides the details to the executive review process, and this dashboard provides visibility into the status of those submitted operations and supply chain plans
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Key Point A Sales and Operation Planning (S&OP) meeting is a meeting to design the future course of a business Yet, too many companies spend too much time talking about the past or the current period I recommend using about 6070% of the time discussing the futureOrchestrate all players with sales and operations planning (S&OP) while remaining aligned with your business strategy and financial objectives We have the time and insights to focus on scenario management and decisionmaking documents for the S&OP meeting" from the customer demand, the whole planning and the feedback to the3 Part of an S&OP Process Elements of S&OP meetings • Number of meetings – One To match supply and demand – Three Demand, then supply, then final executivelevel adjustments • Frequency and length – Monthly or weekly – 2 hours to half of a day • Crossfunctional – Demand forecasting organization – Supply chain
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Sounds simple, doesn't it?PreSOP Meeting This stage of the S&OP process requires leadership personnel from multiple departments to meet, collaborate, and evaluate the financial ramifications of the forecasted demand and supply plans 6 Exec S&OP Meeting Next, leaders from finance, sales, operations, marketing, and other relevant departments meet once again to discuss all dataA Global S&OP meeting is conducted to review and discuss the supply plan Open issues or individual regional concerns are addressed in this meeting The Regional Master Production Schedulers develop more detailed plans for plants in their region They are constrained by decisions made in the Executive S&OP meeting
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Step 4 Integrated Reconciliation Predictive and analytical reports S&OP graphs showing future volume forecasts of sales, production and resulting inventory for the total business and ALL product families over a minimum 18 month horizon S&OP predictive reports for ALL product families and the total business showing the latest year endS&OP meetings are decision meetings – not discussion meetings The ability to make decisions is the most central element in the whole process!It depends on collaboration and consensus from each executive stakeholder to generate forecasts for future sales Depending on your company's goals, S&OP planning might take place monthly, quarterly, or yearly For some businesses, however, it
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The PreS&OP meeting didn't happen this month, and the data was summarized by the S&OP coordinator for the Executive S&OP meeting Track your progress over time Including a simple chart like the one below in your monthly executive deckTo accomplish the demand and supply balance Sales and Operations Planning Steps to S&OP There are two distinct phases to S&OP 1) process design, and 2) process conduct In the design phase, all of the technical workings are engineered, and in the conduct phase S&OP is used as a business management process The following 10 stepsS&OP, or sales and operations planning, is an integrated business management process that drives organizational consensus to balance supply and demand The S&OP process, which typically happens monthly, aligns operational areas – such as sales, marketing, product development, manufacturing, procurement, finance, and accounting – so they work in concert to
Supply Review Meetings
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