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.

• 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”

S&OP Process

Issues with Variability

Variability Issues and Buffers in a Make to Stock Environment

DeliverMakeSource

Order Insertion Point

CustomerSupplier

Market Demand

Back Order Filter

FGFilter

ProductionFlexibility

Filter

MaterialInventory

Filter

Order Cycle TimeForecast

DeliverMakeSource

Order Insertion Point

CustomerSupplier

Market Demand

Back Order Filter

FGFilter

ProductionFlexibility

Filter

MaterialInventory

Filter

Production Plan tuning

Variability Issues and Buffers in a Hybrid Environment

Forecast Order Cycle Time

S&OP ProcessVariability in the Supply Chain

12 3

Fre

quen

cy

1. It’s not normal2. With this shape even the best point is only 50% accurate.3. Must change the shape

Plan

DEC S&OP ProcessVariability in the Supply Chain

12 3

Fre

quen

cy

1. It’s more normal2. With this shape 90% is possible.3. Still has special causes

Plan

S&OP Process Objective

1. Agree on upcoming demand/resource match that balances needs of business and customers.

2. Understand and fix the problems – continuous improvement of the S&OP process.

3. Review results of implementing plan and adjust.

It is a collaborative process for making decisions.

What is the S&OP process?

Business Planning

Sales Planning

Production Planning

Master Scheduling

Detailed Planning &Execution Systems

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Basic S/D Planning Process No S&OP

Business Planning

Sales & OperationsPlanning

SalesPlan

Master Scheduling

Detailed Planning &Execution Systems

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OperationsPlan

Basic S/D Planning Process With S&OP

Basic S/D Planning Process and InteractionsNo S&OP

Sales

Marketing

Distribution

Operations

Customer

Plan Source

BusinessStrategies

Plan DeliverPlan Return

Plan Sales

Plan Market

Plan Make

Plan SC

Deliver

Commit

Goods

Order Forecast

Account Information

Demand Forecast

Master SC Plan

Sales Forecast

OrderInformation

OrderInformation

Order

Return

Sales

Marketing

Distribution

Operations

Customer

Plan Source

BusinessStrategies

Plan DeliverPlan Return

Plan Sales

Plan Market

Plan Make

Plan SC

Deliver

Order

Commit

Goods

Order Information

Account Information

Demand Forecast

Master SC Plan

Sales Forecast

OrderInformation

S&OPTeam

SOP1Demand and Sales

SOP2Supply /Resource

OrderInformation

SOP3Decision Meeting

Return

Basic S/D Planning Process and InteractionsWith S&OP

Feedback

Feedback

•Strategic Planning

•Business Planning

• Master Scheduling

• Detailed Planning & Execution

– Plant Scheduling

– MRP

– Supplier Scheduling

BusinessStrategy

Formulated

Business Strategy Executed

The Bottomless Pit of Good Intentions

S&OP Bridge

Caused by different time horizons (Qtr v. daily), misalignment of goals, functional silos, lack of

information (visibility)

FEEDBACK FEEDBACK FEEDBACK

OUTCOME

•Demand Plan to Resource # Detail

•Will include How Much, When and Where

•Supply Plan Alternatives that best satisfy the Demand Plan

•Plan selection or proposed Hybrid

•Input into the Process for Improvement

•KPI review

OWNERS

Sales VP

Operations VP

Business Unit Leaders

mm,15,yymm,12,yymm,09,yy

Demand & Sales

Planning

Supply/ Resource Planning

S&OP Decision Meeting

Production Schedule

S&OP Process

Strategic Business Objectives•Market Segment Growth •Pricing•Inventory

•ABC Customer List•Raw Material

S&OP Process

Institutionalizing a PracticeThe Results

1- never or does not exist. 2 -sometimes, 3- frequently, 4- mostly,

5- always or definitely exists

Process Performance

Com

pan

ies

(Cou

nt)

Ineffective or Misleading

Institutionalized Effective

Total Company

Business Unit

Product Family

Product Subfamily

Model / Brand

Package Size

SKU (Resource #)

SKU (Resource #) by Customer

SKU (Resource #) by Customer by Location

Incr

ea

sin

g L

eve

l of

De

tail

De

cre

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Fo

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ccu

racy

S&OP

Sales Plan

Operations Plan

Master Schedule

Execution Schedules

Levels of Detail in Planning

Delivery Schedules

Orders

Business Strategy

Business Plan