Sales & Operations Planning (S&OP)

- What is S&OP?

© SKF Group

Planning System Questions

May 1, 2023Slide 2

What are we going to make?

What does it take to make it?

What do we already have?

What do we need to get?

© SKF Group

Manufacturing Planning and Control

May 1, 2023Slide 3

In order of time span (long to short) and detail (general to detailed):

• Strategic business plans

• Sales and Operations Plan (Production Plans and Marketing Plans)

• Master Production Schedules

• Material Requirements Plans

• Purchasing and Production Activity Control

© SKF Group

Sales and Operations Planning

Annual

May 1, 2023Slide 4

Strategic Business Plan

Detailed Sales Plan

MasterProductionSchedule

MarketingPlan

ProductionPlan

SALES AND OPERATIONS PLAN

Monthly

Weekly/Daily

© SKF Group

Sales and Operations Planning- Benefits

Provide means to update the strategic plan as condition changes.

Provides a tool to manage change.

Enforces functional/departments plans to be realistic and coordinated.

Represents a plan to achieve company objectives.

Provides management visibility of production, inventory, and backlogs.

May 1, 2023Slide 5

© SKF Group May 1, 2023Slide 6

S&OP – Balancing supply and demand

Demand

Supply

S&OP

SCPMSP

MSP: Manufacturing Supply PlanningSCP: Supplier Capacity Planning

Sales Forecasting

© SKF Group May 1, 2023Slide 7

S&OP at SKF

Monthly global process to balance supply and demand, bringing all business operational plans into one integrated plan

• Common Sales Forecasting process- To forecast market demand in order to drive the SKF demand chain

• Common Manufacturing Supply Planning process (MSP)- To decide production volumes to fulfill future demand, stock and service

targets • Common Supplier Capacity Planning process (SCP)

- To secure material and component supply by sharing demand information with suppliers

One consensus plan among Customers, SKF Sales, SKF Factories, SKF Purchasing and Suppliers !

© SKF Group

Sales Forecasting Review

SalesForecast

Monthly Supplier Capacity Planning

Supply Capacity Confirmation

S&OPBA Meeting

S&OP Executive Meeting S&OP BU Meeting

Monthly Manufacturing

Supply Planning

Decision for next Cycle

Monthly S&OP Cycle

© SKF Group

short termoperational

medium termtactical

May 1, 2023Slide 9Slide 9

S&OP focuses on the tactical horizon

FullFlexibility

Completelyfixed

Time

S&OP Focus

S&OP - timeframe

1 2 3 4 5 6 7 8 9 10 11 12 year 2

© SKF Group

Sales Forecasting

May 1, 2023Slide 10

Sales Forecasting1

© SKF Group May 1, 2023Slide 11

Sales forecasting purpose

To forecast market demand in order to drive the SKF demand

chain

© SKF Group May 1, 2023Slide 12

Sales forecasting process

Sales History• From Sales Data Warehouse (SDW)

Market & Customer Knowledge• Macro economic input

- Business Cycle Report- Business Cycle Forecast (F18)- Market surveys- Business climate indices

• Specific customer information - Order book - New business- Customer growth plans- Customer Forecasts- Customer markets

Sales Forecast

S&OPCubes

Create system forecast

as baseline

Enter market intelligence by Collaborators

Approval from Sales Director

INPUT PROCESS OUTPUT

SDW

© SKF Group May 1, 2023Slide 13

Using all available information

The system will use the past to

forecast what will happen in the future.

The job is to look into the future and predict

any changes in the business, based on what

you see and what you expect around the corner.

© SKF Group

Manufacturing Supply Planning

May 1, 2023Slide 14

2Manufacturing Supply Planning (MSP)

© SKF Group May 1, 2023Slide 15

To decide production volumes to fulfill future demand, stock and service targets

Manufacturing Supply Planning purpose

© SKF Group May 1, 2023Slide 16

Sales Forecasting• From S&OP Sales Forecasting

Supplier Capacity Constraints• From Supplier Capacity Work stream

Data• From MDW, OIDW, Custserv

Production Capacity and Stock Target• From Factory

MSP process

DataWarehouse

Production Plan, Stock Projection

and Capacity Needs

Solved issues & Identified issues

for escalation

Sales Forecast

SupplyConfirmati

on

Volume planning on

Channel level

Aggregated to Factory &

Product Group level

Issue escalation

meetings & decide on

actions

INPUT PROCESS OUTPUT

© SKF Group

S&OP Monthly MSP & Escalation Process

Input to S&OP Factory Planning

No

Yes

Data Warehouses

Sales Forecastin

g

Supplier Capacity Planning

S&OP Factory

planning

S&OP Sales & Shipment Forecast

Manuf. constraints & Inventory targets

Data (Inventory, Shipments, Production etc)

Supplier Confirmation

Issues for S&OP

Executive?

S&OP Business

Unit meeting

S&OP Business

Area meeting

S&OP Executive meeting

*Please see “S&OP Calendar” for monthly time schedule

Monthly process end

© SKF Group

Supplier Capacity Planning

May 1, 2023Slide 18

3Supplier Capacity Planning (SCP)

© SKF Group May 1, 2023Slide 19

Supplier Capacity Planning purpose

To secure material and component supply by sharing demand information with

suppliers.

© SKF Group May 1, 2023Slide 20

Supplier Capacity Planning process

Sales forecast per product• From Forecasting Work stream

Factory planned production deliveries• From MSP Work stream

Bill of material• From MDW

SupplyCapacity

Confirmation

DataWarehouse

Production Plan

Elaborate Material & Components

demand out of S&OP Sales Forecast

Material & Components

forecast validated by SKF factories

Material & Components forecast

communicated to suppliers by SKF

factories

Available capacity communicated by suppliers to SKF

INPUT PROCESS OUTPUT

Sales Forecast

© SKF Group May 1, 2023Slide 21

S&OP is based on 3 work streams

SalesForecastin

g

Supply

confirmation

Demand ForecastMaterial Demand Forecast

Supplier Capacity Planning

Manufacturing Supply Planning

S&OP Meetings