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
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(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
asi
ng
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
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