Sales and Operations Planning

1
Sales and Operations Planning

• Process Overview

2
SOP 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
SOP Process

• Issues with Variability

4
Variability Issues and Buffers in a Make to
Stock Environment
Order Cycle Time
Forecast
Order Insertion Point
Deliver
Make
Source
Customer
Supplier
Back Order Filter
FG Filter
Production Flexibility Filter
Material Inventory Filter
Market Demand
5
Variability Issues and Buffers in a Hybrid
Environment
Order Cycle Time
Forecast
Order Insertion Point
Production Plan tuning
Deliver
Make
Source
Customer
Supplier
Back Order Filter
FG Filter
Production Flexibility Filter
Material Inventory Filter
Market Demand
6
SOP ProcessVariability in the Supply Chain
1. Its 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 SOP ProcessVariability in the Supply Chain
Plan
1. Its more normal 2. With this shape 90 is
possible. 3. Still has special causes
Frequency
2
3
1
8
SOP Process Objective

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

9

• What is the SOP process?

10
Basic S/D Planning Process No SOP
Business Planning
Sales Planning
Production Planning
Capacity Planning
Forecasting Demand Management
Master Scheduling
Detailed Planning Execution Systems
11
Basic S/D Planning Process With SOP
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
SOP
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
Plan Return
Return
Goods
13
Basic S/D Planning Process and InteractionsWith
SOP
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
SOP Team
Business Strategies
Plan SC
Order Information
Operations
Master SC Plan
Plan Source
Plan Make
Plan Deliver
Deliver
Distribution
Plan Return
Return
Goods
14
SOP Bridge
Business Strategy Executed
Business Strategy Formulated

• Master Scheduling
• Detailed Planning Execution
• Plant Scheduling
• MRP
• Supplier Scheduling

• Strategic Planning
• Business Planning

The Bottomless Pit of Good Intentions
Caused by different time horizons (Qtr v. daily),
misalignment of goals, functional silos, lack of
information (visibility)
15
SOP 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
SOP
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