Special Report Sales & Operations Planning
between the markets served and the ment, which plans, directs and controls the in the S&OP process. In this way, they
manufacturing process operated. However, material supply and processing activities of transformed S&OP into Integrated Business
Ewing highlights that in order to achieve this, an enterprise, so that specified products are Planning, a process that strives for a one-
improved communication channels – both produced by specified methods to meet an number plan for the entire company. The
internally and externally – were needed. “This approved sales programme.’ Pieter Van evolution in information and communication
gave rise to the concept of Sales & Operations Nyen, project manager at OM Partners technology resulted in increasingly powerful
Planning, two halves of one business talking reflects that this definition shows that, already software packages, with strong planning
with each other and sharing information. in the early seventies, at least some people functionalities, communication capabilities,
Early adopters saw this as a real opportunity were aware of the positive impact of etc. These packages can be considered as
and recognised straight away that by coordinating sales & operations planning, the technological enablers of efficient and
designing an effective S&OP process, they which should result in an approved sales effective S&OP processes.”
could continually align their operational plans plan. “Since then, a lot of new names have
with their financial plans and align high level In the view of Martin Woodward, managing
strategic plans with day-to-day operations. director of ToolsGroup UK, the relationship
Faced with huge cultural barriers, unsuitable between sales and supply chain has become
technology and collaborative challenges still more mature over the past few years. “They
being discussed today, these early pioneers understand each other far better,” he said.
achieved great goals and provided for “The best systems can now model the
everyone a wealth of valued material upon complex relationships far more reliably. Key
which to design your own processes.” questions can be answered quantitatively
instead of qualitatively and the language
According to Ewing, the primary key is in barrier can be broken down (sales
designing an S&OP process from the top generally thinks money while supply
down. “You cannot buy or copy someone chain talks volume).”
else’s process, then make it work for you; it
requires the total commitment of everyone,” Woodward notes that, as the planning cycle
he remarked. “Thankfully, there are now
Mike Novels: “Typically, S&OP is
time shrinks it leaves time to investigate
many tools available – designed to assist
undertaken over in a much longer
alternative scenarios. “The expected output
with S&OP – that take the grunt out of
timeframe than detailed scheduling.”
from the S&OP process is no longer a
gathering, aggregating, analysing and feasible plan but increasingly an optimal
presenting meaningful information for use been invented for this coordination process, plan,” he said, adding that another
in your S&OP sessions.” but the main idea stayed the same: balance consequence of the increasing velocity of the
the potential sales with the available planning process is that other actors, namely
However, while the roots of the S&OP process production capacity,” said Van Nyen. finance, can begin to participate in the process.
definition are in the late 1980s, the current “Business process tools allow a broader
definition is quite different, claims TXT’s He adds that two important evolutions are consensus to be reached in the widening
Richard Nicholas. “The process has shifted also worthy of mention: “With the increased window between planning and executing,”
from a four-step process of balancing demand awareness of the financial impact of operations said Woodward. “As the barriers begin to
and supply in the early 1990s, to a collaborative on the bottom-line result of the total company, break down, the S&OP process has emerged
six-step planning process in early 2000, to a financial departments started being involved as the central business planning process.” >>
nine-step process by demand-driven supply
network (DDSN) leaders in 2005,” he said.
“This new process has become the standard
operating plan for leaders attempting to be
demand driven. For these leaders, it is all about
demand sensing, shaping demand and driving
the best demand response for profitability.”
Nicholas added that tools for managing the
S&OP process still cover the basics such as
forecasting, but are now more sophisticated
and add value to the business. “For example,
planners are now required to, at the same
time, plan and concurrently analyse and
interpret information to ensure the plan is
feasible from all angles and that all trade-offs
made are fully understood.”
In his book on production control, Burbidge
(1971) defines production control as follows:
‘Production control is the function of manage -
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MANUFACTURING
October 2009 &LOGISTICSIT
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