Special Report Sales & Operations Planning
business objectives and deliver shareholder One company that has gained considerable the manufacturing organisation was using for
value. Specifically, Nicholas cites S&OP’s success through marketing its solution and production planning and acquisition of raw
main drivers as including: the need for methodology as Sales & Operations materials. So, the rationale behind S&OM is
improved Cash flow; pressure from Management (S&OM) is i2. Razat Gaurav becoming more and more compounded as
customers; keeping up with explosive sales explains the reasoning behind the company’s companies have to deal with more variability
growth; the need to reconcile financial and adoption of the term. “As we’ve worked with and uncertainty in organisations’ operating
operational budgets; changes in supply organisations all over the world, we have environments.”
chain structure; and shortened lead times. realised it’s not sufficient to just think in terms
He adds that, while vendors have differing Novels makes the point that the debate
visions on how to achieve best practice about the different definitions regarding the
S&OP there is a consensus about the term S&OP is similar to the debate about the
benefits, which include: less inventory; differences between the terms Planning and
stronger order fulfilment; shorter cash to Scheduling. “We come across this all the
cash cycle times; greater profit margins; time – one person’s plan is another’s
and higher return on assets. schedule and visa versa,” he said. “We
always explain that a planning system deals
Van Nyen also believes there is consensus with buckets of time but it doesn’t deal with
on the main functionalities of S&OP. And, at the operational sequence within that period,
the highest level, Woodward concurs too. so they can’t give you a specific dispatch
However, he reflects that at the tactical and list and a sequence of operations to be
operational level vendors’ definitions are undertaken at each resource. Therefore, if
coloured by their heritage. “A Business sequence is important to a company – for
Intelligence vendor is likely to emphasis example, if they have sequence-dependent
monitoring and reporting, whilst an SCP changeovers – then a planning system alone
Andrew Kinder: “The term S&OP has wide
vendor will focus on forecasting and
adoption across all of manufacturing;
won’t meet their requirements.”
supply matching,” he said. From Ewing’s both process and discrete, but different
perspective, the term S&OP has now been
companies’ starting point in the process
can be different.”
accepted globally as meaning sales & Process and execution
operations planning. But, he maintains that
this is a process of continual improvement of planning. So, we’ve adopted a very simple To what extent is efficient S&OP down to
and so would be “shocked” if it did not yet profound frame work around plan, do, processes and to what extent is it about
evolve. Variations he has begun to see check, act – or what some companies call execution and the people involved? Gaurav
include: Sales Inventory Operations Planning PDCAs. In our view, organisations that can is quick to insist that creating an efficient
(SIOP), Single Integrated Operational close this PDCA cycle in a rapid way are the S&OP/S&OM process is not only about the
Plan (SIOP) and, more recently, Sales & ones that have organisational velocity and software. “I was with a very large CPG
Operations Management (S&OM). “What your ultimately are the organisations that are really company recently conducting a workshop
process is called should not matter so long able to deal with a lot of the variability and on S&OM, and the bulk of the conversion
as it is achieving the desired result and uncertainty. Companies may have established was about the process, organisational
involves all parts of the business,” he said. a plan at the beginning of their fiscal year, and metrics side of the equation,” he said.
but that plan may “At this point the software just becomes
have been based an enabler. The transformation that needs
on a certain to occur within organisations is around
assumption of processes, organisational issues and the
demand because metrics side of things. S&OM is not a supply
the sales & chain function, it’s not a finance function, it’s
marketing not a manufacturing function, it’s not a sales
organisation may & marketing function. So who really facilitates
have committed to and determines the cadence around it and
a certain demand structure around it? We have come to realise
projection or that the companies that do it well are those
demand forecast. that have senior executive sponsorship
However, within around championing an S&OP/S&OM
months – or process. In many organisations, this has
sometimes even to be the CEO, because this is where these
within weeks – that four or five different organisational silos
demand picture really come together. This is important
may have completely before jumping into the systems project.”
changed even
though the demand Baumann agrees that executive level S&OP
picture was what must have a sponsor – typically the general >>
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MANUFACTURING
October 2009 &LOGISTICSIT
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