Sales and operation planning S&OP

Solutions of this group are responsible for accomplishment of tasks of strategic and operational management, allow to perform strategic planning of structure of a supply chain, namely: develop plans of a supply network, model different situations, estimate the level of execution of operations, compare planned and current targets. Besides, solutions of this group allow the companies to make the plans proceeding from a demand forecast for their products. Actually it is the office of permanent management, connecting in indivisible process all functions of sales and transactions, primary clients and prime vendors for the purpose of creation of the approved comprehensive plan of demand and accomplishment for increase in profitability of the company by means of considerable improvements in such spheres as capability to react, reliability and use of resources. The sales plan and productions are the plan of the high level created periodically for up to three months for the purpose of optimization and equilibration of production with demand at the level of all organization. In practice sales and operations planning is first of all a question of enterprise of management of the company and its main management to change style of business, to develop new managerial behavior. Successful introduction of PPO is defined by correctness of top managers to that way which they selected also strict discipline from implementation of the decisions made jointly.

If the traditional schedule system first of all makes a start from financial expectations of shareholders, then forecast demand (assessment of need of the market for finished goods) and key production and logistic restrictions becomes a starting point for S&OP.

So in the first case production is forced to pursue requirements of already created sales plan which will not always fully be approved with real requirements of the market or opportunities of the enterprise. And in the second these criteria are considered initially. Result – the company saves money. The company saves every time when does not make excess products and makes room in a warehouse. When for 100% fulfills obligations to the customers and does not pay them multimillion penalties for goods underdeliveries. When all its business processes effectively function: from raw materials procurement which is conducted in the terms which are in advance coordinated with suppliers and in the necessary volumes, before implementation of finished goods which meets all requirements of customers.

Purposes S&OP

• Provide complete information space for the persons participating in process S&OP planning separated territorially and functionally for the purpose of joint work.
• Adjust planning process based on uniform digits for all who participate in S&OP.
• Reduce OOS and raise the service level for our clients due to preliminary determination and removal of restrictions in production, raw materials supply, warehouses and transport.
• Use all production capabilities of the company it is more productive.
• Make the conscious choice concerning what we lose at the time of emergence of insuperable restrictions.
• Understand what can be financial effects as a result of decision making.

To strategic the purposes of the sales plan and transactions belongs:

• determination of product quantity which will be made for every period
• identification of the necessary inventory level (component parts, semi-finished products, materials)
• determination of required resources (the equipment, labor power, materials, finance) on the periods.

Appointment S&OP

First of all, S&OP provides communication of strategic vision with the business plan of the company and operations which are performed by each department in real time. The S&OP function is consolidation of financial performance of the company and expression in monetary units, the business plan with the production plans calculated in batches, tons, etc. S&OP gives the chance to make and execute the realistic business plan as plans of all levels are balanced with planned (or available) production capacities. Using S&OP, it is possible to set necessary levels of trade inventories, based on planned targets of extent of customer service and to use them for the purpose of determination of optimum level of safety stocks. Business rules which will change over time — for example, rules of supply of the enterprises which are located in different regions, an interaction guarantee with a large number of suppliers with different contractual strategy (delays, restrictions and clauses) can be also set with the help S&OP. PPO has monthly cyclic character and provides information by means of business metrics and finance therefore it integrates operational and financial planning. Developers of products the main management, finance, sales, transactions are involved to it. Operation of PPO helps to expect and define bottlenecks of production resources, imbalances and deficits of materials. The sales plan and transactions (PPO) is expression of the business plan in full sizes. PPO is also intended for communication of the business plan with really achievable, taking into account opportunities of the market, production capacity, personnel and a financial opportunity. The production schedule and the sales plan are the main components S&OP. It is also used to define possibilities of satisfaction of the forecasted demand.

You See Also

• CRM
• Sales Performance Management - Performance management of sales
• Sales Force Management - Sales management
• Sales Force Automation - Automation system of sales
• Sales Force Management System (SFMS)