Tetra Pak started system implementation of sales and operations planning – Sales and Operations Planning (S&OP)

In the spring of 2016 in Tetra Pak company started system implementation of sales and operations planning – Sales and Operations Planning (S&OP). Her idea is simple and directed to synchronization of work of production, departments of planning and sales for the best satisfaction of the expected demand and receiving the maximum profit^[1].

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.

"The manufacturing enterprise provides with products a certain requirement in the market, – Taras Shevchenko, the planning manager of the Moscow factory Tetra Pak explains. – Specialists of sales department monitor changes of this demand and manage it. They communicate with clients, understand that it is necessary for them. But only to sell a product, it at first needs to be made in enough and in due time. And here on a joint of these two territories – production and sales – process S&OP also should be implemented".

"The party which is engaged in sales (i.e. demand) should understand accurately that it will sell, – Taras Shevchenko emphasizes. – Because differently she risks not to cover this demand or, on the contrary, can receive an excess product which should be stored in a warehouse. For the company it is not just "frozen" money, but also excessively heavy expenses for purchase of raw materials and the organization of work of production lines which could be avoided at accurate coordination of actions between sales department, department of planning and production".

These in advance approved installations form the basis of a comprehensive plan in which the target sales plan always corresponds to realities of production and logistic activity of the company.

S&OP – process regular, cycling. It repeats monthly. Therefore any deviations from the plan are jointly analyzed and adjusted in each subsequent planning cycle. It allows to avoid them in the future.

"Thus, we reach the high level of interaction between production and sales department – two divisions of the company which historically work in the different planes and often have different priorities, – Taras summarizes. – Process S&OP helps to create for them the general agenda. And it without delay finds reflection in improvement of financial performance of the company".

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