Sales and Operations Planning – Process and Purpose
Your company probably excels at making strategic decisions. Your employees strive to perform the daily operations of your business to the best of their ability. It is often very difficult to maintain alignment between strategy and operations. Bross & Partner have many years of experience in the implementation of Sales and Operations Planning processes in companies and are happy to provide you with advice and support.
S&OP as an integrative process
Sales and Operations Planning is a process that balances the various functions of a business while aligning supply and demand. S&OP gives executives a comprehensive view of their business so they can understand how and where their company stands. This allows them to continually align long-term strategy with day-to-day operational tactics across all departments. Simply put, a company can get into trouble if it sells far more than it produces, or if it produces far more than it sells. The goal of the S&OP process is to keep everything in balance. With S&OP, executives can manage the entire supply chain, optimize resources and maximize profits.
Production and distribution in harmony
The purpose of the S&OP process is to bring the perspective of finance, sales and production into a decision-making process. These different stakeholders should balance demand and supply as well as integrate financial planning. A look at the planning pyramid clarifies the time horizon of the S&OP process. The planning pyramid shows that the S&OP process provides the guidelines and rules for the tactical and operational process. Therefore, the S&OP process must be linked to the strategic, operational, and tactical processes. The level of detail should match the time horizon. For many companies, the long time horizon is too detailed. Digging deep for the long term does not add value to the decision-making process; it only prolongs it. Long-term planning must be done at an aggregate level. This is because detailed long-term planning does not improve accuracy and requires a lot of effort. S&OP is about making decisions at a long-term and aggregate level. Means the overarching strategy in the annual business plan is aligned with the sales plan, production plan, marketing plan, new product development plan, inventory/backlog plan, financial plan and more. The S&OP process alerts executives to timely adjustment needs they should make in each area. Bross & Partners can help you add value to your planning process through appropriate software expertise such as SAP Integrated Business Planning.