Sales & operations planning: building the foundation

SALES & OPERATIONS PLANNING: BUILDING THE FOUNDATION
By Alan L. Milliken

To run the S&OPprocess efficiently and effectively, you need the support of the top management, without which nothing will work ... schedule S&OP meetings at least 12 months into the future so that team members can plan ahead ... the best way to start an S&OP process is to start with a pilot program with one or twoproduct groups.

before conducting meeting. 1.

the

first

S&OP

data processing, and displaying of tables. 6. Develop S&OP level performance measures and implement the reporting procedure. Develop and issue S&OP meeting agenda and conduct first meeting.

Educate top management and acquire a champion for the implementation. Determine the S&OP Team members (names and positions). Set datesfor the next 12 S&OP meetings and process steps. Identify planning groups, planning horizon, and resources available. Design and test S&OP data acquiring.

2.

7.

3.

S

ales & Operations Planning (S&OP) is the process by which we bring together all the plans for the business (Customers, Sales, Marketing, Development, Manufacturing, Soureing, and Financial) into one integrated set oftactical plans. The S&OP process provides management the ability to direct its business to achieve a sustainable competitive advantage. The overall objective of S&OP is to arrive at a business "Game Plan" to help manage and allocate critical resources to meet the needs of a customer at the least cost. Figure 1 shows the five steps in the S&OP process.

4.

5.

These tasks usually require threeto six months. While you need a project plan, try not to exaggerate the effort required, as that would make it more difficult to acquire upper management support. In terms of time and money, a typical S&OP implementation is not very expensive relative to the benefits received. The participants in the implementation are primarily the process stakeholders who will greatly benefit fi-om the improvedplanning processes. Step 1: Educate Top Management. S&OP is a top-down process. Therefore, the first thing to do is to educate top management regarding the process and how it will benefit the business. Key objectives of the education session are: Provide an in-depth understanding of the formal S&OP process.

Implementation of the S&OP process is a journey that should be undertaken in phases. Thefirst phase involves getting the basics in plaee. (See Figure 2) Failure to properly build the S&OP foundation will impede progress in the business and result in lower benefits. In some instances, the S&OP approaeh may fail completely if the fiindamentals are not properly implemented.

ALAN L. MILLIKEN Mr. Milliken is a business process consultant and educator with BASF Corporation. He hasextensive experience in Operations Management atmajorplantsitesincludingproduction, logistics, quality control, and training. He has participated in several S&OP implementations as a subject matter expert as well as a project facilitator.

•

Generate commitment toward the S&OP process. Give details regarding actions required to begin the S&OP joumey.

•

BASIC STEPS IN S&OP IMPLEMENTATIONThe following tasks must be completed

Interactive activities should be included in the education session. For example, survey the participants regarding how well their current planning processes are

THE JOURNAL OF BUSINESS FORECASTING, FALL 2008

working and discuss the results before the S&OP presentation. After the session, conduct again the survey and discuss the differences inperspective after they are educated about this process. The leadership team must nominate one of their members as a champion for the S&OP implementation. The head of finance is a good choice since the overall goal of S&OP is to improve bottom-line performance. He or she is familiar with current management performance. If the supply chain leader is selected, he or she must work hard to communicate S&OP as...