Executing Your Sales & Operations Plan
For those of you who have used but dropped S&OP or if you not familiar with the term, it would be best described as “Executing your Sales & Operations Plan.” If you are having problems turning your sales plan into a reality because operations, sales and finance are not aligned, then you need to consider the S&OP process. This is the reason S&OP exists… effective execution!
In summary, S&OP is a sales (demand) plan, an operations (supply) plan and a financial (investment) plan that are synchronized and presented together, monthly or quarterly, to executives as an aligned plan.
Key aspects of S&OP implementation:
- Keep all data at a high level – aggregate to product families
- If the high level is not planned well, the detailed mix becomes almost impossible to schedule
- Most companies spend too much time scheduling the mix but not enough time planning the higher levels
- Know your planning time fences:
- Your operational leadtime
- Average supplier leadtime
- Longest critical supplier leadtime
- Use S&OP to track the few critical metrics such as on-time-delivery, fill rate and inventory turns
- Look back a few months at past performance in addition to forward at the forecast
- Actual demand versus forecast
- Actual inventory or production versus the plan
- The difference should be cumulative to follow the trend
- Link your business plan / annual budget to the sales and operations plan to keep your budget dynamic
- First run a pilot project to make sure the organization can benefit and is “on-board”
Click on our Sales and Operations Planning Service Summary for more info on S&OP including setting up your spreadsheet.
If you have any additional questions or would like to discuss implementing S&OP email me at: Mitch@supplyvelocity.com.