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.