An essential element in enduring competitive advantage in today’s global business environment is a successful Sales and Operation Planning (S&OP) process. Supply-chain concentrated companies use S&OP to evolve a business-wide game plan to enhance their overall business performance.
Sales & Operation Process prospers on collaboration & sincere communication among main organizational players. Further, S&OP is a strong decision-making tool for business executives.
Few Points Regarding Sales and Operation
- S&OP’s role is to balance supply & demand at the volume level.
- The general objective of S&OP is to come up a business “Game Plan” to help manage. And, assign condemning resources to meet the needs of the consumer at the lowest cost.
- S&OP is generally managed by executive-level management professionals every month & permits them to better align their plans with company-wide goals.
- Sales & Operations Planning analyzes customer purchasing habits to make sure a company is capable to meet the predicted production, distribution, and purchasing demands.
- Positive outcomes obtained by companies using S&OP include:
- Improved customer service.
- Better decision making.
- Lower inventory.
- Improved teamwork.
Must-Haves of Sales & Operation Planning
There are a few must-haves of next-generation SOPs for Successful Implementation;
As SOP processes mature, there’s a huge requirement for planning systems to assist the integration of the planning processes themselves. S&OP is about people cooperating to execute & course-correct plans to attain corporate, departmental & trading partner goals. So, By offering an integrated workflow solution, companies enable enhanced internal collaboration & control. It ensures that S&OP decisions are communicated, established, and practiced as part of regular, weekly & monthly processes of Lean Transformation.
Companies are realizing that improving planning doesn’t lead to benefit without tying the improved plan to the execution systems that enable those actions. So, there’s a dire need for planning systems & processes to have a direct tie to the systems.
Also read: Supply Chain Management Books
The demand plan is essential to SOP and to obtain the most out of it, the plan should take into consideration granular-level detail, including geographies, products, components, & customers. Furthermore, Companies are looking to extend collaboration by examining how their planning processes in Business Transformation can better involve suppliers, distribution partners & customers. Furthermore, This results in better forecasts & improved ability to react from the supply side.
One of the biggest challenges of getting SOP to work is obtaining agreement among stakeholders. As a result, this activates a series of additional actions, including testing the practicality of the proposed plans & modifying those plans collaboratively in a timely fashion. Once the S&OP stakeholders agree to a plan of record, it can be smoothly executed. Now the financial, operational, and commercial plans can be in accord so that all teams work unitedly to attain corporate goals.
S&OP is a process to help you deliver better customer service, lower inventory, shorter lead times, more stable production rates, and better management of an overall business. Lastly, it gives an awesome team building and communication mechanism in VUCA.