A simplified S&OP process works like this:
1. A new forecast update (based on the latest sales data) is reviewed and modified to become a preliminary demand plan.
2. The supply planning team prepares a production plan that will make and distribute enough product to satisfy demand.
3. Supply and demand teams meet to work out a “best” plan that makes effective use of resources to satisfy expected demand.
This likely will involve some compromise in order to reach a decision that is overall best for the company and its customers. Often, the S&OP work is presented to the company’s functional executives – the heads of sales and marketing, production, materials, engineering, finance. The executive S&OP decision makers typically come together to review any updates to the plan, commit their respective departments to the plan, and make the hard decisions that involve compromises, commitments of funds or resources, or strategic matters. This limits the amount of detail involved, keeps the process manageable, and focuses on volume.
To learn more about the Sales and Operations Panning process and how Advanced Supply Chain software can improve performance and the decision-making process, visit the Advanced Supply Chain blog.
The Brown Smith Wallace Distribution and Manufacturing Software Guides are currently available for download. Please contact snelson@bswllc.com for more information about the latest editions.
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