Sales and Operations Planning is a systematic communication and decision making-process to:
• Balance demand and supply on a mid-to-long term basis to manage mismatches
• Create a consolidated, viable operating plan for the organization
• Integrate strategic business and financial plans with operational plans
• Develop a capability to track and control performance
The goal is to profitably meet customer demands, improve customer service (higher fill rates and shorter lead times), and maximize return on operating assets while achieving lower targeted inventories. Soft benefits include forward visibility for early issue identification, organization cooperation and teamwork, data consistency and knowledge sharing.
Practical applications include:
• Align demand and supply; “build what we sell and sell what we build”
• Diverse product lines and frequent new product introductions
• Link company business and financial plan to operational plan
• Develop a discipline process of a holistic view with forward visibility
Are you experiencing these business challenges? Do these questions sound familiar?
Common Business Challenges
• High forecast error/low forecast accuracy
• Lack of ownership of the forecast and inventory levels; lack of consensus forecast
• Excessive swings in inventory levels
• Few performance metrics in the demand and supply process
• Insufficient analytical tools/techniques to manage demand and inventory
• Lack of process discipline and poor communication across departments and with customer and s suppliers
• Business complexity; high number of SKUs sold across multiple divisions in many geographic regions
• Inability to react quickly to rapid changes in the market with a diverse product line and frequent new product introductions
• Gap between business and financial expectations of top management and operations management
• Lost sales, canceled orders or consistent late deliveries
• Limited use of technology; Manual process and data management using complex Excel spreadsheets,
email and offline phone conversations
• Poor capacity planning and utilization
Key Questions for Consideration
• Should we invest in a Sales and Operations Planning software solution? How should it improve our planning process effectiveness and efficiency?
• What is our process for building a consensus forecast? Is it reviewed and revised with operations managers? Is the
forecast shared with customers and suppliers?
• How can we identify potential demand and supply issues earlier vs. responding to “after the fact” challenges?
• Why is there a disconnect between top management business and financial goals versus the operational forecast and
• Does the demand forecast drive supply or supply plan drive demand forecast? How are inventory levels effected?
• Do we have a structured, disciplined monthly process to match demand and supply?
• How do we track performance to plan? Does the organization have the visibility to metrics and results to control
performance? How do we maintain accountability?
Supply Chain Acuity’s Demand Planning/Sales and Operations Planning service helps our clients develop a structured, disciplined approach to planning and operating according to one game plan. We evaluate the current forecasting and demand planning processes, as well as the manufacturing capacity planning processes, and suggest improvements as part of an integrated plan.
Delivered Benefits and Desired Outcomes
• Increased revenues , profitability and asset utilization; increased customer service levels, more stable production rates,
reduced warehousing and transportation cost, appropriate supply of raw materials and inventory levels
• Vertical and horizontal agreement on a single, integrated, plausible plan
• Holistic view with forward visibility; linked business and financial expectations
• Focus on volume and dollars across operational, financial and customer service metrics
• Improved communication, clear decision making and accountability
• Planning focus and efficiency following a disciplined process; improved forecast, prioritized product lines/aggregate
volumes, routine communication and knowledge sharing
• Improved collaboration with customers and suppliers
• Use of analytical and integrative technology resulting in analytical rigor, data consistency, and reliability