Balancing Demand and Supply with Effective Sales and

Operations Planning

A multitude of consequences are faced when a company of any industry fails to meet the
challenge of effectively balancing demand and supply. It can lead to the following:
 Hampers E-trading network
 Poor access to raw materials
 Increased production costs due to unscheduled changeovers to meet unplanned
promotional activities
 High cost of inventory
 Inhibiting promotional programs
 Stock outs
 Customer loss
 Cash flow difficulties

SOLUTION: SALES AND OPERATIONS PLANNING

The task of determining the overall level of manufacturing output and other activities in order
to best satisfy current planned sales levels while also meeting general business objectives
such as profitability, productivity, competitive customer lead times, inventory and/or backlog
levels, and so on." Management may use S&OP to set the required levels of customer service,
inventory levels, and production plans.
The S&OP process is rigorous. Held on a monthly basis, it includes representatives from
most functional areas, including top management and the goal is to reach consensus on the
current status and future plans for each product family, for both demand and supply. It
involves the following four steps:
1. Meeting preparation
 Identification of team members
 Gathering of information
 Calculating performance measures
 Demand forecasting
 Aggregating data
 Identifying production constraints
 Data analysis to identify trends and compare performance to goals
 Creating exhaustive reports

2. Monthly S&OP meeting

 Reviewing actual versus plan for the previous time period
 Analyzing sales and operations results
  Sales focus on understanding forecasting and customer service issues
 Operations focus on effectiveness of meeting demand
 Discussing factors that impact the goals and creating a business plan to meet
these goals
 Discussing industry trends, competitive rivalry and market conditions
 Specific product families are discussed, potential resolutions and a projected
plan
 Demand considerations are reviewed from sales perspective
 Supply issues are reviewed from operations perspective
 For execution, team members in attendance identify and document new issues,
assign responsibilities, and set resolution dates

3. Modification and communication of consensus demand and supply plans

According to the decisions taken during the S&OP meeting, the sales team must
adjust sales projections, marketing/sales strategy, and promotional activities.
Production plans, distribution methods, and transportation activities must all be
adjusted as needed by the operations team. The S&OP documentation is amended and
disseminated to the team in order to reflect the most recent team choices. The minutes
of the meeting are written and circulated. Finally, the updated plans must be conveyed
to other affected sections of the company, such as procurement, research and
development, engineering, and so on.

4. Executive S&OP session

 Identifying issues that need executive input
 Reviewing team performance versus goal and budgets
 Discussion of expected sales, production, and inventory, including forecast
scenarios
 Reviewing the decisions, resolves any disputes, and makes clear policy
decisions.

HITTING THE BOTTOM LINE

Principal benefits of Sales and Operation Planning Process include:
 Improved bottom line performance
 Providing window into the future
 Better decision making
 Improved customer service
 Reduction in inventories
 Efficient production
 Enhanced teamwork
BARRIERS TO SUCCESS
It is essential to bring together the following three activities for a successful S&OP process:
demand forecasting, sales planning and operations planning. Sales, marketing, purchasing,
distribution, production, and senior management must all communicate and negotiate as part
of this cooperation. The problem is figuring out how to set up a system that allows for
informed, collaborative decision-making that leads to a balanced demand and supply plan.
Three common issues make creating an effective S&OP process a challenge.
1. Unproductive meetings
All information regarding sales and operations that is not in conflict with the current plan
should be disseminated and reviewed prior to the meeting.
2. Lack of integrated flexible planning and measurement tools
Often, data is from multiple disparate systems and may be represented in different time
buckets and different levels of aggregation. It is not easily and quickly accessed, nor is it
easily merged into usable management reports. The meeting participants spend an
inordinate amount of time obtaining data and creating excellent reports to be discussed in
the meeting.
3. Lack of accurate planning information
When a team is setting the overall level of manufacturing output and other activities to
best satisfy the current planned levels of sales, it is critical to have particularly accurate
forecast and resource capacity projections. The forecast and operations plan are
frequently unachievable given the available resources due to limitations in many planning
tools.

Manugistics NetWORKS S&OP

Manugistics NetWORKSTM S&OP provides firms with the tools they need to plan sales and
operations effectively. Successful S&OP should be considered as primarily an organisational
process that is backed up by a solution that allows stakeholders to collaborate to establish a
comprehensive, integrated plan, shows performance metrics in a clear, simple manner, and
generates intelligent, optimised data.

Enabling stakeholder information

NetWORKS is a collaborative web-based solution that helps a corporation solve the problem
of ineffective meetings. NetWORKS S&OP delivers real-time insight across the company to
planning data provided by NetWORKS S&OP optimization engines through a configurable
user interface. Stakeholders can post material for evaluation prior to the S&OP meeting,
allowing the cross-functional team to focus on high-priority topics that have the greatest
influence on company goals. Modifications to demand and supply plans can also be made
directly in the planning system, resulting in real-time, actionable outcomes.
Presenting performance metrics in clear and concise manner
NetWORKS is a collaborative web-based solution that helps a corporation solve the problem
of ineffective meetings. NetWORKS S&OP delivers real-time insight across the company to
planning data provided by NetWORKS S&OP optimization engines through a configurable
user interface. Stakeholders can post material for evaluation prior to the S&OP meeting,
allowing the cross-functional team to focus on high-priority topics that have the greatest
influence on company goals. Modifications to demand and supply plans can also be made
directly in the planning system, resulting in real-time, actionable outcomes.

Generating intelligent and optimized data

NetWORKS S&OP's optimization engines enable companies to leverage intelligence for real-
time decision-making and to create realistic demand and supply plans. Unlike conventional
forecasting tools, NetWORKS Demand enables the simultaneous tracking and understanding
of demand along multiple dimensions such as sales, marketing, and logistics. Intelligent
modeling accurately predicts future customer demand and allows for management overrides.
The solution's NetWORKS Master PlanningTM component serves as the trade network's
command centre, maximising the utilisation of limited resources while improving customer
service and profit. It also allows multi-site production, distribution, and supplier networks to
optimise materials, capacity, inventory, transportation, and distribution restrictions at the
same time. These strategies are created to meet certain corporate objectives, such as higher
income and better service.

Better decisions and better results

Making more timely, proactive decisions is a cornerstone to successful Sales and Operations
Planning. NetWORKS S&OP gives you the ability to get the correct information from a
single source. Manugistics' solution is trustworthy and quick to install. It offers exception-
based management, browser-based collaboration, optimization, measurement, and analysis.