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Farrayi Kambarami - Sales and Operations Planning
Farrayi Kambarami - Sales and Operations Planning
Farrayi Kambarami - Sales and Operations Planning
Agenda
S&OP
S&OP
Business
(qualified definition) an activity carried out for profit
legally recognised entity designed to provide goods or services to consumers
Two important factors Consumers/Markets and Profit
Business Competition
Same consumers targeted by almost all businesses to buy their goods/services.
(more important as economic crisis escalates)
Most important aspect happens at customer/consumer interface: 2 moments of
truth
Purchase do they buy it
Use do they like it, and thus will they buy it again
To Compete
Business MUST meet consumer/customer demand profitably and consistently
Internal business processes must facilitate delivery of product
there are proven best practices for organising business to achieve this in an efficient
manner without distracting from your own customer/consumer proposition
S&OP
S&OP
Questions of concern to
department
Questions Answered
Marketing
Production/Operations
Distribution/Logistics
Sales
Finance
What Profitability
Buying/Purchasing
S&OP
Financial Budgets
Strategic Plans
Sales Forecasts
Production Plans
S&OP
S&OP
S&OP
The outcome is a clear view of the products that the company will
market, those that it will launch and when they will be launched, and
the ones that it will discontinue complete with timings.
Recommended frequency is monthly, however most orgs make this
a quarterly or at least seasonal review.
With clarity on products to be marketed, the next set of questions answered in the
S&OP process are:
Metrics Reviewed
What is the quantitative demand for each of the products that we market for any future given
period?
How is this demand constituted by customer, region,etc?
S&OP
Process output
Challenge is how to ensure demand is truly unconstrained if customer service is erratic how do you
capture true demand into your company?
(in my last job, this was in weekly buckets for the next 13 weeks, and in months from month 4 to 24.)
Plan is sales units (tons/kg/units and not rand/$)
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S&OP
Once a view of the demand has been generated, focus is then on the supply chain
components that create the needed products to fulfil this demand
The main questions answered here are
How shall we meet this demand at the appropriate times, and in the right places
A detailed supply plan (Depot Requirements Plans, Master Production Schedule, Materials
Requirements Plans) is drawn in an attempt to meet the demand.
The supply plan is based on the proven capacity of the manufacturing and delivery
operations and on the basis of any known/anticipated improvement plans
Metrics Reviewed
Process Output
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Pre-S&OP Review
S&OP
Where the trade offs are pretty routine, this can be standardised/ incorporated into a
template
Sometimes this is collapsed into the agenda of the Supply Review making it a longer
meeting
This meeting serves as a preparation for the final Executive S&OP meeting run by the
senior managers
Recommended final Company Sales and Operations Plan for discussion in the main S&OP
meeting
Any unresolved issues/prioritisation for senior managements attention/resolution
This plan is communicated ahead of time to the senior managers to facilitate the final
discussion
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Executive S&OP
S&OP
The ultimate aim of the Sales and Operations Review is to sign off the
final plan for the business for any given time period.
It answers all those fundamental questions that the business strives to solve:
What products will we be selling, in each of our markets at any given future time?
How much of each product do we hope to procure/produce and hence ultimately sell?
If this is different from what we need to meet our Strategic and other plans, what are we
going to do to close the gap? (Who will do what?
When do we expect to sell what volume?
A review of the previous plan, any key performance indicators and key business and
macro-economic and socio-political trends is carried out first
Based on the information provided from the Supply and demand review, senior
management make final calls on specific prioritisation options.
The risks to the plan are discussed and contingencies put in place with clear
accountabilities for delivering the plan.
Process Output
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Process Enablers
S&OP
S&OP
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Implementation Readiness- An
alternative view
S&OP
Time
Phase 4
Integrating all business processes with
technology
Phase 3 Automation
Knowledge Based Automation of all processes
Phase 1 Co-ordination
Eliminating unplanned events - do routine things routinely
Journey
to Excellence
Source: Oliver Wight, Successful S&OP
through Integrated Business Management
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Setting it up
S&OP
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Benefits of S&OP
S&OP
Cost
Internal efficiency and effectiveness
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S&OP
Useful References:
1. Business Forecasting edited by
Chaman L. Jain
2. Oliver Wights Successful S&OP
through Integrated Business
Management (www.oliverwight.com)
3. IBFs Journal of Business Forecasting
Archives (various articles by various
authors) only available to IBF members
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S&OP
Questions?
Comments?
Anything else?
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