Sales and Operations Alignment (S&OP)

Objective of S&OP

An integrated business management process through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization.

Needing to include:
◦Updated Forecast that leads to
   ◦Sales Plan
   ◦Production Plan
   ◦Inventory Plan
   ◦Customer Lead Time (backlog) plan
   ◦New Product Development Plan
   ◦Strategic Initiative Plan
   ◦Financial Plan

​ S&OP is an Iterative Process (It is not static, it is continually being fine-tuned for the needs of the business):
◦A properly implemented S&OP process routinely reviews customer demand and supply resources and “re-plans” quantitatively across an agreed rolling horizon. The re-planning process focuses on changes from the previously agreed sales and operations plan, while it helps the management team to understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results.

People Focus

PART 1

•CEO/MD Sponsorship
     •Imperative; Anything else will hobble any S&OP effort
•Appoint S&OP Champion
     •Change Manager:  Needs to report to CEO/MD and be outside of Sales, Operations             and Finance Structures to be unbiased and accepted
•Behavioral Coaching/Training
     •Necessary for all key participants to drive a collaborative environment.
     •Conflicts/Attitudes need to be brought to the surface and addressed.
•Involve All Teams
     •In the design and development phase of the enabling solutions and report definitions.       For Example: Granularity, Frequency, and Horizons Reporting need to be aligned and           agreed.
•Align Incentives
     •Review how performance is measured and rewarded.  KPI’s should be transparent and       agreed by all teams

PART 2

•Conflict Resolution Process
     •Define and document and agreed conflict resolution process between teams which            covers tie-break rules in cases of limited availability of material, time, resources or funds.
•Transparency in Information and Communication
     •Everyone needs to be on-board if there are cases where Sales has more priority over         operations or vice versa.
•Restructure/Relocate teams if necessary
     •S&OP meetings need to be face-to-face between key stakeholders and participation           should be mandatory.  Sometimes, new roles may need to be defined and team                    structures changed to move toward a more collaborative environment
•Emphasis on Commercial and Operational Discipline
     •Minimize ad-hoc processes.  This usually comes from the top and the leaders of                   various functions will need to set examples so teams get the message.
•Document and Broadcast
    •Its essential to communicate and celebrate the successes and learnings from the S&OP       Process.  Also, track improvements/savings made as case studies to capture                         organizational journey.

Process Focus: What Should be Discussed in S&OP Meetings?

Rule #1 for S&OP meetings: If there is no data/numbers to support it, it should not be discussed.  Opinion driven decisions will cause more problems than solve*

​•Historical Performance Analysis
•Review Planning Criteria
•Review Demand Plan (14 to 52 week horizon)
•Review Supply/Production Plans
•Review Inventory and Customer Service
•Continuous Improvement Plans and Initiatives
•S&OP Actions and Next Steps

Process Focus - Step 1 and 2, Level 1 Example

Historical Performance Analysis
•Review Last Period (Week/Month) and Year to Date
•Review Financial KPIs
•Review Forecast Accuracy at Product Family Level
•Review Forecast Bias at Product Family Level
•Review Operations Plan Accuracy at Product Family Level
•Review Cost to serve at customer account level
•Review Historical wastage and Returns

Review Planning Criteria
​•Review Warehousing/Manufacturing Capacity
•Review any changes in prices
•Review Product Range Changes
•Review merger/divestment of business areas
•Review any planned systems functionality changes
•Review Key manpower and resourcing issues
•Review Product Hierarchy Changes