1. Sales & Operations Planning

2. What is happening 6-12 months from now?

3. Maturity Scan How do you characterize the S&OP process in your team?
Stage of Evolution
Characteristics
Ad hoc decisions, fire fighting problems, no specific sequence
Functional organization with each function making separate decisions in its own silo, not sharing it with the others
Joint decision making with a rough logical sequence, not formalized or detailed. Limited preparation on trade offs
Formalized logical sequence of joint decision making. Individual preparation of decisions and trade offs beforehand
Stage I
React
Stage II
Anticipate
Stage III
Collaborate
Stage IV
Orchestrate
How do you characterize the S&OP process in your team?

4. A definition
S&OP is
a process discipline that brings together the sales & marketing ambitions, supply capabilities, customer needs and financial constraints and objectives to balance them and create a single, achievable plan for the tactical horizon

5. Strategic Management /
S&OP can be an effective bridge between Strategic Business Planning and Execution
Predict and prepare
Strategic Management /
Business Planning
S&OP
Align functional plans
Create the right context
2-18 months horizon
Prepare for different scenarios
Recognise and address gaps
Tactical Planning
& Decision Making
(Tactical) Execution
Sense and respond

6. S&OP is business planning in 5 steps…
From Forecasting to Demand Shaping
Getting the right info to make decisions into the last 60 minutes of the process
Reconcile with financial plans
Supply
Reconcile demand and supply
Demand
Sales and Ops Planning
Meeting
“What if?” Rather than “Yes/No”
S&OP ultimately moves planning forward from a supply chain focused and supply chain driven activity to multidisciplinary business planning.
The 5 basic steps are shown here : Demand, Supply, Reconcile them….. Then make them financial and consider a financial review. Concluding with a final meeting.
[press space to get texts]
In the development of S&OP this process links up and moves demand planning from forecasting into demand shaping and sensing, supply planning from etc…. (read texts)
From Capacity Planning to Supply Network trade offs & design

7. The process seems simple but some principles are a challenge….
Discussions should be fact-based
There must be clear ownership of each element of the process and of the decisions made
The operating plan must be formally linked by assumptions to a financial plan
There needs to be a formal balancing of demand and supply across a rolling horizon
Gaps (vs set targets…) must be recognised and action plans formulated to close them taking into consideration the relevant lead times
Trade-offs must be clearly articulated and commercially evaluated
Read text and explain where necessary.
Phil Heenen goes into fairly detailed do’s and don’ts, which may help you to address some of the hurdles you face in adhering to these principles

8. Common pitfall: believing that S&OP is a monthly meeting
If S&OP is only a monthly meeting, it will not deliver the targeted results: a good process consists of well-prepared and fact-based discussions on key topics only, resulting in optimal decisions for the company as a whole

9. What do you think about this discussion?:
Sales: “We have received a tough target of 5% additional sales next year and we have accepted the challenge”
Marketing: “We are designing a new campaign and will invest €10m, so we think that volumes should increase by 6%”
Supply Chain: “The statistical forecast indicates 2% growth”
Compromise reached after long fight in S&OP meeting: 4% growth

10. ≠ ≠ Target Plan Forecast
Aligning with finance does not mean that the forecast has to become the target!
Target
A goal or objective (a desired future outcome) ≠
Plan
A set of actions designed to achieve a defined outcome ≠
Forecast
The best estimate of anticipated events (a likely future outcome)

11. Realising that there are gaps is good
Realising that there are gaps is good! This helps to timely drive the right actions
GAP
Target
GAP
Demand plan
Forecast
Recognising that gaps exist between forecast and target is very useful:
in the S&OP process you can decide to do something about it!
Time Horizon
History
Short term Next 3 Months
Medium Term 3-18 months
Long Term >18 months

12. It is all about the gaps
Volume plan
Bottom-up financial forecast
Gaps?
Business targets
Planned net average sales prices
Comparing the bottom-up forecast with financial targets will give better understanding of the expected outcomes

13. Key decision making forum Manage together
Sales: we can sell 200
Marketing:
the promotion
will sell 400
Manufacturing: they will
only sell 150
Finance:
we have
budget of 300
Source figure: Red Pepper. Modified E&Y 1999
one
consensus
plan
Key decision making forum
Manage together
Routine things done routinely
Issues addressed early – efficient response & anticipation
Functional silo approach
Ineffective behaviour
Fire fighting
Lots of ad-hoc meetings
Lots of effort, little reward
Result of an effective implementation will take you from functional silo …
To real collaboration

14. Who Brings What to the Table?
Marketing
Product
Development
Demand
Capital
MPS and
Supplier
Constraints
Business
Plan
Workforce
Availability
Adapted from: Launchbury, Keith J. Principles of Planning Omeric, 1999.
Finance
Materials
Operations
Human
Resources
Engineering
General
Management
Capacity
Customer
Interface
Sales
In fact it is not only about sales and operations, but can bring other disciplines/subjects to the table as well.
Just to name some examples. It typically depend on the type of business you are in…

15. How to translate this to The Fresh Connection
Purchasing
Sales
Servicelevel
Demand pattern
Shelflife
Leadtimes
Quality
Reliability
Trade Unit
Strategy
Operations
Capacity
Improvements
Frequencies
Stocklevel
Fixed period
Within TFC environment there is a limited set of stakeholders, and limited set of decisions.
But still pretty complicated
Very good envirinment to experience what a good S&Op process can bring
Supply
Chain
Adapted from: Launchbury, Keith J. Principles of Planning Omeric, 1999.

16. Decision making Decision making sequence Who is involved?
Sales
Operations
Supply chain
Purchasing
sequence
Decision making
Who is involved?
What sequence makes sense?

17. Set up a logical sequence of decisions and roles involved for The Fresh Connection
Sales
Operations
Supply chain
Purchasing
Inventory policy raw mat. (batch size, safety stock)
Production capacity plan (shifts/projects)
Forecasting demand (pattern)
Inventory policy finished product (safety stock)
Supplier selection and agreements
Production policy (interval / fixed period)
Production resources and allocation
Decide about portfolio/ customer service
Typical decisions in TFC , now already or coming up in the next rounds
Not organized it will be a mess
- no logical order
Juming around
a lot of interrelations
who or what is leading
The value proposition
Capacity plan inbound warehouse
Capacity plan outbound warehouse

18. 10 steps to success Iterate Sales Operations Supply chain Purchasing
The value proposition
Portfolio / customer service
Cus-tomer
Forecasting demand
Production resources and allocation
Product group
Production capacity plan (shifts/projects)
Production policy (interval / fixed period)
Finished product
Capacity plan outbound warehouse
Inventory policy finished product (safety stock)
Finished product
Capacity plan inbound warehouse
Inventory policy raw mat. (batch size, safety stock)
Supplier selection and agreements
Compo-nents
Iterate