1. Extended Sales and Operation Planning (ES&OP) - customer and supplier
Operated by Valcon & Implement

2. What is S&OP ? Sales and Operation Planning can be described as:
”A set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning and to link high level strategic plan with day-to-day operations.”
APICS (American Production and Inventory Control Society
Supply
Demand

3. Purpose of the S&OP process
Improve delivery service
Focus on opportunities also outside the forecast
Capacities and resources are in place when needed
To enable growth
Balancing demand and supply also from a cost effective perspective
Differentiated planning strategies, planning and performance level
To reduce cost
and working capital
One aligned and committed plan at management level
Transparent and fast decision making and communication of action plans
Clear rules and prioritisation guidelines for tactical and operational level
To reduce iterations and workload

4. S&OP in the planning hierarchy
Planning buckets
Process cycles
Focus level
Opportunities/actions
Actual planning data and capabilities
Strategic planning
up to 5 years
Commercial strategy (markets, customers, products)
Requirements for new production facilities
Yearly
Yearly
Product group, capacity group
New customers/development of existing customers/campaigns
Increase/decrease in production capacity (shifts) or subcontracting
Build up/reduce inventory
Sales & Operations Planning
2-18 months
Monthly
Product group, capacity group
Monthly
Levelling demand/prioritisation between orders
Overtime/time off in production/ temporary employees
Build up/reduce inventory
Tactical planning
1-3 months
Hvorfor vil vi ændre processen
Weekly/daily
Weekly
SKU level, capacity level
Operational planning
0-6 weeks
Weekly/daily
Weekly/daily
SKU level, individual capacity
Prioritisation between orders
Overtime/time off in production
Build up/reduce inventory
Polices, rules and parameters

5. Extended S&OP process Customer Supplier Internal S&OP process
Customer demand planning
S&OP balancing
Plans and actions
Internal
S&OP
process
Implement plan and actions
Signed off purchasing forecast or takt
Supplier capacity planning
Review critical capacities and resources
Identify issues and make scenarios
Decision (S&OP) meeting
Capacity and resource gaps and scenarios
Supplier
Scenairer: F.eks. øge skift, flytte ordre, op/ned prioritere andre kunder, øge cost f.eks. overarbejde og hast leverancer
Implement plan and actions
Supplier inventory planning
Review raw material and semi-finished stock vs. target
Identify issues and make scenarios
Inventory gaps and scenarios
Common demand and supply plan and agreed actions

6. Framework for ES&OP meeting
Practicalities
Frequency: TBD
Horizon & aggregation level: TBD
Time and place: TBD
Participants
Decision makers customer e.g.:
Purchasing director/manager
Planning director/manager
Decision makers supplier e.g.:
Sales director/manager
Production director/manager
Purpose
The purpose of the ES&OP meeting is to:
sign off on the forecast for month 2 to x
decide actions for imbalance between demand and supply
decide actions for deviation on KPI’s
Ground rules e.g.
The S&OP presentation and recommendations are sent to participants min. 2 days before the meeting
Questions regarding data validation not to be discussed at the meeting
Mandate to be handed over if not able to participate
Decisions are made in the meeting (not before or after)
Agenda
Follow up on actions from last meeting
Update on market trends, market share and market requirement
Last month sales, forecast and development incl. large orders
Capacity and inventory issues and scenarios
New Product Introductions
Decisions and actions
KPI update, deviations and actions
Input
Customer purchasing forecast
Supplier capacity and inventory issues and scenarios
KPI measures and gaps
Output
Balanced demand and supply plan and list of agreed actions
Agreed action to close performance gaps

7. Implementation of ES&OP process
Policies and rules
How can supplier use forecast (e.g. buy raw material, produce to forecast)
Which planning strategies to be used (make-to-stock, make-to-order, JIT, Takt, min./max. on selected products)
Who holds inventory on semi-finished products?
Rules for prioritisation of production/orders
Horizon and focus/aggregation level
Horizon long enough to cover reaction time on ramp-up and down on capacities, resources and inventory
Focus level detailed enough to uncover issues
KPI measures and targets
Should cover QDC (quality, delivery and cost)
What to measure, how to measure it and who to collect data
Differentiation on product groups and/or A, B and C
Process and meeting
Who prepares and leads S&OP meetings?
Who owns and adjusts service level agreement?
Who owns the process and continues improvement on the process?
Tips
It will take some iterations to get a good process up and running.
Don’t spend too much time on getting the data side right.
Support the ES&OP process with a tactical planning meeting at manager level
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