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In most abstract terms,
Sales and Operations
Planning
(S&OP)
can be defined as a
tactical-level
systematic planning
process, where the main
objectives are
maintaining demand and
supply balance,
profitability, and
strategies in mid- to
long-term planning
horizons.
S&OP is also referred as Integrated Business
Planning (IBP) and we
will use them both as
'S&OP/IBP' or 'S&OP' and
will avoid any
discussion related with
differences in between
these two (if any).
S&OP/IBP
is an approach that
integrates the plans of
all organizational
departments such as
sales, marketing,
manufacturing, planning,
purchasing, logistics
and finance.
In this context,
S&OP/IBP improves
interdepartmental
coordination and
communication
capabilities, and
therefore enable
businesses to be more
responsive to market
dynamics and competition
and take quick and
effective actions
earlier than their
rivals.
A well-designed
S&OP/IBP
process
demolishes
inter-departmental
walls...
S&OP is among critical
planning processes on
the path to supply chain
excellence. It is an
interdepartmental
planning platform where
mid-to-long-term
corporate decisions are
made.
Main
features of S&OP can be
summarized as follows:
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Monthly planning
process cycle, the
goal is increasing
competitiveness
●
Each
cycle involves planning
for the next 12-24
months, on a rolling
basis
●
Covers all
departments and
formalizes
inter-departmental
communication
●
Consists of
preparations, planning
activities and decision
making meetings
●
Enables continuous
monitoring and
improvement of
organizational
performance
How does S&OP
serve an organization
competition?
Economic conditions,
competitors' activities,
customer needs and
expectations, sales and
marketing activities,
introduction of new
products, dynamics in
purchasing, production
and logistics, are among
factors that make it
difficult for
organizations to
establish a
demand-supply balance.
S&OP process detects
changes in market
dynamics,
takes actions to meet
demands at minimum cost,
and creates competitive
advantages...
Main competitive
advantages gained by
S&OP are,
●
Improving capabilities
to recognize changes in
competition
●
Detect opportunities and
threats in products,
customers and markets
●
Developing plans to meet
demands with minimum
cost in a disciplined
process
●
Tracking critical
performance measures for
continuous improvement
systematically
How does S&OP
work?
S&OP is a systematic
planning cycle that is
repeated every month.
Although there are
organizational
differences in practice,
the following phases are
followed in each cycle.
1st Phase: Product
Review
2nd Phase: Demand
Review (Sales Planning)
3rd Phase: Supply
Review (Operations
Planning)
4th Phase: Financial
Review and
Reconciliation
5th Phase: Management
Review
At each stage, different
functional departments
have tasks and
responsibilities. No
department will be left
out of the process.
Monthly S&OP cycle,
phases and general tasks
are summarized in the
below figure.
What to do at each
phase of S&OP?
Major tasks in every
phase are as follows:
What to do in Product
Review in S&OP/IBP?
Management of product
lifecycles and product
portfolio, planning of
R&D, NPD and improvement
projects, as well as
other organizational
initiatives are planned
and coordinated in this
phase.
What to do in Demand
Review (Sales
Planning) in S&OP/IBP?
Generating sales
forecasts and price
projections, and
performance indicators
of demand planning,
sales and marketing are
tracked at this phase.
For more information on
this phase, and related
concerns, read our brief
entitled
'What is Demand Planning?'
What to do in Supply
Review (Operations
Planning) in S&OP/IBP?
Determination of
critical resource
requirements related to
purchasing/procurement,
manufacturing,
warehousing, logistics
and other operations, so
as to meet the demand
plan are done at this
phase. Alternative
supply scenarios and
inventory/backlog
projections are
reviewed. Performance
indicators related with
all supply operations
are tracked and
evaluated.
What to do in
Financial Review and
Reconciliation in
S&OP/IBP?
Financial projections
and risks are reviewed
under alternative
scenarios. Possible gaps
from business plans and
budgets are analyzed.
Issues to be considered
in Management Review are
determined.
What to do in
Management Review in
S&OP/IBP?
Product, demand, supply
and financial plans are
reviewed and approved.
Gaps from strategic and
financial goals are
reconsidered. Risks and
opportunities are
assessed. General
organizatonal
performance indicators
are evaluated. Sales and
Operations plan for the
upcoming 12-24 months is
decided for. Strategies
may be revised based on
discussions on this
phase.
Based on the process,
related tasks and
decision making,
as well as their effects
on organization and
competition,
Top Managers may choose
S&OP/IBP as
the way to manage the
organization...
Is S&OP a brand
new process?
Deployment of
initiatives of Top
Management's strategic
decisions and goals
across the whole
organization can
effectively be achieved
by the S&OP process.
Organizations carry
out some parts of S&OP
activities.
However, these may not
exactly be
in the full
extent
and
integration
as proposed in the S&OP
process...
Is S&OP
process the same
for each
organization?
There are many
factors that
affect how to
implement the
S&OP process
within the
organization.
Manufacturing
strategies and
physical
structure of the
manufacturing
environment,
products and
their features,
materials, their
suppliers and
supply chain
relations, the
patterns and
trends of
customer demand
are among such
factors.
In fact, all
factors that
affect the
competitiveness
of the
organization in
the market
should be taken
into account
when designing
the S&OP
process.
The custom
design and
execution of the
process should
be addressed in
the conceptual
design of the
process within
the
organization.
Organizations
may require a
unique
sequential flow
of tasks ,
decision making
mechanisms, and
related tools
within the
context of S&OP.
Optimum Planlama
provides consultancy
services on designing
and reengineering
organizational Sales and
Operations
Planning (S&OP/IBP) processes, as
well as supportive
tools.
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Red Bull Türkiye
S&OP/DP Project, 2022 |
Makbul
S&OP Project, 2021 |
NIVEA Beiersdorf
S&OP/DP Project, 2019 |
SİKA Türkiye
S&OP Project, 2018 |
ÇİLEK
S&OP Project, 2017 |
Contact us
for more information on
our consulting services
regarding design and
implementation of Sales
and Operations Planning
processes and related
tools.
Where is
S&OP/IBP within
enterprise
resource
planning?
Enterprise
resource
planning (ERP)
can be defined
as the
management of
main business
processes in an
integrated and
coordinated
manner within an
organization.
Main business
processes, in
this respect,
can be listed as
sales,
manufacturing,
supply chain,
purchasing,
finance, HR,
etc.
S&OP holds a critical
position within
the scope of
supply chain
management.
S&OP
is the process
that integrates
tactical-level
planning
activities of
functional
departments.
Organizations striving for
excellence in
their supply
chains, and
therefore in
S&OP/IBP,
need certain
functional
planning
processes in
place. These
processes are
outlined below.
Organizations
need to identify
the deficiencies
and requirements
of their current
demand
forecasting and
planning
processes, and
then improve or
re-engineer
them.
Optimum
Planlama
offers
professional
training and
consultancy
services for
organizations to
excel their
supply chain
performance.
Dr. İlker Güçlü
|
Founder,
Optimum Planlama
|
Click
for resume
This
article
is to
provide
a
general
information.
The
aforementioned
may not
apply to
all
organizations.
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Optimum Planlama training programs focused on
'S&OP/IBP'
business processes are,
|
Sales and Operations
Planning, S&OP/IBP
training
program
(V2.0EN)
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Training Goals
This program presents
the road map of
constructing and/or
improving the Sales and
Operations Planning
(S&OP/IBP) processes
within the organization.
Generating mid-term
product, demand and
supply plans in line
with the strategic
objectives, balancing
demand and supply, as
well as financial
reconciliation are main
topics. Examples to
planning dashboards,
KPIs and critical
concerns in
implementation are
discussed in detail.
Verbal presentation, all
visuals and printed
material are in English.
Click for
details. |
Target Audience
Top and
Senior
Management
Planning
Professionals
Supply
Chain
Professionals
Demand
Management
Sales
and
Marketing
Professionals
Manufacturing,
Operations
Warehouse,
Logistics
Mngers
R&D and
Product
Managers
Purchasing,
Procurement
Finance,
Budgeting
Process
Improvement |
Training
Modules
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Day
1:
S&OP/IBP Processes,
Product and Demand
Reviews |
Day 2:
Supply, Financial
and Management Reviews
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Operational Processes, Planning and S&OP/IBP
Balancing of Supply with Demand, Results of Imbalance
Differences between Budgeting Process and S&OP/IBP
Competitiveness and Gains with S&OP/IBP
S&OP/IBP Processes and Tools
S&OP Calendar, Preparations and Meetings
Duties and Responsibilities
Product Review (R&D, NPD, Engineering)
New Products and Their Impact on Competition
Product Development Process and Product Lifecycles
Product/Project Planning Presentations and Dashboards
Case: Product/Project Resource Planning
Demand Planning and Sales Forecasting
Basic Principles and Techniques of Forecasting
Past Sales, Prices and Events History
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Assumptions Management (Market, Competition, Demand)
Demand Planning Presentations and Dashboards
Case: Demand Planning
Supply Planning: Procurement, Production, Logistics
Identifying Resource Needs and Bottlenecks
Procurement, Production, Warehouse & Logistics Assumptions
Supply Strategies and Alternative Scenarios
Supply Planning Presentations and Dashboards
Case: Supply Planning
Financial Planning and Reconciliation
Key Cost Factors, Financial Assumptions
Innovative Approaches in S&OP/IBP
Financials and Budget Gap Analysis
Management Review and Decision Making
Case: Optimization in S&OP
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Excellence
in your supply
chain
performance,
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