Not without S&OP (Sales and Operational Planning).

Definition:

S&OP is a collaborative, risk-reducing, balancing process that translates a strategic plan (which lacks detail) into a tactical level plan that is transferred to a Master Schedule.

Purpose:

S&OP’s purpose is to facilitate and provide information for a CEO and his team to make decisions and give directives on product and service lines. The essence of S&OP is continuous improvement, which means that the tasks involved are repeated until a good plan is drafted.

Major S&OP goals are to:

  1. Provide inputs for demand and supply balancing.
  2. Provide insight on the market, economic, competitive, political forces, and trends that may impact customer demand and supply reliability.
  3. To understand and mitigate risks and impacts from forecast error.
  4. To serve as a framework for all departments to collaborate.
  5. To learn and manage aspects about an organization that were not known before.
  6. To enhance the probability of the implementation of a good, practical strategic plan.

Scope:

From strategic plan design to implementation of the plan at the tactical level. The departments involved are Demand Mandated (Sales and Marketing) and Supply Mandated (Procurement, Production, Logistics, HR, Finance, IT, Engineering).

Implementation:

Table 1: SIPOC Matrix

A SIPOC chart is a good mechanism to manage process implementation. This tool provides insight on process and input variables that can be manipulated to improve the results of an S&OP plan. The key underpinning is Y(f)… x …The chart in the video provides a similar methodology.

Challenges of S&OP:

  1. Forecasts are usually wrong, and S&OP facilitates the decision-making that is underpinned by the forecast. The goal is to continuously refine the data and adjust strategic, tactical, and operational plans as needed.
  2. Cultural changes may impact the process if an organization acquires new senior leadership. S&OP systems must be adjusted to facilitate new strategic directions and preferences of such leaders.
  3. Market uncertainty from shifting preferences and requirements.
  4. Silo thinking may impact the collaboration and coordination required for effective S&OP.

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Categories: Procurement

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Published On: February 24th, 2021Comments Off on Your Business Strategy Is Foolproof, Right?

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