A robust and successful SCM system that supports Sales and Operations Planning (S&OP) is vital for bringing together executives from major operational departments — sales, materials/procurement, manufacturing, transportation, marketing and finance — and determining how best to manage company resources and make future investments. Using the SCM system, team members can routinely see and discuss the S&OP process and the various trade-offs between customer service, inventory investments, production capabilities, supply availability and distribution concerns.
Every successful S&OP process requires a strong SCM system with reliable, accurate information regarding time-phased demand, production capabilities, inventory status, and any limitations on resource availability, such as warehouse space, transportation capacity, and limits on cash or credit. A number of tasks and analyses must be completed prior to the executive S&OP meeting in order to make best use of the monthly planning session. These include:
- Innovation and Strategy Review of the impact of new product introductions (NPIs)
- Demand Review of base-line demand as well as demand sensing and demand shaping activities
- Supply Review of inventory levels and production capabilities
- Financial Review of company financial objectives and ability to stay within working capital constraints
- Executive Business Review of future plans and impacts with regard to all major departments
These tasks gather and prepare the full range of information the S&OP team requires for a good decision-making process. The team can confidently make tough decisions that will ultimately determine how well the company performs against its priorities and challenges.
This white paper provides tips to establish a successful S&OP process, including the need to have up-to-date information regarding future time-phased demand, production capabilities, inventory status, and any limitations on resource availability and their influence on each other and overall company results.