Executives are continuously challenged to drive decisions downward to directly impact the day-to-day activities in sales, purchasing, production, and service, all while at the same time they must also drive upward so that the company’s financial plans can reflect accurate current and future sales and operation planning.
A business operates in an age of rapid changes that include both increasingly demanding customers and supply chains that extend half a world away. Ineffective planning in such an environment makes it extremely difficult to control and manage the business.
The resulting impacts on your organization include:
It is essential to guide daily operations and monthly plans toward long-term business goals so that your organization can remain relevant and competitive in today’s growing global market. When an organization is not yet achieving the ROI that they should be, it is wise for them to consider S&OP as their primary management process for helping navigate to higher levels of profitability.
Key issues that require continuous attention include:
Sales and Operations Planning is a tool that enables the top management team of an organization to establish the desired levels of customer service, inventory investment, and lead times in advance. From there, this same team of executives manages the business proactively, in a manner that will help them to achieve their targets. The objective of Sales and Operations Planning is to reach a consensus on a single operating plan that allocates the critical resources of people, capacity, materials, time, and money to most effectively meet the marketplace in a profitable way.
S&OP is often referred to as “top management’s handle on the business” and with that, organizations with a sound S&OP plan will experience a number of key benefits.
Results that can be readily measured include:
- Higher customer service
- Lower finished goods inventories
- More stable production/service rates
- Faster and more controlled new product introductions
- Reduced obsolescence
- Shorter customer lead times
Soft benefits from Executive S&OP include:
- Enhanced teamwork in the executive and mid-management groups
- Better decisions with less effort
- One set of numbers in both units and dollars, with which to run the business
- Tight linkage between strategic plans and day-to-day activities
- A view into the future
- Improved customer lead times