Question

What are the five steps in a sales and operations planning process, and identify at least three activities in each step.

Answer 1

Answer:

Sales and Operations Planning (S&OP):

Sales and Operations Planning, also commonly referred as S&OP is a cross functional plan which is created by continuously revisiting and revising the strategic business plan, operational plan and coordinating plans. S&OP is a plan that involves various key departments like Sales and marketing, Operations, Finance, Research and Development or Product Development and most importantly involves the senior management.

Sales and Operations Planning (S&OP) has a five step process:

1. Data gathering: Here in this steps the data is collated from various inputs.

Activities involved are as under:

• Gather past month sales data
• Review and update the new product development/introduction
• Take current inventory records
• Collate marketing and sales data
• Gather financial data

2. Demand Planning: Use of all data gathered from different sources following activities are further under taken:

• Statistical forecast is created keeping in mind other inputs
• Circulate the new forecast to all interested stakeholders
• Get input from the stakeholders
• Demand planning meeting for review and approval
• Create Sales and demand plan
• Document all assumptions and risk

3. Supply Planning: In this step, the demand forecasts are compared with the capacity constraints. It is the Supply resource planning phase.

Activities involved are as under:

• Create the operations plan in sync with the demand plan
• Match the operations plan with important and critical resources
• Multiply the operations plan with the bill of resources for each family and create the a resource plan for each family
• Document risks and assumptions

4. Pre S&OP meeting: This step is used to balance the supply and demand,

Activities involved are as under:

• Resolve differences
• Develop action recommendations
• Develop agenda for top management who will participate in the S&OP meeting

5. Executive S&OP meeting: Final decisions are taken in this meeting based on all inputs, recommendations and see how it best fits the company’s strategic plan and strategic business plan.

Activities involved are as under:

• Work through the agenda
• Review the progress on actions from previous month
• Review all product families and approve the recommendations
• Develop new proposals
• Make decisions
• Identify at least one item for improvement