This document provides an overview of the Sales and Operations Planning (S&OP) process in high performing organizations. It describes key elements of the S&OP including integrating demand and supply side plans, using rolling 12-month forecasts and plans, managing risks, and ensuring accountability. It emphasizes that the S&OP process requires collaboration between various business functions like sales, marketing, and operations to align around a single business plan.

1. 1
S&OP Process in
High Performance
Organizations
Syed Yasir Saeed

2. 2
Business Model
Strategic Plans
Financial Plans
Business ObjectivesDemand-Side Plans Supply-Side Plans
BusinessImperatives
Operations Planning
MPS Master Production Scheduling
BusinessImperatives
Sales Planning
DataAccuracy
Procurement Process Shop Floor Process
DataAccuracy
Customer Service
MRP
Marketing Plans
Pull Systems BOM, Inv., Item Master
S&OP Process
Supplychain
Syed Yasir Saeed

3. 3
What is the S&OP?
l Risk management for demand, capacity and profit
l Spreadsheet for review and accountability
– Revenue
– Operations
– Inventory
– Profit
l Does not have to have the “books closed”
l 12-months rolling plans
l Same time every month
l HEADLIGHTS!
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4. 4
Why S&OP in Manufacturing
Need good plans for stakeholders
Capacity and inventory agreements with the plants/resources
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5. 5
Simple S&OP Example
20 25 23 23 28 20 20
21 21 21 21 22 22 22
Beginning Inventory = 17
Top Management directive for inventory at end of period
7 = 8
17 8
Operations Plan = Demand Plan plus delta in inventory
divided by the number of periods
20+25+23+23+28+20+20=159-9/7=150/7=21.4
18 14 12 10 4 6 8
Demand
Operations
Inventory
O Ring Compression Molding - Make to Stock (MTS)
(Numbers in 000’s)
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6. 6
Structure of Supply-Side
Corporate Plans
Plant 1 Plant 2 OtherPlants
OtherPlants
OtherPlants
Other Plants
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7. 7
Data Stream,
Demand
Corporate Plans
VP Sales & MarketingCustomers
Distribution
Customer Sales
Reps
Plant 1 Plant 2 Suppliers
Other Plants
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8. 8
Data Stream, Demand
Demand Manager
Operations Coordination
VP Sales & MarketingCustomers
Distribution
Customer Sales
Reps
Plant 1 Plant 2
Suppliers
Other Plants
Syed Yasir Saeed

9. 9
Objectives of an S&OP Process
•Improve competitive advantage for the business
•Handshake between Demand and Supply sides of the organization
•Risk management for the business
•New product introduction
•Product transfers
•New suppliers
•Capacity risks in general
•Supplychain management
•Inventory!
•Backorders and customer service!
•Keep the top management team in sync with the rest of the
business
•Send clear messages to the team on priorities and objectives
•Headlights to the supply-side
Syed Yasir Saeed

10. 10
S&OP Data Stream Standards
S&OP Information Standards
Static
Data
Sudden
Changes
Missing
Data
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11. 11
It starts with Demand
l Business inputs
l Customer inputs
l Sales inputs
l Historical inputs
l Etc.
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12. 12
Demand Planning
lDemand planning is a process consisting of actions
and planned expectations to affect customer
behaviors (bookings) by product family.
lIt is stated by product family.
lOne deliverable is the resulting forecast of
anticipated customer orders (bookings) received by
product family.
lBookings are stated in both currency and units by
product family.
lThe demand plan is measured by plan accuracy of
units by product family.
Syed Yasir Saeed

13. 13
Forecast Detail Logic
Target
$
Item numbers
(SKUs)
high
low
Syed Yasir Saeed

14. 14
Factors in Product Groupings
l Common components
l Common capacity
l Common constraint
l Common inventory
strategy
l Similar pricing strategy
l Other commonalities
l What ever makes
sense in your business
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15. 15
Backlog
Plan
New Demand Plan
Operations
Capacity
Plan
MTO
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16. 16
Inventory
Plan
Operations Plan
Demand
Plan
MTS
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17. 17
Demand Planning
Demand Review
or Pre-S&OP S&OP
Demand Planning
Forecast
by product
family
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18. 18
Demand Planning
Business Plan
Demand Review S&OP
What products
What markets
What Customers
Revenue
Profit/Pricing
Cost Drivers
Economic
Assumptions
Forecast
by product
family
Demand Planning
Syed Yasir Saeed

19. 19
Demand Planning
Business Plan
Marketing
Demand Review S&OP
Affecting customer behaviors
Marketing/Demand Development
Promotions
New Product Introductions
Channel Management
Forecast
by product
family
Demand Planning
Syed Yasir Saeed

20. 20
Demand Planning
Business Plan
Marketing
Demand Review S&OP
Sales
The funnel review
Know opportunities
Know closure rate
Know closure cycle time
Calculate results
Forecast
by product
family
Demand Planning
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21. 21
Demand Planning
Business Plan
Marketing
Demand Review S&OP
Sales
History
Experience by
product family
Forecast
by product
family
Demand Planning
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22. 22
Characteristics of a
Good Forecast
l 12-months rolling by product family
l Reviewed at least monthly for validity and measured for
accuracy, short term
l Communicated appropriately to operations
l Sales/Marketing is accountable for accuracy
– What did we learn?
– What are we going to do differently?
l Appropriate historical information
l Appropriate market/customer information
l Marketing influences and expectations taken into
consideration
l Performance is measured and posted
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23. 23
Demand Process Owner
l Responsible for data gathering process
l Responsible for accuracy of data
l Responsible for root cause analysis
l Responsible for actions
l Responsible for trends
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24. 24
Demand Review or Pre-S&OP
l Happens between the master scheduler(s) of
the business and the demand-side of the
business.
l Demand Review 3 weeks of the month
l Pre-S&OP last Friday prior to the S&OP
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25. 25
Demand Review
or Pre-S&OP
l Same time every month
l Responsibility well defined (demand process
owners)
l Prep for S&OP
l Agenda
– Review last 30 day performance
– Discuss likelihood of hitting plans out 30-90 days
– Firm and adjust plan for S&OP
Syed Yasir Saeed

26. 26
Performance Metric –
Demand Planning
l Forecast Accuracy of each Product Family
l Delta from plan (no % above 100)
l Average Performance
l Tolerance
– Total Dollars ($) = 95-100%
– Product Family Units = 90-95%
Syed Yasir Saeed

27. 27
Orders Received per Day
0
20
40
1
27
53
79
105
131
157
183Days
Received
Series1
Customers can
be unruly!
Syed Yasir Saeed

28. 28
Beginning
of new month
End of month
0 30030
Beginning
of new month
End of
month
Pre-S&OP
S&OP
Pre-S&OP
Timing
* * * * * *
* = Weekly Demand Review
Syed Yasir Saeed

29. 29
Manager in charge
- ?
Data Messenger - ?
Demand Process
Owner – ?
Operations Process
Owner - ?
Finance Process
Owner - ?
Develops the spreadsheets
Reconciles Demand Performance
Asks the tough questions
Reconciles Operational Performance
Reconciles Profit Performance
S&OP Process
Syed Yasir Saeed

30. 30
S&OP Agenda
l Review performance to plan, last 30 days
(Metric)
– Business plan (Profit)
– Demand plan (Forecast)
– Operations plan (Capacity)
l Review next 30, 60, 90 day plans
l Review 12-month rolling plans
l Review any open actions and document new
actions
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31. 31
Separate the Risks on the
Spreadsheets
l New products
l New Customers
l New equipment
l New shifts
l New suppliers (major impact)
l Other risks?
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32. 32
Supply-side (Operations Plan) Process
Owner(s)
l Responsible for data gathering process
l Responsible for accuracy of data
l Responsible for root cause analysis
l Responsible for actions
l Responsible for trends
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33. 33
Thoughts to go
away with
l S&OP = Risk management
l The Demand Plan is not necessarily equal to the
Operations Plan.
l Good service is not necessarily dependant on
accurate forecasts
l Business strategy (inventory strategy) is a
prerequisite in understanding how to run the
business cost effectively as a high performance
enterprise
l Top Management must own the S&OP
Syed Yasir Saeed

34. 34
Semi-Annual
•Talent Review
•Strategic Review
Weekly
•Operational Plan Accuracy
•Project Review
•Weekly Performance
Monthly
•S&OP
•Financial
•Operational Quarterly
•Portfolio Review
•Business Review
Daily
•Schedule Adherence
Rigorous Management System
Class A ERP Management Systems
S&OP
Syed Yasir Saeed

35. 35
Implementation Planning
l Education
l Performance Metrics
l S&OP Organization - Infrastructure for
Reporting (accountability)
l Implementation Plan
– Choose the level of detail for Product groupings
– Define the data flow – Demand and Operations
– Assign accountability
– Determine schedule for review
l Handshake Management
Syed Yasir Saeed

36. 36
Performance for
this last month
Prod Fam 1
Prod Fam 2
Prod Fam 3
Total 87%
Actions Names Dates
xxxxx xxxxx xx/xx/xx
xxxxx xxxxx xx/xx/xx
xxxxx xxxxx xx/xx/xx
xxxxx xxxxx xx/xx/xx
xxxxx xxxxx xx/xx/xx
Inventory Accuracy
Trend Chart
Pareto Chart
Common Reporting Format
Syed Yasir Saeed

37. 37
Handshake Management
Includes (not limited to):
Rules of engagement
Stock levels (MTS & MTO)
Competitive lead-times
Inventory buffer placement
Time fence policy
Assumptions and risk management
Drumbeat from MPS
Process ownership and accountability
Flexibility from forecast
Communication of headlights
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38. 38
Potential Improvement Potential Impact
Reduce inventory levels Reduce capital investment in inventory
Reduce time-to-market Increase revenues through increased sales
Increase capacity Increase revenues
Increase customer satisfaction Increase revenues through increased sales
Reduce rejects/rework Decrease material costs; greater ROI
Speed up delivery time Increase revenues
Business Impact
Syed Yasir Saeed