Presentation of Dr. Jain, Professor at Saint John's University, about S&OP - IBF seminar of 20th may organized by Advance School in Italy

1. By
Chaman L. Jain, Ph.D.
Tobin College of Business
St. John’s University
8000 Utopia Parkway
Jamaica, New York 11439
USA
Jainc@stjohns.edu

2. • How S&OP works
• What obstacles do we encounter, and how to
overcome them
• Benefits of S&OP

3. Step
5
Exec
S&OP
(Review,
finalize
and
implement
plans)
Source:
Adapted
from
the
book,
Thomas
F.
Wallace.
Sales
&
Opera+ons
Planning:
The
How
to
Handbook.
CincinnaG,
Ohio:
T.
F.
Wallace
&
Co,
2004,
p.
59.
Step
3
Supply
Planning
Group
(Ability
to
meet
the
demand;
if
not,
what
opGons
do
we
have)
Step
4
Pre-­‐Exec
S&OP
(Prepare
a
proposal
for
the
Exec-­‐S&OP)
Step
1
Data
Gathering
(Gather
data,
and
prepare
staGsGcal
forecasts)
Step
2
Demand
Planning
Group
(Finalize
forecasts,
and
send
them
to
the
Supply
Planning
Group)
Working of Sales and Operations
Planning Process

4. 1. Align demand with supply
2. Integrate operational plans with strategic
goals/budget
3. Manage product portfolio
4. Integrate product mix with total volume/profit

5. Obstacles to Implementation
• Lack of support from upper management
• Silo structure
• Excuses and excuses for not attending meeting
• No champion
• Concentrating on SKUs, not on category and brand
• Goals and metrics are not clearly defined
• Guidelines for resolving conflicts and courage to act
on difficult issues
• No centralized data warehouse
• No technology to facilitate the process
• Conflicting incentives
5

6. Benefits of S&OP
• Improves forecasts
• Increases sales and reduces stock-outs and
inventory
• Improves customer service
• Reduces cost of production
• Reduces obsolescence
• Reduces freight cost
• Enables to make decisions faster and with
less efforts
• Creates harmony among different functions
6

7. 7
BENEFITS
DERIVED
FROM
THE
IMPLEMENTATION
OF
S&OP
PROCESS
Company
Period
Improvement
in
Forecasts
Improvement
in
Inventory
Improvement
in
Customer
Service
Source
Air
Products
&
Chemical
JohnsonDiversey
Syngenta
On
Semiconductor
2003-­‐06
2002-­‐05
2001-­‐06
2004-­‐05
21%
23%
49%
NA
20%
18%
5-­‐10%
14%
10%
6%
NA
1%
Stephen
P.
Crane,
Dir.
of
Supply
Chain
Performance
Polymers
Greg
Reyman,
Director
GAPAC
Value
Chain
Richard
Herrin,
Currently,
Director
of
Supply
Chain,
Georgia
Gulf
Corporation
Tim
Williams,
Demand
Forecasting
Mgr.
1. Herrin,
Richard.
“Managing
Products
via
Demand
Variability
and
Business
Importance.”
Journal
of
Business
Forecasting.
Spring
2007,
pp.
6-­‐10.
2. Reyman,
Greg.
“How
JohnsonDiversey
Implemented
S&OP
in
Europe.”
Journal
of
Business
Forecasting.
Fall
2005,
pp.
20-­‐23,
28.
3. Williams,
Tim.
“Forecasting
Journey
at
On
Semiconductor.”
Journal
of
Business
Forecasting.
Spring
2006,
pp.
29-­‐32.
4. Crane,
Stephen
P.,
“How
to
Incorporate
Market
Intelligence
into
Statistical
Forecasting,”
Presentation
at
the
Demand
Planning
&
Forecasting
Best
Practices
Conference
in
Orlando,
Florida,
of
Institute
of
Business
Forecasting
and
Planning,
Appeared
in
the
Conference
Manual
(New
York:
Institute
of
Business
Forecasting
and
Planning,
October
2006):
327-­‐347.