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Sales and Operations Planing Handbook

The document is a handbook on Sales & Operations Planning (S&OP). It provides an overview and definition of S&OP as a process to balance demand and supply. The handbook discusses key challenges in implementing S&OP and achieving effective decision making. It emphasizes the importance of integrating different business functions and having the right focus, people, processes and data to support S&OP. The handbook also covers specific topics like demand forecasting, new product introductions, and ensuring S&OP is linked to strategic, tactical and operational planning processes.

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Sales & Operations Planning Handbook Balancing demand and supply Planning Fourth edition, 2014
2 Preface Sales & Operations Planning Aligning business plans with operations S&OP: A set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning and to link high-level strategic plans with day-to-day operations (definition by APICS – American Production and Inventory Control Society). Sales & Operations Planning (S&OP) is all about balancing demand and supply – and to take and execute decisions to keep this balance in line with company strategies and targets. It should be simple – and in theory it is – but experience shows that implementing S&OP is difficult. The primary reason being that this is a cross-functional process, involving many different parts of the organisation, and at the same time, it often requires IT support. Implementation of S&OP is therefore much about people, less about processes and least about systems. This is the basis for the handbook. In the following chapters, we will present a set of viewpoints which describe our stand on the topic with the purpose of providing an outline of our approach and sharing some of our knowledge and experience from past and ongoing S&OP projects. Enjoy!
3 Contents of the S&OP Handbook 1 What is Sales & Operations Planning (S&OP) 2 Why Sales & Operations Planning 3 The Sales & Operations Planning process 4 Demand forecasting 5 New Product Introduction 6 Capacity and inventory planning 7 One common language 8 Scenario planning, balancing and decision-making 9 Finance in S&OP 10 Key principles for S&OP implementation 11 IT-supported S&OP This is a reduced version of the handbook. Contact us to get the full version (see back of handbook)
4 S&OP: What is in a name? Integrated Business Planning SOIP Sales & Operations Planning Executive S&OP SIOP S&OP Business Planning The big name confusion: Many names exist for the process of aligning business plans with operations, and some experts claim that different names encompass different content – most recent perhaps is the claim that “IBP = S&OP but with finance”. In Implement Consulting Group, we collaborate with Tom Wallace, one of the original ‘inventors’ of S&OP as a concept. According to Tom, the original definition of S&OP included sales, marketing, product development, finance, operations and of course; the top management. Thus, Tom Wallace sees no difference in the definitions on the left-hand side. To avoid contributing to the general confusion of terms, we in Implement have decided to fully use Tom Wallace’s definition and name: Sales & Operations Planning (S&OP) Tom Wallace is a teacher and writer, specialising in Sales & Operations Planning – and regarded by many as one of the inventors of S&OP. He is a distinguished fellow of the Ohio State University’s Center for Operational Excellence. Tom has written twelve books, including Sales & Operations Planning: The How-To Handbook, 3rd edition (2007), Sales & Operations Planning: The Executive’s Guide (2006) and Sales & Operations Planning: The Self-Audit Workbook (2005). A rose by any other name would smell as sweet.” William Shakespeare MIOE
5 S&OP is about doing what is best for the company as a whole Sales & Operations Planning can be described as: Finance Operations Sales Overall plan Finance Operations Sales Stakeholders are often at odds with each other: • Sales wants to increase sales and make customers happy (plenty of inventories) • Operations wants to run machinery as stable and efficient as possible (long runs, few changeovers) • Finance wants high profit and/or turnover, efficient operations and low working capital The S&OP process brings these different views together in one balanced decision making process. One overall planWhat is S&OP? A set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning and to link high-level strategic plans with day-to-day operations.” APICS (American Production and Inventory Control Society)
6 Failing to make decisions in time results in lost sales or excess costs Situation faced by many companies Inability to make decisions in a timely fashion caused by: • Uncertainty about decision-making horizons and the available courses of action, particularly in Sales • Uncertainty about capacity and material • Uncertainty about the number of new products and associated issues • Failure to phase out old products • Absence of a formal cross- functional decision-making process and forum that includes Sales, Production, Purchasing and Finance and ensures minimal involvement by senior management • Conflict between decisions and budget • Sales, Production, Finance – all operating according to different plans Current challenges Failing to make decisions in a timely fashion results in lost sales or excess costs: • If capacity is increased too late, customer service suffers, leading to lost sales • If capacity is cut too late, capacity costs become too great • If activities to increase sales – such as campaigns and new incentive models – are implemented too late, it is impossible to make use of excess capacity or material to increase sales further • If inventories for things such as seasonal products are expanded too late, customer service suffers and sales are lost • If inventories are drawn down too late, company liquidity is reduced • If sales is not levelled out to match the capacity constraints, service levels and lead times will suffer Key questions 1. Are capacity and supply presented in a simple manner that supports timely decisions? 2. Do all the most important decision-makers in Sales, Production, Purchasing and Finance know the key decision-making horizons and the available courses of action? 3. Is there a formal cross-functional decision- making process including Sales/marketing, Production, Purchasing and Finance that provides timely decisions for senior management? 4. Is there a well-functioning tactical planning? 5. What sales opportunities were missed in the past year? 6. Have there been problems filling orders in the past year? 7. Have there been periods of overcapacity in the past year? 8. How many new products were introduced in the past year? How many were phased out? 9. Has the pace of inventory turnover increased in the past year?
7 Effective decision-making is a balancing act between the different dimensions of S&OP Maximising the effectiveness and the impact requires a customised approach with the RIGHT… • Focus on business targets and objectives • Process design based on market and business characteristics • People involved to ensure the desired behaviour • System and data to support an efficient and fact-based process S&OP will create impact on business performance through collaborative planning and decision-making System and data Focus areas People and organisation Process and methods Effective business decisions An imbalance can cause undesired behaviours and lead to either no decisions or the wrong decisions, thus reducing the chances of realising the potential. This is enabled by an environment characterised by… • Collaboration – cross-functional involvement and ownership • Trust – holistic view and targets, as well as data transparency • Accountability – continuous review of outcome versus plan • Foresight – focus on market conditions and assumptions • Insight – decoding cause and effect relations • Decisions and actions – plan, do, check and act mentality The result will be a significant business impact1): • On-time delivery to customers +25% • Inventory levels -41% • Manufacturing downtime -35% • Plant efficiency +17% • Transportation cost -17% 1): SALES & OPERATIONS PLANNING: COSTS AND BENEFITS by Tom Wallace (2009)
8 Focusing on foresight, insight, decisions and actions And be both agile and absorptive towards change • Being agile means identifying and exploiting opportunities as they emerge – ahead of competition • Being absorptive means having the capacity to sustain change and deliver upon the defined strategy – better than competition Managing change and supporting the strategy journey • There is an ever ongoing journey between the current reality and the created future that a business sets out to reach • This journey rarely comes in the shape of a straight line, there is a constant and increasing level of change and uncertainty that need to be managed • The challenge of acting in a changing and uncertain environment is often substantial, but it can also be a source of opportunities • S&OP can act as a supporting platform for delivering upon defined strategies, but it can also act as a platform for change and adapting to emergent opportunities Moreover, S&OP is a strong tool to support the strategy journey through a continuous strategic dialogue Utilise S&OP for a frequent, continuous and focused strategic dialogue Supporting execution of deliberate strategies Sensing and adapting to emergent strategies Created future Created future Current reality Foresight Insight Decision Action & follow-up Change and uncertainty What do we think can and will happen? What effect can it have on our strategy and business? What is the best course of action for our business? How do we ensure effective execution?
9 The S&OP process must be linked to strategic, tactical and operational processes Targets and policies are supplied downwards, while capabilities and actual performance are sent up The S&OP process must supply the policies, rules and prioritisation guidelines for the tactical and operational processes Timing is business dependent and can alter significantly within heavy industry in particular Strategic planning 5 years Sales & Operations Planning 2-18 months Tactical planning 1-3 months Operational planning 0-6 weeks Policies, rules and parameters Actual planning data, capabilities
10 SUICIDE QUADRANT Long term planning must be on an aggregated level. Detailed long term planning will not improve accuracy – but requires a lot of effort Detail level Time High (Detailed) Low (Aggregated) Source: FORECAST LESS AND GET BETTER RESULTS by Tom Wallace and Bob Stahl Near Far Sales & Operations Planning Forecast and plans in the long- term often have lower accuracy on a detailed level. Therefore, digging into the details in the long-term does not bring value to the decision-making process and only makes the process longer and more cumbersome. S&OP is about making decisions in the long-term on an aggregated level. S&OP should provide the aggregate projections. Decisions in the short term are based on more details handled within tactical planning rather than S&OP. S&OP focus: Long term and aggregate level Get out of the suicide quadrant The higher you fly, the easier it is to see where to land”. Tom Wallace
11 PRODUCT REVIEW SUPPLY PLANNING INVENTORY PLANNING DEMAND PLANNING BALANCING & DECISIONS The S&OP process is a cross organisational process to take and execute the decisions that are best for the company as a whole Create (statistical) forecast Review unconstrained demand plan Sales approval Sales input Interface to NPD process Prepare decision proposal Executive decision meeting Update revenue & cost estimate Pre-meeting based on reconciliation Analyse scenarios, incl. financial impact AllSales & Finance SCM & Finance EXECUTION “Handover” from decision meetings Communication & decision execution Update of latest estimate (quarterly) Week 1 Week 2 Week 3 Week 4 Identify demand gaps & supply issues Develop initial supply chain plan Review critical resources & assess scalability Finance Review target stock Review Service Level Agreements Decisions Demand gaps & supply issues Unconstrained forecast The S&OP process consists of 4 general steps: Demand planning, Supply planning, Balancing & Decision Making and Execution Decisions are executed
12 The main purpose of the demand forecasting process is to deliver an unbiased, realistic forecast in the S&OP horizon – at the right level of detail • Statistical forecasting can help us predict the future based on the past – but it is reactive so we need to combine statistical forecasting with input from Sales and Marketing to get a realistic forecast • It is hard to motivate Sales and Marketing to forecast, and it is important that they spend their time where it provides the most value, e.g. tenders, promotions and new products • The forecast from Sales and Marketing is often biased and affected by their incentives or just by common optimism/ pessimism • Consistent underforecasting gives major delivery problems, and consistent overforecasting gives excess capacity (bias) • Optimisation of statistical models and parameters does not make statistical forecasting less reactive – but more complex and non-transparent • An unclear forecast purpose and focus leads to a complex solution, e.g. unnecessary SKU forecasting in the S&OP horizon (suicide quadrant) • In many companies, typical forecast measurements are based on the forecast accuracy in the near horizon – leaving no incentives for improving accuracy of the forecast in the S&OP horizon 1. One consensus volume forecast shared by Sales, Finance and Operations 2. The focus level of forecast must be determined by the decisions taken on the basis of the forecast 3. Sales is from Venus, Operations is from Mars 4. Statistical forecasting must be simple and transparent 5. Baseline forecast must be separated from campaigns and tenders 6. One size does not fit all – time used in the forecasting process should be spent where it has the largest impact 7. KPIs should be aligned with the level of forecast required – in different horizons 7 Implement viewpoints on the demand planning process Key challenges in achieving a realistic forecast in the S&OP horizon
13 Sales is from Venus, Operations is from Mars – forecast should not be created by Sales, but could be reviewed by Sales • Sales managers are typically focused on people, relationships and sales incentives, e.g. bonus (Relational/Experimental) • Operations typically focuses on processes, numbers and KPIs (Rational/Practical) (*) Whole Brain thinking from NBI and Solutions finding Pty (Ltd) • The Whole Brain model(*) states that people have one dominant preference out of four possible Sales has other preferences than Operations • Statistical forecasting is reactive. Therefore, the only manner in which to make forecasting proactive is to get input from Sales and Marketing • Good sales managers typically have a preference for relationships, people, seeing opportunities etc. We use the Whole Brain model to illustrate this on the right • Sales managers are motivated by understanding why they have to provide input and by minimising their work – they are not motivated by lots of numbers, Excel sheets and statistical models • Important input from sales managers includes e.g. tenders, promotions, increasing/decreasing pipeline and new customers • Sales managers have a tendency to overforecast in the short-term horizon and underforecast in the long-term horizon • Marketing has important information for long-term forecast, e.g. new products, new markets and new campaigns Actual sales Sales manager forecast Why do we need input from Sales and Marketing
14 New product development/introduction is a key demand driver and is therefore important to integrate with the S&OP process The need for integration between NPI and S&OP is primarily driven by the dynamics of a portfolio … • The introduction of new products is one of the most significant sources of change and uncertainty – as well as a key demand- shaping technique – so make sure not to leave it out of the S&OP process • Both the impact and importance of new products are always increasing and continue to be a key challenge within S&OP • If not managed and integrated, new products can lead to business decisions and actions based on an incomplete picture and perspective, as well as unmanaged variability and uncertainty • How big of a challenge the new products impose and the potential impact depend on the specific portfolio dynamics – what is the rate and type of new product introductions? Integration can lead to more effective business decision- making … • … through including new products in all the key dimensions of S&OP (focus areas, process and methods, people and organisation and systems and data) • … through including the total portfolio volume with specific focus on net incremental volume from new products and cannibalisation on existing products as well as positive effects on portfolio dynamics • … leading to more effective business decision-making through considering a holistic view on facts, assumptions and business plans … and uncertainty and volatility will be managed effectively • Make sure to integrate S&OP and the new product development and introduction process effectively by considering the different stages of development, product type and time to introduction – leading to specific challenges • Combine specific challenges with the needs and requirements of the involved functions, when designing the detailed integration and setting the framework for decision-making • Managing change and uncertainty in the different stages can be done through either coordination, cooperation or collaboration – make sure that the ways of working are efficient as well as effective Horizon Volume Total portfolio volume Incremental NPI Cannibalisation
15 The main purpose of the capacity and inventory planning process is to identify issues and opportunities in the S&OP horizon 1. The supply chain scalability/flexibility should be identified for all supply chain entities 2. By knowing the forecast accuracy in the S&OP horizon, a safety margin can be considered in the decisions taken 3. Well-defined decision-making and planning horizons make it clear which measures should be taken and by whom (Sales or Operations) in order to balance the situation 4. Each planning level makes plans according to the near-term needs and supply set by the level below it, ending with the operational production level 5. The level of detail in the plan should not exceed the variance – it does not make sense to make a detailed plan on SKU level 12 months ahead, if the forecast accuracy is very low in this horizon • The forecast is often biased, and the accuracy in the planning horizon is unknown • The actual required decision horizons for the supply chain changes (e.g. increasing/decreasing shifts on bottleneck resources) are unclear • The planning level in the S&OP horizon is often not aligned with the required level for the decisions to be made – if bottleneck resources are evaluated, SKU level plans are often not necessary; product group level will suffice • The responsibility of the different processes is often unclear – which could result in the same supply chain issues being discussed at all meetings, while other issues are left unexamined Strategic planning 5 years Sales & Operations Planning 2-18 months Tactical planning 1-3 months Operational planning 0-6 weeks Five viewpoints on the capacity and inventory planning processKey challenges in identifying issues in the S&OP horizon
16 Clarifying actual scalability and planning horizons is a prerequisite and enabler for timely decision-making • Production, warehousing, transportation, suppliers and sub-contractors will have different levels of flexibility regarding their supply chain capacities. In a global organisation, flexibility will also differ between countries • This will depend on labour agreements for increasing/decreasing the number of shifts using overtime and weekend production, temporary labour, availability of overflow warehouses and contract manufacturers etc. • The decision time needed in order to increase/ decrease capacity should be clarified for each key supply chain constraint per site, country, network, region, etc. • Which constraints are bottlenecks, if demand is increased by 10%, 20% etc. • What is the reaction time and actions for handling a demand increase/decrease (e.g. by 10%, 20%) • This scalability will determine decisions to be made per horizon and form the foundation of the S&OP process Supply chain scalability and decision horizons Operational Tactical S&OP Strategic Time Flexibility 100% capacity +5% +8% +12% +15% +25% -10% -25%
17 A common language is the key to achieving a common S&OP plan It all starts with being able to ”translate” into different languages Sales Finance Operations Sales is measured in € or units per e.g. market, brand or segment Finance is measured in € per e.g. business unit or division Operations is measured in units or Kgs per hour per e.g. production site or capacity group Sales and demand data is aggregated in the language spoken by the sales organisation, and it can be difficult to translate into the language spoken by production – and vice versa. Therefore, it is important to define a common language and agree on rules of translation between units of measure. 狗 A “Google translate” is needed – to translate market outlook to financial and supply chain outlook.
18 We need to convert market input into supply requirements aligned with the scalability Customer Company Suppliers ... that we need to translate into supply requirements Demand plan Business plan We have a market outlook ... Business plans and demand plans are often defined in € or units per e.g. market, brand or segment Operations is often planning in units or Kgs per hour per e.g. production site or capacity group
19 We need to make the input level (product families) match with how the market(sales) sees it Sales has other preferences than Operations but Supply Chain is often initiating S&OP projects – so they set up groupings according to how operations work. But that does not necessarily fit with how sales sees it. That makes forecasting harder. Forecast should be made on the level that makes value for sales. E.g. Product families. In the S&OP process this input should be converted to a common language that can be used for decision making. The common language has to be aligned with the level defined din the supply chain scalability ! Product hierarchy Hierarchies The input level of the forecast Key design areas Time Flexibility 100% capacity Scheduling Operational Tactical Strategic Capacity decisions will result in a flexibility for each capacity Customer grouping/hierarchy 1 2
20 The ability to make decisions is the most central element in the whole process At this point, the most important focus is to enable the decision- making for the identified issues and opportunities. This is ensured through analysis and listing the few relevant key scenarios. Based on these, recommendations should be prepared and presented in a simple executive overview – but with all the background analyses available for those needing more information. This should be presented with the KPI overviews that enable decision making – and consequences to be clear. How to make S&OP a decision process – rather than a discussion process Recommendations based on scenario analysis With conclusions presented as decision recommendations With relevant KPI overviews
21 Improve your decision-making in a highly uncertain environment through scenario planning Increasing uncertainty and volatility on both demand and supply makes forecasting more difficult. Decision-making becomes harder when planning is not in a steady state. A high level of uncertainty is created by introducing new pro- ducts, product portfolio transition, tenders, big growth rates combined and long-term planning (usually >1 year) etc. Hence, a different approach is needed based on assumptions rather than historical data – by assessing probability, risk and cost to different assumptions. This means that forecasting moves from the classical statistical one-number forecasting to scenario-based forecasting ranging from “best case” to “worst case”. Scenario planning brings a number of advantages: • Risk management focus becomes key in the decision • Improves the forecasting quality in highly uncertain environment • Focus on consequences for business (cost, utilisation, service levels, lead time) • Allows for addressing opportunities rather than discussing bias With inspiration from strategic scenario planning, we define: “Scenario analysis is a process of analysing possible future events by considering alternative possible outcomes (sometimes called “alternative worlds”). Thus, the scenario analysis, which is a main method of projections, does not try to show an exact picture of the future. Instead, it consciously presents several alternative future developments. Consequently, a scope of possible future outcomes are observable” [1] [2] Scenario planning, including risk assessment and consequence estimations are important for minimising risks when planning is not in a steady state 1. Aaker, David A. (2001). Strategic Market Management. New York: John Wiley & Sons. pp. 108 et seq. 2. Bea, F.X., Haas, J. (2005). Strategisches Management. Stuttgart: Lucius & Lucius. pp. 279 and 287 et seq.
22 What should Finance be doing in S&OP? What is the current challenge? • S&OP is argued to speak the language of sales and manufacturing (forecasts, bookings, production, units, hours etc.), while the overall business plan of the company is stated in financial terms • S&OP is no longer just about balancing supply and demand. It is about searching for and executing the most profitable strategy out of many possible scenarios The role of Finance The main reason for suggestions to convert sales and operations plans into financial terms seems to be to enable reviewing S&OP with the overall business plan of the company.” Ventana Research Variance analysis* Co- owner- ship of forecast Perfor- mance manage- ment Financial recon- ciliation Scenario planning and business cases* Finance Periodic financial outlook (RE/YTG) * Note: Integrated in S&OP process. • Finance’s role in an S&OP process is to monetise the demand and supply plans developed by Sales and Production, so the company can see the future financial situation in the form of financial plans and budgets in place • Therefore, S&OP should include financial reconciliation
23 How do we involve Finance in S&OP? Conversations heard in the Finance department The planning process must be transparent with clear communication of expectations to control actual results. Performance against the sales and operations plans should also be widely communicated. When actual results differ from plans, the source of these deviations must be analysed and communicated.” Moreover, one method that many suggest using is driver-based planning such as activity-based budgeting (ABB) to enable forecast costs and expenses through deriving them directly from the sales forecast.” In other words, financial reconciliation of sales and operations plans should make it possible to see the financial effects of the operational plans rather than just volumes and other non-financial variables while also enabling to see the overall effects and correspondence with the strategy.” I'll make him an offer he can't refuse.” Don Vito Corleone So, please bring a chair! Finance needs to be involved in the S&OP process, since the S&OP process will enable Finance to fulfill the role expected of them. And Sales and Production needs Finance to be involved!
24 Key principles supporting S&OP implementation How to get started Executive commitment – High level of involvement • Basic project team with representation from Sales, Operations and Finance • Workshop-based involvement • Stakeholder analysis and communication plan (1:1 meetings, weekly status meetings, weekly email, newsletter) • Link between Finance, Sales and Operations S&OP methodology – Structured approach • Use generic S&OP process as a starting point – as an accelerator for process definition • Use standard method to clarify scalability of supply chain entities • Use generic S&OP agendas as a starting point • Set the right ambition level by assessing the current level of maturity Create impact – Business case approach • Clear project purpose definition is necessary • Business case ($) sets direction and focus • Project success criteria linked to business case • Key deliverables linked to business case Get started – Concurrent implementation • The new S&OP process is started parallel to the project in order to gain experience and make corrections • Co-create system solution – let system experts demonstrate prototypes • Less data, more information: Create prototypes of executive overview and KPI cockpit with real data early in the process to ensure validation of relevance
25 A maturity model can act as a target-setting tool for developing the S&OP process Generic maturity models can be used for overall comparison and target-setting • Acts as a discussion tool for the ideal process – and the steps in between • Sets a long-term focus for the development of the process with realistic steps and identifies actions to improve process • Used as a communication tool towards stakeholders – to align expectations – and for continuous self- assessments A tailored maturity model for S&OP has several functions • A generic model can be used to get an overview of the current maturity level of the S&OP process and to set a target as for where to aim • Can only be used for basic self-assessment • Gartner's maturity model is an example of such a generic model, which is well-known worldwide
26 According to Tom Wallace, the importance of the system is very low when implementing S&OP System 10% Process 25% Mindset/People 65% ... but often this is what we see in projects… the main focus should be mindset changes System 80% Process 15% Mindset/People 5% System
27 Drivers for overall system requirements are complexity and agility Complexity • Supply chain tiers • Levels of production with constraints • No. of products • … 1 Agility • Volatility in the markets • Forecast quality • Horizon for supply chain decisions 2 Increased complexity will set requirements for system data model Agility requirements will set requirements for system flexibility … and increases with maturity
28 There is a limit to what can be handled manually by “Blood, Sweat and Excel” Complexity (Supply chain network, SKUs ...) Agility (Demand volatility, what-if scenarios, ...) Limit for complexity handled manually Limit for agility handled manually Increased need for system support Increased maturity is commonly followed by a need for more what-if simulations and advanced scenarios In a simple process, constraints can be modelled in excel – and a few scenarios calculated. In a more advanced process, constraints has to be modelled in a planning system – that also supports scenarios calculations.
29 For more information Implement Consulting Group P/S Thomas Holm, Partner Email: tho@implement.dk Mobile:+45 5138 7427 Søren Skjødt, Partner Email: sos@implement.dk Mobile: +45 5138 7402
30 Supply Chain Megatrends 2012 Viewpoints Lean Impact in Warehouse Execution 2013 Viewpoints Differentiated planning 2012 Plan materials according to their characteristics Forecast 2011 Viewpoints S&OP Handbook 2014 Balancing demand and supply Selected viewpoint handbooks from Implement Consulting Group Inventory optimisation is not about formulas, it is about people and processes, applying the right methods to manage inventory – not as a one-time action, but a repeated process. This handbook deals with inventory optimisation and includes a set of Implement viewpoints on the topic. One size does not fit all – not all products have the same characteristics. Differentiated planning is about planning materials according to different characteristics – and how to perform segmentation to identify the right categories. The warehouse floor is where corporate plans meet reality! Warehouse managers and workers often feel that they are using most of their time putting out fires! In this booklet you will find some of the key elements that we believe in when it comes to achieving excellent warehouse operations. In this booklet you will get an introduction to the basic dilemmas concerning the forecasting process and Implements viewpoint on these. You will find out that there is more to a forecast than just a basic calculation and that a forecast should be created and not only calculated. Sales & Operations Planning (S&OP) is about balancing demand and supply – and to take and execute decisions to keep this balance in line with company strategies and targets. It should be simple – but experience shows that implementing S&OP is difficult. This is the basis for the handbook. Leading companies work with various strategic levers to cope with the global supply chain challenges in order to stay competitive. Implement Consulting Group has summarised the strategic levers into five supply chain megatrends, which are described in this book. Inventory optimisation handbook 2014 Balancing service level and inventory
Implementconsultinggroup.com Implement Consulting Group Implement Consulting Group is a leading Scandinavia based management consultancy, specialised in driving strategic transformations with a strong differentiator on “making change happen” – delivering documented Change with Impact. Stalk us on:

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Sales and Operations Planing Handbook

  • 1.
    Sales & Operations PlanningHandbook Balancing demand and supply Planning Fourth edition, 2014
  • 2.
    2 Preface Sales & OperationsPlanning Aligning business plans with operations S&OP: A set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning and to link high-level strategic plans with day-to-day operations (definition by APICS – American Production and Inventory Control Society). Sales & Operations Planning (S&OP) is all about balancing demand and supply – and to take and execute decisions to keep this balance in line with company strategies and targets. It should be simple – and in theory it is – but experience shows that implementing S&OP is difficult. The primary reason being that this is a cross-functional process, involving many different parts of the organisation, and at the same time, it often requires IT support. Implementation of S&OP is therefore much about people, less about processes and least about systems. This is the basis for the handbook. In the following chapters, we will present a set of viewpoints which describe our stand on the topic with the purpose of providing an outline of our approach and sharing some of our knowledge and experience from past and ongoing S&OP projects. Enjoy!
  • 3.
    3 Contents of theS&OP Handbook 1 What is Sales & Operations Planning (S&OP) 2 Why Sales & Operations Planning 3 The Sales & Operations Planning process 4 Demand forecasting 5 New Product Introduction 6 Capacity and inventory planning 7 One common language 8 Scenario planning, balancing and decision-making 9 Finance in S&OP 10 Key principles for S&OP implementation 11 IT-supported S&OP This is a reduced version of the handbook. Contact us to get the full version (see back of handbook)
  • 4.
    4 S&OP: What isin a name? Integrated Business Planning SOIP Sales & Operations Planning Executive S&OP SIOP S&OP Business Planning The big name confusion: Many names exist for the process of aligning business plans with operations, and some experts claim that different names encompass different content – most recent perhaps is the claim that “IBP = S&OP but with finance”. In Implement Consulting Group, we collaborate with Tom Wallace, one of the original ‘inventors’ of S&OP as a concept. According to Tom, the original definition of S&OP included sales, marketing, product development, finance, operations and of course; the top management. Thus, Tom Wallace sees no difference in the definitions on the left-hand side. To avoid contributing to the general confusion of terms, we in Implement have decided to fully use Tom Wallace’s definition and name: Sales & Operations Planning (S&OP) Tom Wallace is a teacher and writer, specialising in Sales & Operations Planning – and regarded by many as one of the inventors of S&OP. He is a distinguished fellow of the Ohio State University’s Center for Operational Excellence. Tom has written twelve books, including Sales & Operations Planning: The How-To Handbook, 3rd edition (2007), Sales & Operations Planning: The Executive’s Guide (2006) and Sales & Operations Planning: The Self-Audit Workbook (2005). A rose by any other name would smell as sweet.” William Shakespeare MIOE
  • 5.
    5 S&OP is aboutdoing what is best for the company as a whole Sales & Operations Planning can be described as: Finance Operations Sales Overall plan Finance Operations Sales Stakeholders are often at odds with each other: • Sales wants to increase sales and make customers happy (plenty of inventories) • Operations wants to run machinery as stable and efficient as possible (long runs, few changeovers) • Finance wants high profit and/or turnover, efficient operations and low working capital The S&OP process brings these different views together in one balanced decision making process. One overall planWhat is S&OP? A set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning and to link high-level strategic plans with day-to-day operations.” APICS (American Production and Inventory Control Society)
  • 6.
    6 Failing to makedecisions in time results in lost sales or excess costs Situation faced by many companies Inability to make decisions in a timely fashion caused by: • Uncertainty about decision-making horizons and the available courses of action, particularly in Sales • Uncertainty about capacity and material • Uncertainty about the number of new products and associated issues • Failure to phase out old products • Absence of a formal cross- functional decision-making process and forum that includes Sales, Production, Purchasing and Finance and ensures minimal involvement by senior management • Conflict between decisions and budget • Sales, Production, Finance – all operating according to different plans Current challenges Failing to make decisions in a timely fashion results in lost sales or excess costs: • If capacity is increased too late, customer service suffers, leading to lost sales • If capacity is cut too late, capacity costs become too great • If activities to increase sales – such as campaigns and new incentive models – are implemented too late, it is impossible to make use of excess capacity or material to increase sales further • If inventories for things such as seasonal products are expanded too late, customer service suffers and sales are lost • If inventories are drawn down too late, company liquidity is reduced • If sales is not levelled out to match the capacity constraints, service levels and lead times will suffer Key questions 1. Are capacity and supply presented in a simple manner that supports timely decisions? 2. Do all the most important decision-makers in Sales, Production, Purchasing and Finance know the key decision-making horizons and the available courses of action? 3. Is there a formal cross-functional decision- making process including Sales/marketing, Production, Purchasing and Finance that provides timely decisions for senior management? 4. Is there a well-functioning tactical planning? 5. What sales opportunities were missed in the past year? 6. Have there been problems filling orders in the past year? 7. Have there been periods of overcapacity in the past year? 8. How many new products were introduced in the past year? How many were phased out? 9. Has the pace of inventory turnover increased in the past year?
  • 7.
    7 Effective decision-making isa balancing act between the different dimensions of S&OP Maximising the effectiveness and the impact requires a customised approach with the RIGHT… • Focus on business targets and objectives • Process design based on market and business characteristics • People involved to ensure the desired behaviour • System and data to support an efficient and fact-based process S&OP will create impact on business performance through collaborative planning and decision-making System and data Focus areas People and organisation Process and methods Effective business decisions An imbalance can cause undesired behaviours and lead to either no decisions or the wrong decisions, thus reducing the chances of realising the potential. This is enabled by an environment characterised by… • Collaboration – cross-functional involvement and ownership • Trust – holistic view and targets, as well as data transparency • Accountability – continuous review of outcome versus plan • Foresight – focus on market conditions and assumptions • Insight – decoding cause and effect relations • Decisions and actions – plan, do, check and act mentality The result will be a significant business impact1): • On-time delivery to customers +25% • Inventory levels -41% • Manufacturing downtime -35% • Plant efficiency +17% • Transportation cost -17% 1): SALES & OPERATIONS PLANNING: COSTS AND BENEFITS by Tom Wallace (2009)
  • 8.
    8 Focusing on foresight,insight, decisions and actions And be both agile and absorptive towards change • Being agile means identifying and exploiting opportunities as they emerge – ahead of competition • Being absorptive means having the capacity to sustain change and deliver upon the defined strategy – better than competition Managing change and supporting the strategy journey • There is an ever ongoing journey between the current reality and the created future that a business sets out to reach • This journey rarely comes in the shape of a straight line, there is a constant and increasing level of change and uncertainty that need to be managed • The challenge of acting in a changing and uncertain environment is often substantial, but it can also be a source of opportunities • S&OP can act as a supporting platform for delivering upon defined strategies, but it can also act as a platform for change and adapting to emergent opportunities Moreover, S&OP is a strong tool to support the strategy journey through a continuous strategic dialogue Utilise S&OP for a frequent, continuous and focused strategic dialogue Supporting execution of deliberate strategies Sensing and adapting to emergent strategies Created future Created future Current reality Foresight Insight Decision Action & follow-up Change and uncertainty What do we think can and will happen? What effect can it have on our strategy and business? What is the best course of action for our business? How do we ensure effective execution?
  • 9.
    9 The S&OP processmust be linked to strategic, tactical and operational processes Targets and policies are supplied downwards, while capabilities and actual performance are sent up The S&OP process must supply the policies, rules and prioritisation guidelines for the tactical and operational processes Timing is business dependent and can alter significantly within heavy industry in particular Strategic planning 5 years Sales & Operations Planning 2-18 months Tactical planning 1-3 months Operational planning 0-6 weeks Policies, rules and parameters Actual planning data, capabilities
  • 10.
    10 SUICIDE QUADRANT Long term planningmust be on an aggregated level. Detailed long term planning will not improve accuracy – but requires a lot of effort Detail level Time High (Detailed) Low (Aggregated) Source: FORECAST LESS AND GET BETTER RESULTS by Tom Wallace and Bob Stahl Near Far Sales & Operations Planning Forecast and plans in the long- term often have lower accuracy on a detailed level. Therefore, digging into the details in the long-term does not bring value to the decision-making process and only makes the process longer and more cumbersome. S&OP is about making decisions in the long-term on an aggregated level. S&OP should provide the aggregate projections. Decisions in the short term are based on more details handled within tactical planning rather than S&OP. S&OP focus: Long term and aggregate level Get out of the suicide quadrant The higher you fly, the easier it is to see where to land”. Tom Wallace
  • 11.
    11 PRODUCT REVIEW SUPPLYPLANNING INVENTORY PLANNING DEMAND PLANNING BALANCING & DECISIONS The S&OP process is a cross organisational process to take and execute the decisions that are best for the company as a whole Create (statistical) forecast Review unconstrained demand plan Sales approval Sales input Interface to NPD process Prepare decision proposal Executive decision meeting Update revenue & cost estimate Pre-meeting based on reconciliation Analyse scenarios, incl. financial impact AllSales & Finance SCM & Finance EXECUTION “Handover” from decision meetings Communication & decision execution Update of latest estimate (quarterly) Week 1 Week 2 Week 3 Week 4 Identify demand gaps & supply issues Develop initial supply chain plan Review critical resources & assess scalability Finance Review target stock Review Service Level Agreements Decisions Demand gaps & supply issues Unconstrained forecast The S&OP process consists of 4 general steps: Demand planning, Supply planning, Balancing & Decision Making and Execution Decisions are executed
  • 12.
    12 The main purposeof the demand forecasting process is to deliver an unbiased, realistic forecast in the S&OP horizon – at the right level of detail • Statistical forecasting can help us predict the future based on the past – but it is reactive so we need to combine statistical forecasting with input from Sales and Marketing to get a realistic forecast • It is hard to motivate Sales and Marketing to forecast, and it is important that they spend their time where it provides the most value, e.g. tenders, promotions and new products • The forecast from Sales and Marketing is often biased and affected by their incentives or just by common optimism/ pessimism • Consistent underforecasting gives major delivery problems, and consistent overforecasting gives excess capacity (bias) • Optimisation of statistical models and parameters does not make statistical forecasting less reactive – but more complex and non-transparent • An unclear forecast purpose and focus leads to a complex solution, e.g. unnecessary SKU forecasting in the S&OP horizon (suicide quadrant) • In many companies, typical forecast measurements are based on the forecast accuracy in the near horizon – leaving no incentives for improving accuracy of the forecast in the S&OP horizon 1. One consensus volume forecast shared by Sales, Finance and Operations 2. The focus level of forecast must be determined by the decisions taken on the basis of the forecast 3. Sales is from Venus, Operations is from Mars 4. Statistical forecasting must be simple and transparent 5. Baseline forecast must be separated from campaigns and tenders 6. One size does not fit all – time used in the forecasting process should be spent where it has the largest impact 7. KPIs should be aligned with the level of forecast required – in different horizons 7 Implement viewpoints on the demand planning process Key challenges in achieving a realistic forecast in the S&OP horizon
  • 13.
    13 Sales is fromVenus, Operations is from Mars – forecast should not be created by Sales, but could be reviewed by Sales • Sales managers are typically focused on people, relationships and sales incentives, e.g. bonus (Relational/Experimental) • Operations typically focuses on processes, numbers and KPIs (Rational/Practical) (*) Whole Brain thinking from NBI and Solutions finding Pty (Ltd) • The Whole Brain model(*) states that people have one dominant preference out of four possible Sales has other preferences than Operations • Statistical forecasting is reactive. Therefore, the only manner in which to make forecasting proactive is to get input from Sales and Marketing • Good sales managers typically have a preference for relationships, people, seeing opportunities etc. We use the Whole Brain model to illustrate this on the right • Sales managers are motivated by understanding why they have to provide input and by minimising their work – they are not motivated by lots of numbers, Excel sheets and statistical models • Important input from sales managers includes e.g. tenders, promotions, increasing/decreasing pipeline and new customers • Sales managers have a tendency to overforecast in the short-term horizon and underforecast in the long-term horizon • Marketing has important information for long-term forecast, e.g. new products, new markets and new campaigns Actual sales Sales manager forecast Why do we need input from Sales and Marketing
  • 14.
    14 New product development/introductionis a key demand driver and is therefore important to integrate with the S&OP process The need for integration between NPI and S&OP is primarily driven by the dynamics of a portfolio … • The introduction of new products is one of the most significant sources of change and uncertainty – as well as a key demand- shaping technique – so make sure not to leave it out of the S&OP process • Both the impact and importance of new products are always increasing and continue to be a key challenge within S&OP • If not managed and integrated, new products can lead to business decisions and actions based on an incomplete picture and perspective, as well as unmanaged variability and uncertainty • How big of a challenge the new products impose and the potential impact depend on the specific portfolio dynamics – what is the rate and type of new product introductions? Integration can lead to more effective business decision- making … • … through including new products in all the key dimensions of S&OP (focus areas, process and methods, people and organisation and systems and data) • … through including the total portfolio volume with specific focus on net incremental volume from new products and cannibalisation on existing products as well as positive effects on portfolio dynamics • … leading to more effective business decision-making through considering a holistic view on facts, assumptions and business plans … and uncertainty and volatility will be managed effectively • Make sure to integrate S&OP and the new product development and introduction process effectively by considering the different stages of development, product type and time to introduction – leading to specific challenges • Combine specific challenges with the needs and requirements of the involved functions, when designing the detailed integration and setting the framework for decision-making • Managing change and uncertainty in the different stages can be done through either coordination, cooperation or collaboration – make sure that the ways of working are efficient as well as effective Horizon Volume Total portfolio volume Incremental NPI Cannibalisation
  • 15.
    15 The main purposeof the capacity and inventory planning process is to identify issues and opportunities in the S&OP horizon 1. The supply chain scalability/flexibility should be identified for all supply chain entities 2. By knowing the forecast accuracy in the S&OP horizon, a safety margin can be considered in the decisions taken 3. Well-defined decision-making and planning horizons make it clear which measures should be taken and by whom (Sales or Operations) in order to balance the situation 4. Each planning level makes plans according to the near-term needs and supply set by the level below it, ending with the operational production level 5. The level of detail in the plan should not exceed the variance – it does not make sense to make a detailed plan on SKU level 12 months ahead, if the forecast accuracy is very low in this horizon • The forecast is often biased, and the accuracy in the planning horizon is unknown • The actual required decision horizons for the supply chain changes (e.g. increasing/decreasing shifts on bottleneck resources) are unclear • The planning level in the S&OP horizon is often not aligned with the required level for the decisions to be made – if bottleneck resources are evaluated, SKU level plans are often not necessary; product group level will suffice • The responsibility of the different processes is often unclear – which could result in the same supply chain issues being discussed at all meetings, while other issues are left unexamined Strategic planning 5 years Sales & Operations Planning 2-18 months Tactical planning 1-3 months Operational planning 0-6 weeks Five viewpoints on the capacity and inventory planning processKey challenges in identifying issues in the S&OP horizon
  • 16.
    16 Clarifying actual scalabilityand planning horizons is a prerequisite and enabler for timely decision-making • Production, warehousing, transportation, suppliers and sub-contractors will have different levels of flexibility regarding their supply chain capacities. In a global organisation, flexibility will also differ between countries • This will depend on labour agreements for increasing/decreasing the number of shifts using overtime and weekend production, temporary labour, availability of overflow warehouses and contract manufacturers etc. • The decision time needed in order to increase/ decrease capacity should be clarified for each key supply chain constraint per site, country, network, region, etc. • Which constraints are bottlenecks, if demand is increased by 10%, 20% etc. • What is the reaction time and actions for handling a demand increase/decrease (e.g. by 10%, 20%) • This scalability will determine decisions to be made per horizon and form the foundation of the S&OP process Supply chain scalability and decision horizons Operational Tactical S&OP Strategic Time Flexibility 100% capacity +5% +8% +12% +15% +25% -10% -25%
  • 17.
    17 A common languageis the key to achieving a common S&OP plan It all starts with being able to ”translate” into different languages Sales Finance Operations Sales is measured in € or units per e.g. market, brand or segment Finance is measured in € per e.g. business unit or division Operations is measured in units or Kgs per hour per e.g. production site or capacity group Sales and demand data is aggregated in the language spoken by the sales organisation, and it can be difficult to translate into the language spoken by production – and vice versa. Therefore, it is important to define a common language and agree on rules of translation between units of measure. 狗 A “Google translate” is needed – to translate market outlook to financial and supply chain outlook.
  • 18.
    18 We need toconvert market input into supply requirements aligned with the scalability Customer Company Suppliers ... that we need to translate into supply requirements Demand plan Business plan We have a market outlook ... Business plans and demand plans are often defined in € or units per e.g. market, brand or segment Operations is often planning in units or Kgs per hour per e.g. production site or capacity group
  • 19.
    19 We need tomake the input level (product families) match with how the market(sales) sees it Sales has other preferences than Operations but Supply Chain is often initiating S&OP projects – so they set up groupings according to how operations work. But that does not necessarily fit with how sales sees it. That makes forecasting harder. Forecast should be made on the level that makes value for sales. E.g. Product families. In the S&OP process this input should be converted to a common language that can be used for decision making. The common language has to be aligned with the level defined din the supply chain scalability ! Product hierarchy Hierarchies The input level of the forecast Key design areas Time Flexibility 100% capacity Scheduling Operational Tactical Strategic Capacity decisions will result in a flexibility for each capacity Customer grouping/hierarchy 1 2
  • 20.
    20 The ability tomake decisions is the most central element in the whole process At this point, the most important focus is to enable the decision- making for the identified issues and opportunities. This is ensured through analysis and listing the few relevant key scenarios. Based on these, recommendations should be prepared and presented in a simple executive overview – but with all the background analyses available for those needing more information. This should be presented with the KPI overviews that enable decision making – and consequences to be clear. How to make S&OP a decision process – rather than a discussion process Recommendations based on scenario analysis With conclusions presented as decision recommendations With relevant KPI overviews
  • 21.
    21 Improve your decision-makingin a highly uncertain environment through scenario planning Increasing uncertainty and volatility on both demand and supply makes forecasting more difficult. Decision-making becomes harder when planning is not in a steady state. A high level of uncertainty is created by introducing new pro- ducts, product portfolio transition, tenders, big growth rates combined and long-term planning (usually >1 year) etc. Hence, a different approach is needed based on assumptions rather than historical data – by assessing probability, risk and cost to different assumptions. This means that forecasting moves from the classical statistical one-number forecasting to scenario-based forecasting ranging from “best case” to “worst case”. Scenario planning brings a number of advantages: • Risk management focus becomes key in the decision • Improves the forecasting quality in highly uncertain environment • Focus on consequences for business (cost, utilisation, service levels, lead time) • Allows for addressing opportunities rather than discussing bias With inspiration from strategic scenario planning, we define: “Scenario analysis is a process of analysing possible future events by considering alternative possible outcomes (sometimes called “alternative worlds”). Thus, the scenario analysis, which is a main method of projections, does not try to show an exact picture of the future. Instead, it consciously presents several alternative future developments. Consequently, a scope of possible future outcomes are observable” [1] [2] Scenario planning, including risk assessment and consequence estimations are important for minimising risks when planning is not in a steady state 1. Aaker, David A. (2001). Strategic Market Management. New York: John Wiley & Sons. pp. 108 et seq. 2. Bea, F.X., Haas, J. (2005). Strategisches Management. Stuttgart: Lucius & Lucius. pp. 279 and 287 et seq.
  • 22.
    22 What should Financebe doing in S&OP? What is the current challenge? • S&OP is argued to speak the language of sales and manufacturing (forecasts, bookings, production, units, hours etc.), while the overall business plan of the company is stated in financial terms • S&OP is no longer just about balancing supply and demand. It is about searching for and executing the most profitable strategy out of many possible scenarios The role of Finance The main reason for suggestions to convert sales and operations plans into financial terms seems to be to enable reviewing S&OP with the overall business plan of the company.” Ventana Research Variance analysis* Co- owner- ship of forecast Perfor- mance manage- ment Financial recon- ciliation Scenario planning and business cases* Finance Periodic financial outlook (RE/YTG) * Note: Integrated in S&OP process. • Finance’s role in an S&OP process is to monetise the demand and supply plans developed by Sales and Production, so the company can see the future financial situation in the form of financial plans and budgets in place • Therefore, S&OP should include financial reconciliation
  • 23.
    23 How do weinvolve Finance in S&OP? Conversations heard in the Finance department The planning process must be transparent with clear communication of expectations to control actual results. Performance against the sales and operations plans should also be widely communicated. When actual results differ from plans, the source of these deviations must be analysed and communicated.” Moreover, one method that many suggest using is driver-based planning such as activity-based budgeting (ABB) to enable forecast costs and expenses through deriving them directly from the sales forecast.” In other words, financial reconciliation of sales and operations plans should make it possible to see the financial effects of the operational plans rather than just volumes and other non-financial variables while also enabling to see the overall effects and correspondence with the strategy.” I'll make him an offer he can't refuse.” Don Vito Corleone So, please bring a chair! Finance needs to be involved in the S&OP process, since the S&OP process will enable Finance to fulfill the role expected of them. And Sales and Production needs Finance to be involved!
  • 24.
    24 Key principles supportingS&OP implementation How to get started Executive commitment – High level of involvement • Basic project team with representation from Sales, Operations and Finance • Workshop-based involvement • Stakeholder analysis and communication plan (1:1 meetings, weekly status meetings, weekly email, newsletter) • Link between Finance, Sales and Operations S&OP methodology – Structured approach • Use generic S&OP process as a starting point – as an accelerator for process definition • Use standard method to clarify scalability of supply chain entities • Use generic S&OP agendas as a starting point • Set the right ambition level by assessing the current level of maturity Create impact – Business case approach • Clear project purpose definition is necessary • Business case ($) sets direction and focus • Project success criteria linked to business case • Key deliverables linked to business case Get started – Concurrent implementation • The new S&OP process is started parallel to the project in order to gain experience and make corrections • Co-create system solution – let system experts demonstrate prototypes • Less data, more information: Create prototypes of executive overview and KPI cockpit with real data early in the process to ensure validation of relevance
  • 25.
    25 A maturity modelcan act as a target-setting tool for developing the S&OP process Generic maturity models can be used for overall comparison and target-setting • Acts as a discussion tool for the ideal process – and the steps in between • Sets a long-term focus for the development of the process with realistic steps and identifies actions to improve process • Used as a communication tool towards stakeholders – to align expectations – and for continuous self- assessments A tailored maturity model for S&OP has several functions • A generic model can be used to get an overview of the current maturity level of the S&OP process and to set a target as for where to aim • Can only be used for basic self-assessment • Gartner's maturity model is an example of such a generic model, which is well-known worldwide
  • 26.
    26 According to TomWallace, the importance of the system is very low when implementing S&OP System 10% Process 25% Mindset/People 65% ... but often this is what we see in projects… the main focus should be mindset changes System 80% Process 15% Mindset/People 5% System
  • 27.
    27 Drivers for overallsystem requirements are complexity and agility Complexity • Supply chain tiers • Levels of production with constraints • No. of products • … 1 Agility • Volatility in the markets • Forecast quality • Horizon for supply chain decisions 2 Increased complexity will set requirements for system data model Agility requirements will set requirements for system flexibility … and increases with maturity
  • 28.
    28 There is alimit to what can be handled manually by “Blood, Sweat and Excel” Complexity (Supply chain network, SKUs ...) Agility (Demand volatility, what-if scenarios, ...) Limit for complexity handled manually Limit for agility handled manually Increased need for system support Increased maturity is commonly followed by a need for more what-if simulations and advanced scenarios In a simple process, constraints can be modelled in excel – and a few scenarios calculated. In a more advanced process, constraints has to be modelled in a planning system – that also supports scenarios calculations.
  • 29.
    29 For more information ImplementConsulting Group P/S Thomas Holm, Partner Email: tho@implement.dk Mobile:+45 5138 7427 Søren Skjødt, Partner Email: sos@implement.dk Mobile: +45 5138 7402
  • 30.
    30 Supply Chain Megatrends 2012 Viewpoints LeanImpact in Warehouse Execution 2013 Viewpoints Differentiated planning 2012 Plan materials according to their characteristics Forecast 2011 Viewpoints S&OP Handbook 2014 Balancing demand and supply Selected viewpoint handbooks from Implement Consulting Group Inventory optimisation is not about formulas, it is about people and processes, applying the right methods to manage inventory – not as a one-time action, but a repeated process. This handbook deals with inventory optimisation and includes a set of Implement viewpoints on the topic. One size does not fit all – not all products have the same characteristics. Differentiated planning is about planning materials according to different characteristics – and how to perform segmentation to identify the right categories. The warehouse floor is where corporate plans meet reality! Warehouse managers and workers often feel that they are using most of their time putting out fires! In this booklet you will find some of the key elements that we believe in when it comes to achieving excellent warehouse operations. In this booklet you will get an introduction to the basic dilemmas concerning the forecasting process and Implements viewpoint on these. You will find out that there is more to a forecast than just a basic calculation and that a forecast should be created and not only calculated. Sales & Operations Planning (S&OP) is about balancing demand and supply – and to take and execute decisions to keep this balance in line with company strategies and targets. It should be simple – but experience shows that implementing S&OP is difficult. This is the basis for the handbook. Leading companies work with various strategic levers to cope with the global supply chain challenges in order to stay competitive. Implement Consulting Group has summarised the strategic levers into five supply chain megatrends, which are described in this book. Inventory optimisation handbook 2014 Balancing service level and inventory
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