Sales & Operations Planning (S&OP) - Ram Nalawade
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S&OP is a monthly global process to balance supply and demand, bringing all business operational plans into one integrated plan. All activities is based on a common Forecast data set. The ultimate target for S&OP therefore is to balance Supply and Demand.
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Sales & Operations Planning (S&OP) - Ram Nalawade
- 1. Sales & Operations Planning (S&OP) - What is S&OP?
- 2. © SKF Group Planning System Questions 25 August 2015Slide 1 What are we going to make? What does it take to make it? What do we already have? What do we need to get?
- 3. © SKF Group Manufacturing Planning and Control 25 August 2015Slide 2 In order of time span (long to short) and detail (general to detailed): • Strategic business plans • Sales and Operations Plan (Production Plans and Marketing Plans) • Master Production Schedules • Material Requirements Plans • Purchasing and Production Activity Control
- 4. © SKF Group Sales and Operations Planning Annual 25 August 2015Slide 3 Strategic Business Plan Detailed Sales Plan Master Production Schedule Marketing Plan Production Plan SALES AND OPERATIONS PLAN Monthly Weekly/Daily
- 5. © SKF Group Sales and Operations Planning- Benefits Provide means to update the strategic plan as condition changes. Provides a tool to manage change. Enforces functional/departments plans to be realistic and coordinated. Represents a plan to achieve company objectives. Provides management visibility of production, inventory, and backlogs. 25 August 2015Slide 4
- 6. © SKF Group 25 August 2015Slide 5 S&OP – Balancing supply and demand Demand Supply S&OP SCP MSP MSP: Manufacturing Supply Planning SCP: Supplier Capacity Planning Sales Forecasting
- 7. © SKF Group 25 August 2015Slide 6 S&OP at SKF Monthly global process to balance supply and demand, bringing all business operational plans into one integrated plan • Common Sales Forecasting process - To forecast market demand in order to drive the SKF demand chain • Common Manufacturing Supply Planning process (MSP) - To decide production volumes to fulfill future demand, stock and service targets • Common Supplier Capacity Planning process (SCP) - To secure material and component supply by sharing demand information with suppliers One consensus plan among Customers, SKF Sales, SKF Factories, SKF Purchasing and Suppliers !
- 8. © SKF Group Sales Forecasting Review Sales Forecast Monthly Supplier Capacity Planning Supply Capacity Confirmation S&OP BA Meeting S&OP Executive Meeting S&OP BU Meeting Monthly Manufacturing Supply Planning Decision for next Cycle Monthly S&OP Cycle
- 9. © SKF Group short term operational medium term tactical 25 August 2015Slide 8Slide 8 S&OP focuses on the tactical horizon Full Flexibility Completely fixed Time S&OP Focus S&OP - timeframe 1 2 3 4 5 6 7 8 9 10 11 12 year 2
- 10. © SKF Group Sales Forecasting 25 August 2015Slide 9 Sales Forecasting 1
- 11. © SKF Group 25 August 2015Slide 10 Sales forecasting purpose To forecast market demand in order to drive the SKF demand chain
- 12. © SKF Group 25 August 2015Slide 11 Sales forecasting process Sales History • From Sales Data Warehouse (SDW) Market & Customer Knowledge • Macro economic input - Business Cycle Report - Business Cycle Forecast (F18) - Market surveys - Business climate indices • Specific customer information - Order book - New business - Customer growth plans - Customer Forecasts - Customer markets Sales Forecast S&OP Cubes Create system forecast as baseline Enter market intelligence by Collaborators Approval from Sales Director INPUT PROCESS OUTPUT SDW
- 13. © SKF Group 25 August 2015Slide 12 Using all available information The system will use the past to forecast what will happen in the future. The job is to look into the future and predict any changes in the business, based on what you see and what you expect around the corner.
- 14. © SKF Group Manufacturing Supply Planning 25 August 2015Slide 13 2Manufacturing Supply Planning (MSP)
- 15. © SKF Group 25 August 2015Slide 14 To decide production volumes to fulfill future demand, stock and service targets Manufacturing Supply Planning purpose
- 16. © SKF Group 25 August 2015Slide 15 Sales Forecasting • From S&OP Sales Forecasting Supplier Capacity Constraints • From Supplier Capacity Work stream Data • From MDW, OIDW, Custserv Production Capacity and Stock Target • From Factory MSP process Data Warehouse Production Plan, Stock Projection and Capacity Needs Solved issues & Identified issues for escalation Sales Forecast Supply Confirmation Volume planning on Channel level Aggregated to Factory & Product Group level Issue escalation meetings & decide on actions INPUT PROCESS OUTPUT
- 17. © SKF Group S&OP Monthly MSP & Escalation Process Input to S&OP Factory Planning No Yes Data Warehouses Sales Forecasting Supplier Capacity Planning S&OP Factory planning S&OP Sales & Shipment Forecast Manuf. constraints & Inventory targets Data (Inventory, Shipments, Production etc) Supplier Confirmation Issues for S&OP Executive? S&OP Business Unit meeting S&OP Business Area meeting S&OP Executive meeting *Please see “S&OP Calendar” for monthly time schedule Monthly process end
- 18. © SKF Group Supplier Capacity Planning 25 August 2015Slide 17 3Supplier Capacity Planning (SCP)
- 19. © SKF Group 25 August 2015Slide 18 Supplier Capacity Planning purpose To secure material and component supply by sharing demand information with suppliers.
- 20. © SKF Group 25 August 2015Slide 19 Supplier Capacity Planning process Sales forecast per product • From Forecasting Work stream Factory planned production deliveries • From MSP Work stream Bill of material • From MDW Supply Capacity Confirmation Data Warehouse Production Plan Elaborate Material & Components demand out of S&OP Sales Forecast Material & Components forecast validated by SKF factories Material & Components forecast communicated to suppliers by SKF factories Available capacity communicated by suppliers to SKF INPUT PROCESS OUTPUT Sales Forecast
- 21. © SKF Group 25 August 2015Slide 20 S&OP is based on 3 work streams Sales Forecasting Demand ForecastMaterial Demand Forecast Supplier Capacity Planning Manufacturing Supply Planning S&OP Meetings
Editor's Notes
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- The S&OP process is build around a monthly Forecasting cycle. FORECASTING The monthly process starts with the Monthly Forecasting Cycle. The output of the process is a Sales Forecast which is the input of Product Group Planning and Supplier Capacity Planning. PRODUCT GROUP PLANNING The monthly Product Group Planning Cycle is based on the actual Sales Forecast. In addition, the results of the last Supplier Capacity Planning will be taken into consideration. Each month Product Group Planning Meetings are held and MEETINGS In case of any issues, this plan will be discuss in the monthly S&OP meeting with the required people from Manufacturing, Sales and if needed purchasing. This Meeting is headed by the Product Group Planning Manager. Ideal wise, all open issue will be solved in the Meeting and an agreed S&OP plan per Product Group will be the result of the monthly cycle. In the more likely case, that there are still open points, which could not be solved on the operational level, there will be a “Executive S&OP Meeting”, where the responsible Managers meet and discuss the open issues and define and agree on the needed actions. This Meeting is headed by the S&OP Manager, and each Product Group Planning Manager has the opportunity to present the burning issue of the area of responsibility and ask for decisions. Example for decisions in the Executive S&OP are Investment decisions Reallocation of large volumes from one factory to another (which may have negative result impact for one of the involved factories) Customer prioritizations The output from Forecasting, MSP and the Meetings is the base for the last step of the monthly cycle and will be the base for the Supplier Capacity Planning. SUPPLIER CAPACITY PLANNING The objective of the Supplier Capacity Planning process is to share our demand plans at an early stage with the suppliers and get there commitment, that they will be able to follow the SKF demand. This process will allow SKF purchasing and our Suppliers to act proactive on potential bottlenecks and launch the necessary action to avoid any bottleneck in supply. In case, where bottlenecks cannot be solved (even with adding new supplier or all other possible activities) a information about the supply constraints has to be given to the Product Group Planning to make sure, that he supply constraints will be taken into consideration, when planning the Product Group volumes. The Product Group Planning Manager will together with the concerned factories plan the supply side and create a stock projection. To balance supply and demand, the needed/possible activities like Support (inside or between factories) Additional shifts/shorttime work External purchase of goods will be taken into consideration. The people planning the production are not allowed to change the approved Forecast, but they can of course challenge the Forecast in a direct contact with the responsible Collaborator or Forecast Manager.
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