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CS/L College




Sales and Operations Planning

          User Manual
CS/L College




Sales and Operations Planning


 •   Course Overview
 •   Introduction to S&OP
 •   S&OP Concepts
 •   Dynamics of S&OP
 •   Key Roles in S&OP Process
 •   Course Summary
Course Overview
Course Overview

The Sales & Operations Planning (S&OP) process
allocates and aligns company resources to a single set of
plans that optimize resources in support of the business
objectives, The objective of this process is to check that
the operating plan is sufficient to deliver the business
goal and to intervene before an operating issue becomes
a business issue.

By the end of this course, you will be able to:

• Define S&OP
• Explain the S&OP process
• List the S&OP process principles
• Identify the key steps in each process
• Understand how tolerances are used in S&OP
• Describe the different roles involved in the S&OP
  process


   Notes




01 of 01                                                     Sales and Operations Planning
Module Overview
Module Overview

S&OP is the business planning
process, which is used to ensure that
the latest operating plan is in line with
the business plan. It provides the
monthly control mechanism to review
changes to business and operating
plans, align on one single plan, and
ensure that all resources are lined up
to deliver it.

This module will introduce you to the
key concepts involved in the S&OP
process and the many dynamics that
govern it.

By the end of this module, you will be
able to:

•   Define S&OP
•   List the objectives of S&OP
•   List the unique benefits of S&OP
•   Explain the S&OP process
•   Describe the characteristics of Family


     Notes




Introduction to S&OP                         01 of 18
Role of S&OP in MRPII
Role of S&OP in MRPII

S&OP links business planning to the execution of the plans in the supply chain. The
S&OP process is focused on bringing a balance between Sales Production &
Inventory (SPI) This ensures that there is sufficient supply capability to support the
sales plan and that costs, service, and cash projections are supported by realistic
plans.




   Notes




02 of 18                                                   Sales and Operations Planning
Role of S&OP in MRPII
Role of S&OP in MRPII

The objective of the S&OP process is to check
that the operating plan is sufficient to deliver
the business goal and to intervene before an
operating issue becomes a business issue.




   Formal Process




   Plans




   Single Plan




03 of 18                                           Sales and Operations Planning
Role of S&OP in MRPII
Role of S&OP in MRPII


  Capacity Planning




  Periodic Review




   Root Cause Analysis




  Decision Making




  Functions




  Notes




Introduction to S&OP     03 of 18
What is S&OP?
What is S&OP?

                S&OP is a continuous monthly process that enables
                a company to optimize operational plans in support
                of the business plan. It is the process by which the
                company can allocate
                and align resources to a single set of Supply and
                Sales Plans that support the business objectives.

                S&OP allows senior management to:

                • Reconcile actual performance against plans
                • Re-focus and re-balance the resources and
                  tactical objectives of each function within the
                  business and update the plans accordingly
                • Do a monthly check of the latest operational
                   plan that supports the business plan
                • Intervene before an operational issue
                  becomes a business issue
                • Maximize profit

    Notes




04 of 18                            Sales and Operations Planning
Objectives of S&OP
Objectives of S&OP

Following are the objectives of the S&OP
process:

• To support the business plan
• To ensure the plans are realistic
• To effectively manage change
• To manage inventory, service, and cost
• To measure performance




   Notes




Introduction to S&OP                       05 of 18
Basic Elements of Effective S&OP
Basic Elements of Effective S&OP

Following are the elements that define an effective
S&OP:

• Leadership
• Business Process
• Outlook
• Systems
• Linked Strategy
• Measures




   Leadership




   Business Process




   Outlook




   Systems




Introduction to S&OP                                  07 of 18
Basic Elements of Effective S&OP
Basic Elements of Effective S&OP

   Linked Strategy




   Measures




   Notes




07 of 18                           Sales and Operations Planning
Building an Effective S&OP
Building an Effective S&OP

Initially, the entire S&OP process may seem like lot of
tedious work. However, by establishing routine, controls
and exception management, S&OP actually frees up
resources in the long term.

An effective S&OP can be accomplished in the
following ways:

• Set expectations and roll it in to the top management
   meeting
• Appoint a qualified S&OP coach / expert to facilitate the
   process and lay the foundation
• Establish a ‘dashboard / scorecard’
• incorporate SR graphical format top sheets
• Implement the key sub-processes: initiatives review,
  demand review, supply review, Pre-S&OP, etc.
• Use the Category S&OP assessment tool to do a
  detailed health check and to build a detailed continual
  improvement plan




   Notes




Introduction to S&OP                                          08 of 18
Common Pitfalls
Common Pitfalls

Though there are many ways to build an effective
S&OP, there are as many pitfalls that you can
encounter during the process.

Following are the common mistakes that you
should watch out for:

• Lack of leadership support and engagement in
  the process with limited cross-functional support
• Lack of systems or capability to generate and
  extract timely, accurate data
• Weak or de-coupled business and operating
  strategies leading to inconsistent 5&OP processes
• Deferred decisions in S&OP top team, surprises
  surfacing for the first time in S&OP top team, long
  meetings, etc.
• Inadequate allocation of resources affecting
  process capability
• Overly complicated processes or complex detail
   leading to disengagement
• Weak or missing sub-processes


   Example




   Example




Introduction to S&OP                                    10 of 18
Common Pitfalls
Common Pitfalls

   Example




   Example




   Example




10 of 18          Sales and Operations Planning
Common Pitfalls
Common Pitfalls

   Example




  Example




  Notes




Introduction to S&OP   10 of 18
S&OP: A Business Management Process
S&OP: A Business Management Process

S&OP integrates and manages the following three operating elements, which have a
direct impact on Total Shareholder Returns (TSR):



                     Availability/Service         Balancing demand & supply so
                                                  that we never miss shipping a case
                       Management
                                                  Managing and improving the
  NOS Growth          Demand Planning             quality of the demand plan

                                                  Getting initiatives to market
                     Initiatives Planning         with excellence

                     Optimize Total System        Balancing plans, ensuring total
                     Cost                         system impacts are transparent
       Cost
                                                  Long term planning of
                     Capacity Utilization         capacity to match sales plans
                                                  Setting and managing to Inventory
                     Inventory Management
                                                  Policies, balancing plans
      Cash
                                                  Long term planning of capital
                    Capital Management
                                                  to match business plans



    Notes




11 of 18                                              Sales and Operations Planning
Unique Benefits
Unique Benefits

S&OP offers many benefits, such as:

• Forward visibility
• Earlier identification and faster response
• Agreement to single, realistic, integrated plan
• Continuous improvement of all key performance
  Measures
• Highlights deviations from expected results and
  leverages the learning in future plans
• Multi-functional decision making




   Forward visibility



   Earlier identification and faster response



   Agreement to single, realistic, integrated plan



   Continuous improvement of all key performance Measures




   Highlights deviations from expected results and leverages the learning in
   future plans




Introduction to S&OP                                                      12 of 18
Unique Benefits
Unique Benefits


   Multi-functional decision making




    Notes




12 of 18                              Sales and Operations Planning
Key Concepts
Key Concepts

S&OP is a continuous monthly process beginning with Demand Planning when the
demand forecast is updated to establish an unconstrained forecast. This data is then
used in the Rough Cut Capacity Planning (RCCP) process as part of the Supply Review.
This process is used to determine any major constraints or issues, which need to be
discussed later The objective is to identify any constraints that would become issues in
the Pre-S&OP. Financial implications are a key part of each of these process / reviews
The primary 5&OP concepts are:

• Demand Planning
• Supply Planning
• Pre-S&OP
• S&OP Meeting
• Financial Implications




   Demand Planning




   Supply Planning




14 of 18                                                 Sales and Operations Planning
Key Concepts
Key Concepts


  Pre S&OP




  S&OP Meeting




   Financial Implications




  Notes




Introduction to S&OP        14 of 18
Key Concepts
Key Concepts

The characteristics listed below belong to the primary S&OP concepts.
Write the appropriate S&OP concepts corresponding to the correct white boxes.

S&OP Concepts:

Financial Implications
S&OP Meeting
Pre S&OP
Supply Planning
Demand Planning




    Notes




15 of 18                                           Sales and Operations Planning
Families
Families

A family is a group of finished product Stock Keeping
Units (SKUs). which by virtue of their similar
characteristics can be grouped together to simplify
planning and reporting.

Families allow you to:

• Aggregate many individual SKUs into more
  manageable groupings
• Manage total demand and/or supply for a
  group of SKUs, which use the same limited
  production capacity, material availability etc.
• Focus on workable plans


   Notes




Introduction to S&OP                                    16 of 18
Summary
Summary

                       In this module, you learned:

                       • What is S&OP
                       • The various objectives of S&OP
                       • The unique benefits of S&OP
                       • The key concepts of the S&OP process
                       • The importance of Families




   Notes




Introduction to S&OP                                            18 of 18
Module Overview
Module Overview

Sales & Operations Planning (S&OP) is an ongoing monthly process that links
several distinct processes that produce a single company business plan. It is based
on vital inputs from both Demand Planning and Supply Planning processes.

The inputs gathered from these processes are identified and plans are weighed
against the resulting financial implications.

The monthly process culminates in the S&OP Meeting where decisions are made
and resources confirmed or re-allocated.

This module will explain how Demand Planning and Supply Planning influence
S&OP. It will enable you to measure the financial implications of the S&OP plans,
and understand the intricacies of the S&OP Meeting.

By the end of this module, you will be able to:

• Describe the process of S&OP
• Describe the steps in the S&OP process
• Describe the principles of Demand Planning
• List the key steps of Demand Planning
• Describe the principles of Supply Planning
• List the key steps of Supply Planning
• Explain the financial implications of an S&OP plan
• Describe the principles of the S&OP Meeting
• List the key steps of the S&OP Meeting




01 of 18                                                 Sales and Operations Planning
Module Overview
Module Overview




  Notes




S&OP Concepts     01 of 18
Monthly Process
Monthly Process

The S&OP begins as follows:

1.   It starts with Unconstrained Demand Forecast.
2.   Supply Review checks capacity against
     Demand.
3.   If Supply Plan can support the Demand
     Forecast, then it becomes the Sales Plan.
4.   If supply Plan cannot support the Demand
     Forecast, then ‘what if’ alternatives are
     developed as options to be considered.
5.   Then in Pre-5&QP, issues will be identified that
     need to be discussed in the S&OP Meeting.
6.   The monthly process cumulate in an S&OP
     Meeting, led by the General Manger, where past
     performance is reviewed and key decisions are
     made on issues raised.


     Notes




02 of 18                                                Sales and Operations Planning
Importance Of Demand Forecast Accuracy
Importance Of Demand Forecast Accuracy

An accurate Demand Forecast is extremely critical to
the Demand Planning process.
It enables you to:

• Understand volume gaps
• Check assumptions
• Stimulate strategy review
• Meet the needs of the customer at a lower cost




   Notes




S&OP Concepts                                          03 of 18
Key Principles of Demand Planning
Key Principles of Demand Planning

Demand Planning is a key element of integrated MRPII work processes. Demand
Planning develops a detailed bottom-up forecast for all products sold to our
customers. This forecast is typically developed by country, and may be developed
for individual key customers or groups of customers. The objective is to develop a
50/50 (unbiased) forecast over an 18 to 24 month planning horizon.

The approach is to create a statistical forecast, based on historical shipments that
can be modified, as needed, to reflect market intelligence and changing business
conditions. Measuring the accuracy of volume forecasts and forecast assumptions
provides a basis for understanding current capability and developing improvement
plans.

Following are the key principles of Demand Planning:

• Timely
• Unbiased (50/50)
• Reasonable
• Known Accuracy
• Includes Key Plans & Assumptions
• Details & Aggregations are Consistent




04 of 18                                                  Sales and Operations Planning
Key Principles of Demand Planning
Key Principles of Demand Planning

  Timely




  Unbiased (50/50)




  Reasonable



  Known Accuracy




  Notes




S&OP Concepts                       04 of 18
Key Steps Of Demand Planning
Key Steps Of Demand Planning

Following are the key steps involved in Demand Planning:




   Collecting and reviewing relevant input




   Documenting key assumptions that were used to build the forecast




06 of 18                                               Sales and Operations Planning
Key Steps Of Demand Planning
Key Steps Of Demand Planning

  Preparing monthly summaries of the forecast for the meetings




  Communicating demand forecast and assumptions




  Notes




S&OP Concepts                                                    06 of 18
Key Principles Of Supply Planning
Key Principles Of Supply Planning

The Supply Planning process balances the supply
capability (resources—people, capacity, materials,
time, money) to the demand over time. It covers all
possible external and internal constraints and
includes all demands on the available capacity of a
particular supply chain.

Following are the key principles of Supply Planning:

• The Product Supply/Supply chain team owns the
   Supply Planning process
• The Supply Plan is updated every month
• The capacity is assessed against the
   unconstrained demand
• The assumptions are documented with the supply
   recommendation and alternatives
• The demonstrated capacity is utilized for planning
• Scorecards are used to track and manage results
  according to the Operating Strategy


   The capacity is assessed against the unconstrained demand




   Notes




S&OP Concepts                                                  08 of 18
Category Supply Planning Process
Category Supply Planning Process

                   At the category level, Supply Planning is defined by the
                   following processes:

                   • Linking demand planning, initiative planning, RCCP
                     (Rough cut capacity Planning) and S&OP with site
                     integrated planning
                   • insuring that product supply can meet the demand in
                     the sales plan
                   • Focusing on defining total demand, performing cc
                     (Rough cut capacity Planning), and developing
                     family-level execution plans


   Notes




09 of 18                                 Sales and Operations Planning
Key Steps Of Supply Planning
Key Steps Of Supply Planning

Following are the key steps involved in Supply Planning:




   S&OP deck




   Notes




S&OP Concepts                                              10 of 18
Factors That Determine financial Implications
Factors That Determine financial Implications

The Finance team owns the financial impact of a plan.

Following are the principles that influence the financial
implications of an S&OP plan:

• Developing the Profit Outlook using the
  S&OP numbers
• Measuring performance by profit forecast accuracy
• Aligning Demand & Supply assumptions
• Evaluating the financial impact of operating plans
• Evaluating the financial impact of what-ifs and
  issue sheets




   Developing the Profit Outlook using the S&OP numbers




   Aligned Demand & Supply assumptions




   Notes




S&OP Concepts                                               12 of 18
Key Steps of Supply Planning
Key Steps of Supply Planning

Following are the key steps that are used to determine the financial
implications of an S&OP plan:




   Notes




13 of 18                                                  Sales and Operations Planning
Principles of S&OP Meeting
Principles of S&OP Meeting

                        • Primary vehicle for checking that the latest operational plan
                          is in-line with the business plan
                        • Owned and led by the General Manager
                        • Attendance is mandatory for Core Category Leadership
                        • Focus on planning / influencing the future
                          (3-18 month timeframe)
                        • Review the S&OP scorecard and check performance versus
                          the tolerances, which are defined in the category
                          operating strategy
                        • Check and approve the Sales Production & Inventory Plans
                          (in graphical format)
                        • Sales Production & Inventory Plans are approved by the
                          General Manager
                        • Identify and resolve issues
                        • Evaluate ‘What-ifs’
                        • Document decisions and authorize the single Sales &
                          Supply Plan
                        • A formal change process is used


  Core Category Leadership




  A formal change process is used




  Notes




S&OP Concepts                                                                 14 of 18
Key Steps of S&OP Meeting
Key Steps of S&OP Meeting

Following are the key steps of the
S&OP Meeting:

• A monthly meeting with a formal
  agenda
• GM and key leadership team
  members review recommended
  Demand and Supply Plans
• Significant issues related to
  production policies, inventory
  policies, and change process
  guidelines are discussed and
  resolved
• Policies and guidelines are defined
  as needed
• Demand and/or Supply gaps are
  discussed, along with
  alternatives
• Decisions are finalized to provide a
  single authorized Sales Plan and
  Supply Plan
• Plans are communicated by the
  Demand Manager and Supply
  Manager




    Notes




15 of 18                                 Sales and Operations Planning
S&OP Top Sheets
S&OP Top Sheets

S&OP top sheet should include historical SPP, PPP, and IPP performance (at
the family / product aggregation levels defined in the Category Operating
Strategy), as well as future-oriented Sales Production & Inventory plans.

The following graph shows how we can evaluate risks by monitoring past SPP:




17 of 18                                              Sales and Operations Planning
S&OP Top Sheets
S&OP Top Sheets

  Sales Plan Performance




  Sales Plan




  Notes




S&OP Concepts              17 of 18
Summary
Summary

           In this module, you learned about:

           • The steps in the monthly S&OP process
           • The principles of Demand Planning
           • The principles of Supply Planning
           • The key steps of Supply Planning
           • The financial implications of an S&QP plan
           • The principles of the S&OP Meeting
           • The key steps of the S&OP Meeting
           • Top sheet requirements for SPI’s




   Notes




18 of 18                  Sales and Operations Planning
Module Overview
Module Overview

Though the S&OP process is driven largely by Demand, Supply, and Sales dynamics, it
has far-reaching effects across many spheres within the organization.

This module will explain how S&OP injects fresh perspectives and links with various
initiatives. It will also show how negative behavior can mar the best S&OP design.
By the end of this module, you will be able to:

• Describe how various initiatives link with S&OP
• Describe how S&OP impacts business results
• Identify the types of negative behavior that can inhibit the S&OP process
• Describe the characteristics of Zones and Tolerances
• List the key measures of S&OP




   Notes




Dynamics of S&OP                                                                 01 of 17
Initiatives Linkages
Initiatives Linkages

The S&OP process has significant links with
initiatives across almost every
function in the organization

The initiative linkages include:

• Ensuring that the product launch process
  is appropriately utilized and linked to S&OP
• Embracing S&OP as the key tool for delivering
  an integrated Category Business Plan with all
  initiatives included




   Ensuring that the product launch process is appropriately utilized and linked to
   S&OP




   Notes




02 of 17                                             Sales and Operations Planning
Business Impact
Business Impact

Effective S&OP can yield the following results:




   Strategic Planning




   Organizational Capacity




Dynamics of S&OP                                  03 of 17
Business Impact
Business Impact


   Improved Data




   TDC




   Improved Cash Flow




03 of 17                Sales and Operations Planning
Business Impact
Business Impact

  Improved Customer Service




  Notes




Dynamics of S&OP              03 of 17
Negative Behaviors
Negative Behaviors

The success of the S&OP process mainly hinges on the
discipline and dedication of the team members, A
careless, haphazard approach can inhibit the process
and dilute its effectiveness.

The following behaviors can have a negative influence
on the S&OP process:

• Insufficient pre-work / Partial implication analyses
• Avoidance of real issues
• Token decision making
• Inappropriate issues
• Poor attendance. delegation of responsibility




   Insufficient pre-work/Partial implication analyses




   Avoidance of real issues




Dynamics of S&OP                                         05 of 17
Negative Behaviors
Negative Behaviors


   Token decision making




   Inappropriate issues




   Poor attendance-delegation of responsibility




   Notes




05 of 17                                          Sales and Operations Planning
Time Zones
Time Zones

In the S&OP process, the future can be divided into two major segments:

• The future that is already planned, which is typically a short term of 0-3 months.
• The future that we can plan, which is typically a longer term of 4-18 months.



                                     The further out we go, the easier and less
                                     expensive it is to make changes




Changing the plan is
either impossible or
is expensive

    The future that is already planned, which is typically a short term of 0-3 months




    The future that we can plan, which is typically a longer term of 4-18 months




    Notes




07 of 17                                               Sales and Operations Planning
Types of Time Zones
Types of Time Zones

An important part of the S&OP process is the recognition of various time
zones where decisions, particularly those concerning changes, must be made or where
increased stability can have an impact on bottom line results.
The Time Zones are classified into three categories:

• Fixed Zone
• Firm Zone
• Planning Zone




                                    The further out we go, the easier and less
                                    expensive it is to make changes




Changing the plan
is either impossible
or is expensive


   Fixed Zone




   Firm Zone




Dynamics of S&OP                                                             08 of 17
Types of Time Zones
Types of Time Zones


   Planning Zone




   Notes




08 of 17               Sales and Operations Planning
Planning Zones
Planning Zones

Based on the S&OP process, the future is divided into two Planning Zones:

• The Stable Zone
  This refers to the near future, the part that is already planned months earlier.

• The Open or Flexible Zone
  This refers to the distant future, the part that is well within our control and which still
  needs to be planned.

The dividing line between these two zones is driven by the adjusted Cumulative Lead Time
(CIT) for the supply chain The Cumulative Lead Time is the period of time between
receiving a new customer order (or seeing a forecast change, which is outside agreed
tolerances), to when we actually deliver the product to the distribution center.




   The Stable Zone




Dynamics of S&OP                                                                         09 of 17
Planning Zones
Planning Zones

   The Open or Flexible Zone




   Notes




09 of 17                       Sales and Operations Planning
How Zones Influence Behavior
How Zones Influence Behavior

An analysis of the Planning Zones should drive the following behavior in the S&OP
process:

• Reduce the CLT by becoming more responsive and flexible.
• Clearly define the CIT. understand what drives it, and document it in the operating
  strategy.
• Have an excellent plan for the months beyond the CIT.
• Consider that the months within the CIT have already been planned; therefore, focus
  should be on executing with excellence within defined tolerances. For example, we
  may decide to install capability to handle a 25% volume upside.
• Measure performance and execute plans on the basis of Sales Plan Performance
  (SPP), Production Plan Performance (PPP), and Inventory Plan Performance (IPP).




   Notes




Dynamics of S&OP                                                                10 of 17
How Zones Influence Behavior
How Zones Influence Behavior




    Notes




10 of 17                       Sales and Operations Planning
Tolerance
Tolerance

There are two kinds of tolerances:

• Executional Tolerances
• Planning Tolerances




   Executional Tolerances




   Planning Tolerances




   Notes




12 of 17                             Sales and Operations Planning
Key principles of Setting Tolerances
Key principles of Setting Tolerances

The following principles need to be followed while setting
tolerances:

• Ensure tolerances are meaningful to the business
  and will drive business results.
• Get started early to learn well ahead of time.
• Use tolerances and measures to drive improvement.
• Document tolerances in the operating strategy and
  align them across the entire organization.




   Ensure tolerances are meaningful to the business and will drive business results




   Get started early to learn well ahead of time




   Use tolerances and measures to drive improvement




Dynamics of S&OP                                                          13 of 17
Key principles of Setting Tolerances
Key principles of Setting Tolerances


   Document tolerances in the operating strategy and align them across the entire
   organization.




   Notes




13 of 17                                            Sales and Operations Planning
Key Measures
Key Measures

The Sales Production & Inventory Plan performance measures should be in alignment
with the operating policy. These measures can indicate when the operating policy
needs to be altered and also helps to funnel efforts towards improvement of the
forecast process or Supply Plan execution.

The measures are intended to reflect the actual versus planned performance for the
three key outputs of the S&OP process (i.e., Sales Plan, Production Plan, and Inventory
Plan) at the Family level. Additional measures at the detail level (SKU) in the
“downstream” planning processes (i.e., distribution requirements planning, master
production scheduling, material requirements planning, etc.) are aligned to the family
level.

• Sales Plan Performance
• Production Plan Performance
• Inventory Plan Performance

These results should reflect a 50/50 number
(no bias) within tolerance by family on a
consistent monthly basis.




    Sales Plan Performance




    Production Plan Performance




15 of 17                                                Sales and Operations Planning
Key Measures
Key Measures


  Inventory Plan Performance




  Notes




Dynamics of S&OP               15 of 17
Summary
Summary

                   In this module, you learned:

                   • How initiatives link to the S&OP process
                   •How S&OP impacts business results
                   •How negative behavior can inhibit the S&OP process
                   • The Zones and their impact on S&OP
                   • The Tolerances and their principles
                   • The key measures of S&OP




  Notes




Dynamics of S&OP                                             17 of 17
Module Overview
Module Overview

The S&OP process is developed with distinctive
inputs from various functions across the
organization. Therefore, it is extremely critical
that people across all functions understand
what is expected of them to build a successful
S&OP.

This module describes the significance of each
function in the S&OP process. It explains how
people at various levels influence business
objectives and how seamless teamwork is the
key to an effective S&OP.

By the end of this module, you will be able to:

• Describe the role of the General Manager in
  the S&OP process
• Describe the different roles involved in the
  S&OP process


    Notes




01 of 13                                            Sales and Operations Planning
S&OP Team
S&OP Team



All P&G employees need to work successfully to optimize resources in support of the
business objectives. The S&OP team draws skills from various functions such as
Demand Planning, Supply Planning. Finance and so on. Given below is an example of
a typical S&OP team
                                   Roger Morgan
                                    General Manager
 Ross Goya                                                       Rita Burton
 Customer Business                                               Demand
 Development Director                                            Manager




  Sam Hawn                                                            Kirk Bates
  Product Supply                                                      Supply Planner
  Director


                                                               Darryl James
    Mark Reid
                                                               Finance Manager
    Product Development
                                   Amanda Bleethe
    Director
                                   Marketing Director


   Notes




Key Roles in S&OP                                                              02 of 13
General Manager
General Manager

Roger: Hi, I am Roger Morgan, a business unit General
Manager at P&G. and one of the key members of the
S&OP team The S&OP is of crucial importance to my
business, as it not only enables me to set direction and
make decisions, but also helps me emphasize the
importance of the S&OP process to the Leadership Team.

As General Manager, Roger has the following
responsibilities in the S&OP process:

• Embrace S&OP as a key tool for delivering Category
   Profit commitment
• Integrate S&OP for the total business

Of course, its dedicated teamwork that finally leads to a
successful S&OP process. In the following screens, I will
introduce the other team members and explain how they
influence the S&OP process.


   Embrace S&OP as a key tool for delivering Category Profit commitment




   Notes




03 of 13                                                    Sales and Operations Planning
Demand Manager
Demand Manager

As the Demand Manager, Rita Burton, shares details of
the volume forecast, including key assumptions, trends,
and bias. She knows that the Demand Forecast is
vulnerable to bias from data factors She checks for such
bias and highlights it in the S&OP Meeting. Rita also
validates that initiatives, including pipeline fill and
cannibalization are included at the project establishment
phase of the initiative.

The Demand Manager ensures that the following
Demand Planning elements of the S&OP CBA
(Current Best Approach) are met:

• Documenting assumptions
• Evaluating forecast accuracy
• Providing forecast ranges for ‘what-if planning
• Driving bias out of the forecast
• Ensuring that meeting materials are available prior to
  the meeting
• Documenting and communicating demand-related
  decisions


   Documenting Assumptions




   Driving bias out of the forecast




   Notes




Key Roles in S&OP                                           04 of 13
Supply Planner
Supply Planner

Meet Kirk Bates, our Supply Planner who collects information
on demand sources spread across various geographies. He
ensures that there is supply capability to meet the demand or
identifies gaps.

The Supply Planner ensures that the following supply planning
elements of the S&OP CBA are followed:

• Documenting Supply Planning assumptions,
  capacity constraints arid Product Supply decision time fences
• Bringing together all Demand sources
• Providing 18-month Supply Plans and reviewing the usage of
  SPI document
• Providing what if’ simulation analysis of options and
   contingency plans
• Ensuring opportunities or issues are brought to the S&OP
  meeting with recommendations and alternatives
• Documenting and communicating supply-related decisions


   Notes




05 of 13                                                 Sales and Operations Planning
Finance Manager
Finance Manager

Financial assessments are critical to the S&OP process.
Meet our Finance Manager, Darryl James, who ensures
that all S&OP plans are utilized in profit forecast / analysis.

Following are the key responsibilities of the Finance
Manager in the S&OP process:

• Ensure that financial assessments of the demand and
  supply plans are used in S&OP decisions
• Ensure that the demand and supply plans from S&OP
  are used in Financial / Profit Analyses and outlook
  preparation for GM and Leadership Team




   Ensure that financial assessments of the demand and supply plans are used in
   S&OP decisions




   Ensure that the demand and supply plans from S&OP are used in Financial /
   Profit Analyses and outlook preparation for GM and Leadership Team




   Notes




Key Roles in S&OP                                                       06 of 13
Marketing Director
Marketing Director

Now you know about the responsibilities of the GM, Demand Manager.
Supply Planner, and Finance Manager. So let’s move on to the other
functions.

Meet our Marketing Director, Amanda Bleethe.

As Marketing Director, she influences the S&OP process in the
following ways:

• Embraces S&OP as a key tool for delivering the category’s
  Marketing OGSM (Objectives, Goals, Strategies, and Management)
• Provides pertinent competitive perspective
• Provides appropriate input on market share, market size,
  and category growth plans


   Notes




Key Roles in S&OP                                                    08 of 13
Product Development Director
Product Development Director

As the Product Development Director, Mark Reid, offers critical
inputs to the S&OP process.
Following are the responsibilities of the Product Development
Director in the S&OP process:


• Ensure that the product launch process is
  appropriately utilized and linked to S&OP
• Embrace S&OP as the key tool for delivering an
  integrated category Business Plan with all initiatives included




   Ensure that the product launch process is appropriately utilized and linked to
   S&OP




   Notes




09 of 13                                                    Sales and Operations Planning
Product Supply Director
Product Supply Director

Here’s Sam Hawn, our Product Supply Director, who
ensures that a rigorous supply planning process is
implemented in the S&OP.
Following are the specific responsibilities of the Product
Supply Director;


• Ensure that the supply planning process used in
  support of S&OP and MRPII is thorough
• Embrace S&OP as a key tool for delivering the
  category’s Product Supply OGSM (Objectives,
  Goals, Strategies, and Management)
• Ensures that the forecast is a realistic outlook on
  what is expected in the future




   Ensure that the supply planning process used in support of S&OP and MRPII
   is thorough




   Embrace S&OP as a key tool for delivering the category’s Product Supply
   OGSM (Objectives, Goals, Strategies, and Management)




Key Roles in S&OP                                                        10 of 13
Product Supply Director
Product Supply Director

   Ensures that the forecast is a realistic outlook on what is expected in the future




   Notes




10 of 13                                              Sales and Operations Planning
Customer Business Development (CBD) Director
Customer Business Development (CBD) Director

Meet Ross Goya, our Customer Business
Development (CBD) Director
Following are the key responsibilities of Customer
Business Development (CBD) team in the S&OP
process

• Ensure that the detailed sales activity
  delivers the CBD plan
• Embrace S&OP as a key too’ for delivering the
  business units OGSM (Objectives, Goals,
  Strategies, and Management)




   Ensure that the detailed sales activity delivers the CBD plan




   Notes




Key Roles in S&OP                                                  11 of 13
Summary
Summary

                    The S&OP process is a complex tapestry of
                    many processes. Each function, therefore,
                    plays a significant role in the eventual success
                    of S&OP.

                    In this module, you learned about the:

                    • Role of the General Manager in the S&OP
                    process
                    • Other roles invoked in the S&OP process




   Notes




Key Roles in S&OP                                             13 of 13
Course Summary
Course Summary

This course explained the Sales & Operations
Planning (S&OP) process. Before you move on to
the Assessment, here is a quick recap of the main
points covered in the course.
Sales & Operations Planning is an ongoing monthly
process that links several distinct processes that
produces a single company business plan.

This is based on vital inputs from the Demand
Planning and Supply Planning processes. The
inputs gathered from these processes are identified
while the plans are weighed against the resulting
financial implications. The process culminates in
the S&OP Meeting where decisions are made and
resources confirmed or re-allocated.

Though the S&OP process is driven largely by
Demand, Supply, and Sales dynamics, it has
far-reaching effects across many spheres within the
organization. It is developed with distinctive inputs
from various functions across the organization.

The success of the S&OP process mainly hinges
on the discipline and dedication of the team
members, Therefore, it is extremely critical that
people across all functions understand what is
expected of them to build a successful S&OP.


   Notes




01 of 01                                                Sales and Operations Planning

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S&Op Training

  • 1. CS/L College Sales and Operations Planning User Manual
  • 2.
  • 3. CS/L College Sales and Operations Planning • Course Overview • Introduction to S&OP • S&OP Concepts • Dynamics of S&OP • Key Roles in S&OP Process • Course Summary
  • 4.
  • 5. Course Overview Course Overview The Sales & Operations Planning (S&OP) process allocates and aligns company resources to a single set of plans that optimize resources in support of the business objectives, The objective of this process is to check that the operating plan is sufficient to deliver the business goal and to intervene before an operating issue becomes a business issue. By the end of this course, you will be able to: • Define S&OP • Explain the S&OP process • List the S&OP process principles • Identify the key steps in each process • Understand how tolerances are used in S&OP • Describe the different roles involved in the S&OP process Notes 01 of 01 Sales and Operations Planning
  • 6. Module Overview Module Overview S&OP is the business planning process, which is used to ensure that the latest operating plan is in line with the business plan. It provides the monthly control mechanism to review changes to business and operating plans, align on one single plan, and ensure that all resources are lined up to deliver it. This module will introduce you to the key concepts involved in the S&OP process and the many dynamics that govern it. By the end of this module, you will be able to: • Define S&OP • List the objectives of S&OP • List the unique benefits of S&OP • Explain the S&OP process • Describe the characteristics of Family Notes Introduction to S&OP 01 of 18
  • 7. Role of S&OP in MRPII Role of S&OP in MRPII S&OP links business planning to the execution of the plans in the supply chain. The S&OP process is focused on bringing a balance between Sales Production & Inventory (SPI) This ensures that there is sufficient supply capability to support the sales plan and that costs, service, and cash projections are supported by realistic plans. Notes 02 of 18 Sales and Operations Planning
  • 8. Role of S&OP in MRPII Role of S&OP in MRPII The objective of the S&OP process is to check that the operating plan is sufficient to deliver the business goal and to intervene before an operating issue becomes a business issue. Formal Process Plans Single Plan 03 of 18 Sales and Operations Planning
  • 9. Role of S&OP in MRPII Role of S&OP in MRPII Capacity Planning Periodic Review Root Cause Analysis Decision Making Functions Notes Introduction to S&OP 03 of 18
  • 10. What is S&OP? What is S&OP? S&OP is a continuous monthly process that enables a company to optimize operational plans in support of the business plan. It is the process by which the company can allocate and align resources to a single set of Supply and Sales Plans that support the business objectives. S&OP allows senior management to: • Reconcile actual performance against plans • Re-focus and re-balance the resources and tactical objectives of each function within the business and update the plans accordingly • Do a monthly check of the latest operational plan that supports the business plan • Intervene before an operational issue becomes a business issue • Maximize profit Notes 04 of 18 Sales and Operations Planning
  • 11. Objectives of S&OP Objectives of S&OP Following are the objectives of the S&OP process: • To support the business plan • To ensure the plans are realistic • To effectively manage change • To manage inventory, service, and cost • To measure performance Notes Introduction to S&OP 05 of 18
  • 12. Basic Elements of Effective S&OP Basic Elements of Effective S&OP Following are the elements that define an effective S&OP: • Leadership • Business Process • Outlook • Systems • Linked Strategy • Measures Leadership Business Process Outlook Systems Introduction to S&OP 07 of 18
  • 13. Basic Elements of Effective S&OP Basic Elements of Effective S&OP Linked Strategy Measures Notes 07 of 18 Sales and Operations Planning
  • 14. Building an Effective S&OP Building an Effective S&OP Initially, the entire S&OP process may seem like lot of tedious work. However, by establishing routine, controls and exception management, S&OP actually frees up resources in the long term. An effective S&OP can be accomplished in the following ways: • Set expectations and roll it in to the top management meeting • Appoint a qualified S&OP coach / expert to facilitate the process and lay the foundation • Establish a ‘dashboard / scorecard’ • incorporate SR graphical format top sheets • Implement the key sub-processes: initiatives review, demand review, supply review, Pre-S&OP, etc. • Use the Category S&OP assessment tool to do a detailed health check and to build a detailed continual improvement plan Notes Introduction to S&OP 08 of 18
  • 15. Common Pitfalls Common Pitfalls Though there are many ways to build an effective S&OP, there are as many pitfalls that you can encounter during the process. Following are the common mistakes that you should watch out for: • Lack of leadership support and engagement in the process with limited cross-functional support • Lack of systems or capability to generate and extract timely, accurate data • Weak or de-coupled business and operating strategies leading to inconsistent 5&OP processes • Deferred decisions in S&OP top team, surprises surfacing for the first time in S&OP top team, long meetings, etc. • Inadequate allocation of resources affecting process capability • Overly complicated processes or complex detail leading to disengagement • Weak or missing sub-processes Example Example Introduction to S&OP 10 of 18
  • 16. Common Pitfalls Common Pitfalls Example Example Example 10 of 18 Sales and Operations Planning
  • 17. Common Pitfalls Common Pitfalls Example Example Notes Introduction to S&OP 10 of 18
  • 18. S&OP: A Business Management Process S&OP: A Business Management Process S&OP integrates and manages the following three operating elements, which have a direct impact on Total Shareholder Returns (TSR): Availability/Service Balancing demand & supply so that we never miss shipping a case Management Managing and improving the NOS Growth Demand Planning quality of the demand plan Getting initiatives to market Initiatives Planning with excellence Optimize Total System Balancing plans, ensuring total Cost system impacts are transparent Cost Long term planning of Capacity Utilization capacity to match sales plans Setting and managing to Inventory Inventory Management Policies, balancing plans Cash Long term planning of capital Capital Management to match business plans Notes 11 of 18 Sales and Operations Planning
  • 19. Unique Benefits Unique Benefits S&OP offers many benefits, such as: • Forward visibility • Earlier identification and faster response • Agreement to single, realistic, integrated plan • Continuous improvement of all key performance Measures • Highlights deviations from expected results and leverages the learning in future plans • Multi-functional decision making Forward visibility Earlier identification and faster response Agreement to single, realistic, integrated plan Continuous improvement of all key performance Measures Highlights deviations from expected results and leverages the learning in future plans Introduction to S&OP 12 of 18
  • 20. Unique Benefits Unique Benefits Multi-functional decision making Notes 12 of 18 Sales and Operations Planning
  • 21. Key Concepts Key Concepts S&OP is a continuous monthly process beginning with Demand Planning when the demand forecast is updated to establish an unconstrained forecast. This data is then used in the Rough Cut Capacity Planning (RCCP) process as part of the Supply Review. This process is used to determine any major constraints or issues, which need to be discussed later The objective is to identify any constraints that would become issues in the Pre-S&OP. Financial implications are a key part of each of these process / reviews The primary 5&OP concepts are: • Demand Planning • Supply Planning • Pre-S&OP • S&OP Meeting • Financial Implications Demand Planning Supply Planning 14 of 18 Sales and Operations Planning
  • 22. Key Concepts Key Concepts Pre S&OP S&OP Meeting Financial Implications Notes Introduction to S&OP 14 of 18
  • 23. Key Concepts Key Concepts The characteristics listed below belong to the primary S&OP concepts. Write the appropriate S&OP concepts corresponding to the correct white boxes. S&OP Concepts: Financial Implications S&OP Meeting Pre S&OP Supply Planning Demand Planning Notes 15 of 18 Sales and Operations Planning
  • 24. Families Families A family is a group of finished product Stock Keeping Units (SKUs). which by virtue of their similar characteristics can be grouped together to simplify planning and reporting. Families allow you to: • Aggregate many individual SKUs into more manageable groupings • Manage total demand and/or supply for a group of SKUs, which use the same limited production capacity, material availability etc. • Focus on workable plans Notes Introduction to S&OP 16 of 18
  • 25. Summary Summary In this module, you learned: • What is S&OP • The various objectives of S&OP • The unique benefits of S&OP • The key concepts of the S&OP process • The importance of Families Notes Introduction to S&OP 18 of 18
  • 26. Module Overview Module Overview Sales & Operations Planning (S&OP) is an ongoing monthly process that links several distinct processes that produce a single company business plan. It is based on vital inputs from both Demand Planning and Supply Planning processes. The inputs gathered from these processes are identified and plans are weighed against the resulting financial implications. The monthly process culminates in the S&OP Meeting where decisions are made and resources confirmed or re-allocated. This module will explain how Demand Planning and Supply Planning influence S&OP. It will enable you to measure the financial implications of the S&OP plans, and understand the intricacies of the S&OP Meeting. By the end of this module, you will be able to: • Describe the process of S&OP • Describe the steps in the S&OP process • Describe the principles of Demand Planning • List the key steps of Demand Planning • Describe the principles of Supply Planning • List the key steps of Supply Planning • Explain the financial implications of an S&OP plan • Describe the principles of the S&OP Meeting • List the key steps of the S&OP Meeting 01 of 18 Sales and Operations Planning
  • 27. Module Overview Module Overview Notes S&OP Concepts 01 of 18
  • 28. Monthly Process Monthly Process The S&OP begins as follows: 1. It starts with Unconstrained Demand Forecast. 2. Supply Review checks capacity against Demand. 3. If Supply Plan can support the Demand Forecast, then it becomes the Sales Plan. 4. If supply Plan cannot support the Demand Forecast, then ‘what if’ alternatives are developed as options to be considered. 5. Then in Pre-5&QP, issues will be identified that need to be discussed in the S&OP Meeting. 6. The monthly process cumulate in an S&OP Meeting, led by the General Manger, where past performance is reviewed and key decisions are made on issues raised. Notes 02 of 18 Sales and Operations Planning
  • 29. Importance Of Demand Forecast Accuracy Importance Of Demand Forecast Accuracy An accurate Demand Forecast is extremely critical to the Demand Planning process. It enables you to: • Understand volume gaps • Check assumptions • Stimulate strategy review • Meet the needs of the customer at a lower cost Notes S&OP Concepts 03 of 18
  • 30. Key Principles of Demand Planning Key Principles of Demand Planning Demand Planning is a key element of integrated MRPII work processes. Demand Planning develops a detailed bottom-up forecast for all products sold to our customers. This forecast is typically developed by country, and may be developed for individual key customers or groups of customers. The objective is to develop a 50/50 (unbiased) forecast over an 18 to 24 month planning horizon. The approach is to create a statistical forecast, based on historical shipments that can be modified, as needed, to reflect market intelligence and changing business conditions. Measuring the accuracy of volume forecasts and forecast assumptions provides a basis for understanding current capability and developing improvement plans. Following are the key principles of Demand Planning: • Timely • Unbiased (50/50) • Reasonable • Known Accuracy • Includes Key Plans & Assumptions • Details & Aggregations are Consistent 04 of 18 Sales and Operations Planning
  • 31. Key Principles of Demand Planning Key Principles of Demand Planning Timely Unbiased (50/50) Reasonable Known Accuracy Notes S&OP Concepts 04 of 18
  • 32. Key Steps Of Demand Planning Key Steps Of Demand Planning Following are the key steps involved in Demand Planning: Collecting and reviewing relevant input Documenting key assumptions that were used to build the forecast 06 of 18 Sales and Operations Planning
  • 33. Key Steps Of Demand Planning Key Steps Of Demand Planning Preparing monthly summaries of the forecast for the meetings Communicating demand forecast and assumptions Notes S&OP Concepts 06 of 18
  • 34. Key Principles Of Supply Planning Key Principles Of Supply Planning The Supply Planning process balances the supply capability (resources—people, capacity, materials, time, money) to the demand over time. It covers all possible external and internal constraints and includes all demands on the available capacity of a particular supply chain. Following are the key principles of Supply Planning: • The Product Supply/Supply chain team owns the Supply Planning process • The Supply Plan is updated every month • The capacity is assessed against the unconstrained demand • The assumptions are documented with the supply recommendation and alternatives • The demonstrated capacity is utilized for planning • Scorecards are used to track and manage results according to the Operating Strategy The capacity is assessed against the unconstrained demand Notes S&OP Concepts 08 of 18
  • 35. Category Supply Planning Process Category Supply Planning Process At the category level, Supply Planning is defined by the following processes: • Linking demand planning, initiative planning, RCCP (Rough cut capacity Planning) and S&OP with site integrated planning • insuring that product supply can meet the demand in the sales plan • Focusing on defining total demand, performing cc (Rough cut capacity Planning), and developing family-level execution plans Notes 09 of 18 Sales and Operations Planning
  • 36. Key Steps Of Supply Planning Key Steps Of Supply Planning Following are the key steps involved in Supply Planning: S&OP deck Notes S&OP Concepts 10 of 18
  • 37. Factors That Determine financial Implications Factors That Determine financial Implications The Finance team owns the financial impact of a plan. Following are the principles that influence the financial implications of an S&OP plan: • Developing the Profit Outlook using the S&OP numbers • Measuring performance by profit forecast accuracy • Aligning Demand & Supply assumptions • Evaluating the financial impact of operating plans • Evaluating the financial impact of what-ifs and issue sheets Developing the Profit Outlook using the S&OP numbers Aligned Demand & Supply assumptions Notes S&OP Concepts 12 of 18
  • 38. Key Steps of Supply Planning Key Steps of Supply Planning Following are the key steps that are used to determine the financial implications of an S&OP plan: Notes 13 of 18 Sales and Operations Planning
  • 39. Principles of S&OP Meeting Principles of S&OP Meeting • Primary vehicle for checking that the latest operational plan is in-line with the business plan • Owned and led by the General Manager • Attendance is mandatory for Core Category Leadership • Focus on planning / influencing the future (3-18 month timeframe) • Review the S&OP scorecard and check performance versus the tolerances, which are defined in the category operating strategy • Check and approve the Sales Production & Inventory Plans (in graphical format) • Sales Production & Inventory Plans are approved by the General Manager • Identify and resolve issues • Evaluate ‘What-ifs’ • Document decisions and authorize the single Sales & Supply Plan • A formal change process is used Core Category Leadership A formal change process is used Notes S&OP Concepts 14 of 18
  • 40. Key Steps of S&OP Meeting Key Steps of S&OP Meeting Following are the key steps of the S&OP Meeting: • A monthly meeting with a formal agenda • GM and key leadership team members review recommended Demand and Supply Plans • Significant issues related to production policies, inventory policies, and change process guidelines are discussed and resolved • Policies and guidelines are defined as needed • Demand and/or Supply gaps are discussed, along with alternatives • Decisions are finalized to provide a single authorized Sales Plan and Supply Plan • Plans are communicated by the Demand Manager and Supply Manager Notes 15 of 18 Sales and Operations Planning
  • 41. S&OP Top Sheets S&OP Top Sheets S&OP top sheet should include historical SPP, PPP, and IPP performance (at the family / product aggregation levels defined in the Category Operating Strategy), as well as future-oriented Sales Production & Inventory plans. The following graph shows how we can evaluate risks by monitoring past SPP: 17 of 18 Sales and Operations Planning
  • 42. S&OP Top Sheets S&OP Top Sheets Sales Plan Performance Sales Plan Notes S&OP Concepts 17 of 18
  • 43. Summary Summary In this module, you learned about: • The steps in the monthly S&OP process • The principles of Demand Planning • The principles of Supply Planning • The key steps of Supply Planning • The financial implications of an S&QP plan • The principles of the S&OP Meeting • The key steps of the S&OP Meeting • Top sheet requirements for SPI’s Notes 18 of 18 Sales and Operations Planning
  • 44. Module Overview Module Overview Though the S&OP process is driven largely by Demand, Supply, and Sales dynamics, it has far-reaching effects across many spheres within the organization. This module will explain how S&OP injects fresh perspectives and links with various initiatives. It will also show how negative behavior can mar the best S&OP design. By the end of this module, you will be able to: • Describe how various initiatives link with S&OP • Describe how S&OP impacts business results • Identify the types of negative behavior that can inhibit the S&OP process • Describe the characteristics of Zones and Tolerances • List the key measures of S&OP Notes Dynamics of S&OP 01 of 17
  • 45. Initiatives Linkages Initiatives Linkages The S&OP process has significant links with initiatives across almost every function in the organization The initiative linkages include: • Ensuring that the product launch process is appropriately utilized and linked to S&OP • Embracing S&OP as the key tool for delivering an integrated Category Business Plan with all initiatives included Ensuring that the product launch process is appropriately utilized and linked to S&OP Notes 02 of 17 Sales and Operations Planning
  • 46. Business Impact Business Impact Effective S&OP can yield the following results: Strategic Planning Organizational Capacity Dynamics of S&OP 03 of 17
  • 47. Business Impact Business Impact Improved Data TDC Improved Cash Flow 03 of 17 Sales and Operations Planning
  • 48. Business Impact Business Impact Improved Customer Service Notes Dynamics of S&OP 03 of 17
  • 49. Negative Behaviors Negative Behaviors The success of the S&OP process mainly hinges on the discipline and dedication of the team members, A careless, haphazard approach can inhibit the process and dilute its effectiveness. The following behaviors can have a negative influence on the S&OP process: • Insufficient pre-work / Partial implication analyses • Avoidance of real issues • Token decision making • Inappropriate issues • Poor attendance. delegation of responsibility Insufficient pre-work/Partial implication analyses Avoidance of real issues Dynamics of S&OP 05 of 17
  • 50. Negative Behaviors Negative Behaviors Token decision making Inappropriate issues Poor attendance-delegation of responsibility Notes 05 of 17 Sales and Operations Planning
  • 51. Time Zones Time Zones In the S&OP process, the future can be divided into two major segments: • The future that is already planned, which is typically a short term of 0-3 months. • The future that we can plan, which is typically a longer term of 4-18 months. The further out we go, the easier and less expensive it is to make changes Changing the plan is either impossible or is expensive The future that is already planned, which is typically a short term of 0-3 months The future that we can plan, which is typically a longer term of 4-18 months Notes 07 of 17 Sales and Operations Planning
  • 52. Types of Time Zones Types of Time Zones An important part of the S&OP process is the recognition of various time zones where decisions, particularly those concerning changes, must be made or where increased stability can have an impact on bottom line results. The Time Zones are classified into three categories: • Fixed Zone • Firm Zone • Planning Zone The further out we go, the easier and less expensive it is to make changes Changing the plan is either impossible or is expensive Fixed Zone Firm Zone Dynamics of S&OP 08 of 17
  • 53. Types of Time Zones Types of Time Zones Planning Zone Notes 08 of 17 Sales and Operations Planning
  • 54. Planning Zones Planning Zones Based on the S&OP process, the future is divided into two Planning Zones: • The Stable Zone This refers to the near future, the part that is already planned months earlier. • The Open or Flexible Zone This refers to the distant future, the part that is well within our control and which still needs to be planned. The dividing line between these two zones is driven by the adjusted Cumulative Lead Time (CIT) for the supply chain The Cumulative Lead Time is the period of time between receiving a new customer order (or seeing a forecast change, which is outside agreed tolerances), to when we actually deliver the product to the distribution center. The Stable Zone Dynamics of S&OP 09 of 17
  • 55. Planning Zones Planning Zones The Open or Flexible Zone Notes 09 of 17 Sales and Operations Planning
  • 56. How Zones Influence Behavior How Zones Influence Behavior An analysis of the Planning Zones should drive the following behavior in the S&OP process: • Reduce the CLT by becoming more responsive and flexible. • Clearly define the CIT. understand what drives it, and document it in the operating strategy. • Have an excellent plan for the months beyond the CIT. • Consider that the months within the CIT have already been planned; therefore, focus should be on executing with excellence within defined tolerances. For example, we may decide to install capability to handle a 25% volume upside. • Measure performance and execute plans on the basis of Sales Plan Performance (SPP), Production Plan Performance (PPP), and Inventory Plan Performance (IPP). Notes Dynamics of S&OP 10 of 17
  • 57. How Zones Influence Behavior How Zones Influence Behavior Notes 10 of 17 Sales and Operations Planning
  • 58. Tolerance Tolerance There are two kinds of tolerances: • Executional Tolerances • Planning Tolerances Executional Tolerances Planning Tolerances Notes 12 of 17 Sales and Operations Planning
  • 59. Key principles of Setting Tolerances Key principles of Setting Tolerances The following principles need to be followed while setting tolerances: • Ensure tolerances are meaningful to the business and will drive business results. • Get started early to learn well ahead of time. • Use tolerances and measures to drive improvement. • Document tolerances in the operating strategy and align them across the entire organization. Ensure tolerances are meaningful to the business and will drive business results Get started early to learn well ahead of time Use tolerances and measures to drive improvement Dynamics of S&OP 13 of 17
  • 60. Key principles of Setting Tolerances Key principles of Setting Tolerances Document tolerances in the operating strategy and align them across the entire organization. Notes 13 of 17 Sales and Operations Planning
  • 61. Key Measures Key Measures The Sales Production & Inventory Plan performance measures should be in alignment with the operating policy. These measures can indicate when the operating policy needs to be altered and also helps to funnel efforts towards improvement of the forecast process or Supply Plan execution. The measures are intended to reflect the actual versus planned performance for the three key outputs of the S&OP process (i.e., Sales Plan, Production Plan, and Inventory Plan) at the Family level. Additional measures at the detail level (SKU) in the “downstream” planning processes (i.e., distribution requirements planning, master production scheduling, material requirements planning, etc.) are aligned to the family level. • Sales Plan Performance • Production Plan Performance • Inventory Plan Performance These results should reflect a 50/50 number (no bias) within tolerance by family on a consistent monthly basis. Sales Plan Performance Production Plan Performance 15 of 17 Sales and Operations Planning
  • 62. Key Measures Key Measures Inventory Plan Performance Notes Dynamics of S&OP 15 of 17
  • 63. Summary Summary In this module, you learned: • How initiatives link to the S&OP process •How S&OP impacts business results •How negative behavior can inhibit the S&OP process • The Zones and their impact on S&OP • The Tolerances and their principles • The key measures of S&OP Notes Dynamics of S&OP 17 of 17
  • 64. Module Overview Module Overview The S&OP process is developed with distinctive inputs from various functions across the organization. Therefore, it is extremely critical that people across all functions understand what is expected of them to build a successful S&OP. This module describes the significance of each function in the S&OP process. It explains how people at various levels influence business objectives and how seamless teamwork is the key to an effective S&OP. By the end of this module, you will be able to: • Describe the role of the General Manager in the S&OP process • Describe the different roles involved in the S&OP process Notes 01 of 13 Sales and Operations Planning
  • 65. S&OP Team S&OP Team All P&G employees need to work successfully to optimize resources in support of the business objectives. The S&OP team draws skills from various functions such as Demand Planning, Supply Planning. Finance and so on. Given below is an example of a typical S&OP team Roger Morgan General Manager Ross Goya Rita Burton Customer Business Demand Development Director Manager Sam Hawn Kirk Bates Product Supply Supply Planner Director Darryl James Mark Reid Finance Manager Product Development Amanda Bleethe Director Marketing Director Notes Key Roles in S&OP 02 of 13
  • 66. General Manager General Manager Roger: Hi, I am Roger Morgan, a business unit General Manager at P&G. and one of the key members of the S&OP team The S&OP is of crucial importance to my business, as it not only enables me to set direction and make decisions, but also helps me emphasize the importance of the S&OP process to the Leadership Team. As General Manager, Roger has the following responsibilities in the S&OP process: • Embrace S&OP as a key tool for delivering Category Profit commitment • Integrate S&OP for the total business Of course, its dedicated teamwork that finally leads to a successful S&OP process. In the following screens, I will introduce the other team members and explain how they influence the S&OP process. Embrace S&OP as a key tool for delivering Category Profit commitment Notes 03 of 13 Sales and Operations Planning
  • 67. Demand Manager Demand Manager As the Demand Manager, Rita Burton, shares details of the volume forecast, including key assumptions, trends, and bias. She knows that the Demand Forecast is vulnerable to bias from data factors She checks for such bias and highlights it in the S&OP Meeting. Rita also validates that initiatives, including pipeline fill and cannibalization are included at the project establishment phase of the initiative. The Demand Manager ensures that the following Demand Planning elements of the S&OP CBA (Current Best Approach) are met: • Documenting assumptions • Evaluating forecast accuracy • Providing forecast ranges for ‘what-if planning • Driving bias out of the forecast • Ensuring that meeting materials are available prior to the meeting • Documenting and communicating demand-related decisions Documenting Assumptions Driving bias out of the forecast Notes Key Roles in S&OP 04 of 13
  • 68. Supply Planner Supply Planner Meet Kirk Bates, our Supply Planner who collects information on demand sources spread across various geographies. He ensures that there is supply capability to meet the demand or identifies gaps. The Supply Planner ensures that the following supply planning elements of the S&OP CBA are followed: • Documenting Supply Planning assumptions, capacity constraints arid Product Supply decision time fences • Bringing together all Demand sources • Providing 18-month Supply Plans and reviewing the usage of SPI document • Providing what if’ simulation analysis of options and contingency plans • Ensuring opportunities or issues are brought to the S&OP meeting with recommendations and alternatives • Documenting and communicating supply-related decisions Notes 05 of 13 Sales and Operations Planning
  • 69. Finance Manager Finance Manager Financial assessments are critical to the S&OP process. Meet our Finance Manager, Darryl James, who ensures that all S&OP plans are utilized in profit forecast / analysis. Following are the key responsibilities of the Finance Manager in the S&OP process: • Ensure that financial assessments of the demand and supply plans are used in S&OP decisions • Ensure that the demand and supply plans from S&OP are used in Financial / Profit Analyses and outlook preparation for GM and Leadership Team Ensure that financial assessments of the demand and supply plans are used in S&OP decisions Ensure that the demand and supply plans from S&OP are used in Financial / Profit Analyses and outlook preparation for GM and Leadership Team Notes Key Roles in S&OP 06 of 13
  • 70. Marketing Director Marketing Director Now you know about the responsibilities of the GM, Demand Manager. Supply Planner, and Finance Manager. So let’s move on to the other functions. Meet our Marketing Director, Amanda Bleethe. As Marketing Director, she influences the S&OP process in the following ways: • Embraces S&OP as a key tool for delivering the category’s Marketing OGSM (Objectives, Goals, Strategies, and Management) • Provides pertinent competitive perspective • Provides appropriate input on market share, market size, and category growth plans Notes Key Roles in S&OP 08 of 13
  • 71. Product Development Director Product Development Director As the Product Development Director, Mark Reid, offers critical inputs to the S&OP process. Following are the responsibilities of the Product Development Director in the S&OP process: • Ensure that the product launch process is appropriately utilized and linked to S&OP • Embrace S&OP as the key tool for delivering an integrated category Business Plan with all initiatives included Ensure that the product launch process is appropriately utilized and linked to S&OP Notes 09 of 13 Sales and Operations Planning
  • 72. Product Supply Director Product Supply Director Here’s Sam Hawn, our Product Supply Director, who ensures that a rigorous supply planning process is implemented in the S&OP. Following are the specific responsibilities of the Product Supply Director; • Ensure that the supply planning process used in support of S&OP and MRPII is thorough • Embrace S&OP as a key tool for delivering the category’s Product Supply OGSM (Objectives, Goals, Strategies, and Management) • Ensures that the forecast is a realistic outlook on what is expected in the future Ensure that the supply planning process used in support of S&OP and MRPII is thorough Embrace S&OP as a key tool for delivering the category’s Product Supply OGSM (Objectives, Goals, Strategies, and Management) Key Roles in S&OP 10 of 13
  • 73. Product Supply Director Product Supply Director Ensures that the forecast is a realistic outlook on what is expected in the future Notes 10 of 13 Sales and Operations Planning
  • 74. Customer Business Development (CBD) Director Customer Business Development (CBD) Director Meet Ross Goya, our Customer Business Development (CBD) Director Following are the key responsibilities of Customer Business Development (CBD) team in the S&OP process • Ensure that the detailed sales activity delivers the CBD plan • Embrace S&OP as a key too’ for delivering the business units OGSM (Objectives, Goals, Strategies, and Management) Ensure that the detailed sales activity delivers the CBD plan Notes Key Roles in S&OP 11 of 13
  • 75. Summary Summary The S&OP process is a complex tapestry of many processes. Each function, therefore, plays a significant role in the eventual success of S&OP. In this module, you learned about the: • Role of the General Manager in the S&OP process • Other roles invoked in the S&OP process Notes Key Roles in S&OP 13 of 13
  • 76. Course Summary Course Summary This course explained the Sales & Operations Planning (S&OP) process. Before you move on to the Assessment, here is a quick recap of the main points covered in the course. Sales & Operations Planning is an ongoing monthly process that links several distinct processes that produces a single company business plan. This is based on vital inputs from the Demand Planning and Supply Planning processes. The inputs gathered from these processes are identified while the plans are weighed against the resulting financial implications. The process culminates in the S&OP Meeting where decisions are made and resources confirmed or re-allocated. Though the S&OP process is driven largely by Demand, Supply, and Sales dynamics, it has far-reaching effects across many spheres within the organization. It is developed with distinctive inputs from various functions across the organization. The success of the S&OP process mainly hinges on the discipline and dedication of the team members, Therefore, it is extremely critical that people across all functions understand what is expected of them to build a successful S&OP. Notes 01 of 01 Sales and Operations Planning