This document discusses strengthening sales and operations planning (S&OP) processes. It describes S&OP as a consensus planning process that balances demand and supply while aligning operational, financial, and strategic planning. The document advocates adopting a closed-loop "plan-do-check-act" approach using scenario analysis, process playbooks, demand shaping, and data management to continuously monitor and respond to plan deviations. This helps companies improve supply chain resilience through scenario simulations and predefined responses to issues stored in a knowledge base.

1. S&OP –Strengthen the Processes to
reach another level of excellence
Satish Sandhir
27-28 Jan 2011

2. 2AGENDA
 Introduction
 Sales & Operations Planning
 PDCA – to improve S&OP Process
 New Processes
 Scenario Analysis
 Demand Shaping
 Process playbooks
 Data Compilation

3. 3Introduction
 Satish Sandhir, CPIM
 20+ years experience in defense, shipbuilding, aviation industries
 14 years in setting up Supply Chain Systems for top Fortune
companies, Hi Tech, CPG, Industrials
 Presently Consultant at PepsiCo

4. 4APICS – definition of Executive S&OP
“It is a decision-making activity involving the
leader of the business, his or her staff, and a
number of middle managers and specialists.
Its mission is to balance demand and supply
at the aggregate level, to align operational
planning with financial planning, and to link
strategic planning with day to day sales and
operational activities”

5. 5Sales & Operations Planning
S&OP is the consensus Plan, based on the input from :
 Sales
 Operations
 Marketing
 Product Development
 Finance
 Logistics

6. 6Sales & Operations Planning
Sales
&
Marketing
Operations
Product
Design
Finance
Logistics
SALES & OPERATIONS PLANNING

7. 7Sales & Operations Planning
Sales & Operations Process is a challenging process
 Identifies issues of Sales, Demand, Competition
 Collect prior month Sales, Production and Period ending
Inventory Information. Calculate Inventory based on Supply and
Demand and compare it to the Actual and reconcile differences.
Also collect Sales Forecast and Inventory Plan Information.
Modify S&OP spreadsheet to reflect updated Actuals, Forecast
and Plans.
 Upgrade Performance Measures for each department.
 Analyze and identify Trends
 Review Assumptions ( Marketplace; Economic conditions,
competitive situation, company structure, IT systems
 Compare performance to goals
 Distribute and review meeting material.

8. 8Executive Sales & Operations Planning – Meeting
 S &OP decisions are taken at the highest level (VP’s) to come out
with a consensus Plan that Operations can implement and Sales
execute.
 Any deviations to the plan are clearly shown in the Financial
impact to the company.
 The complexities of the plan are so vigorous that a strong
Technology footprint is a pre-requisite to have a timely Plan that
has been diligently supported by the data.
 Any changes to the Plan are included in the monthly S& OP cycle
that takes place every month or Period.

9. 9OPEN LOOP
CREATE PLAN
EXECUTE PLAN

10. 10Open Loop
Plan is called open Loop as:
 There is no process to constantly measure the deviation to the
Plan.
 By the time action is taken, the SUPPLY and DEMAND situation
has changed.
 Too much latency built in the execution.

11. 11Variability of Demand & Supply
 Technology advances have made Customer the King, so the
variability of Demand has been increasing rapidly.
 Agile companies can not afford to be bowed down by such
changes.
 S& OP processes have been augmented by additional processes
that cater to the Plan deviations, immediately and react
accordingly. Many of these processes have been implemented
based on the renowned Quality Guru Dr. W. Edwards Deming.
 P-D-C-A is the mantra that is being recreated by these companies

12. 12PDCA – CLOSED LOOP
CREATE PLAN
MONITOR PLAN
EXECUTE PLANRESPOND
PLAN
ACT
DO
CHECK

13. 13Closed Loop - P-D-C-A
 Plan - based on Supply Demand match and Financial goals
 Do – implement the Plan using Sales and Operational resources
 Check – Monitor the Plan using processes that create Event
Notification based on Plan deviation
 Act – Use previously worked out process Playbooks to remediate
the plan deviations
 PDCA is called a closed loop. It Monitors the Performance of the
S&OP Plan and Respond based on various Simulations built by
the company.

14. 14Check & Act
 Check ( Monitoring) is done through the following processes:
 The Projected Plan is measured against the Actual. In case
the plan deviates from say by a few percentage points say
6%, an event warning occurs and S&OP co-coordinator is
requested to respond.
 ACT ( Action ) to bring back the impacted Plan to as close to
Numbers as possible
 Different Process Playbooks are used to correct the
deviations. These responses are based on Event, Root Cause
and Response.
 The response is worked out from the Root cause Analysis, in
advance. So a Resolution to the issue is applied to improve
Supply Chain resilience.

15. 15Additional Processes – to strengthen S&OP
Scenario Planning
Process Playbooks
Demand Shaping
Data Management

16. 16Scenario Analysis
 In this Planner run scenarios with different Demand and SUPPLY
profiles. They create WHAT IF scenarios depending on shortages
of Supply, alternate supply or/ Demand variability by region, or by
Product family and number of other situations.
 The impact of these Scenarios on Companies financials is noted. A
number of alternatives are evaluated and a PLAN is chosen.
 Based on optimistic, pessimistic scenarios for the demand and
Supply plans, one can consensually come out with a Plan that is
acceptable to all. Agile Companies are carrying out a number of
simulations. Based on these simulations responses are worked out
and kept in a Knowledge base.

17. 17Demand Shaping
 Demand Shaping provides a mechanism for introducing action
that change demand to match available Supply. Demand Shaping
can be used for
 price changes,
 promotions and
 incentives to buy different products when Supply is low.
 By running different Scenarios, Planners can evaluate the impact
of Demand Shaping on the company’s financials.

18. 18Process Playbook
 Many companies are doing simulations and have a knowledge
base of solutions for similar events. This makes for a well defined
response to ensure that Plan does not deviate. These responses
are called Process playbooks. The Process playbooks may be
applied for a trend such as negative direction or even for strategic
events such as natural disasters.
 Catalog of various unexpected events, and the responses would
make a quick response in a process playbook.

19. 19Process Playbook Example
Volume below
Plan
Selling Price
below Plan
REVENUE
LOW
ROOT CAUSE
Inventory below Plan
Market Volume below
Plan
Competitor Price
Drop
Ineffective Bundles
Expedite Supply
Reduce Inventory Levels
Match Competitor’s Price
Increase bundle value to
support for price raise
Change bundle contents
RESPONSE
EVENT

20. 20Data Management
 Critical data for decision making is held in different formats in
different systems. We need to:
 Integrate data and synchronize it, within various regions.
 Keep a database of competitors and own monitoring needs for
Event Management.
 Keep a record of Root Cause Analysis for different Events.
 Collaboration and Visibility of critical data between different
groups, particularly in global environments.

21. 21Q & A