global sales & operations planning; operations planning

WATCH YOUR BUSINESS COME INTO FOCUS WITH GLOBAL SALES & OPERATIONS PLANNING

Sales & Operations Planning (S&OP) is an integrated

management process through which the executive team

continually achieves focus and alignment between all the

functions of the organization.

The S&OP process regularly and routinely reviews

customer demand and supply resources

and “re-plans” quantitatively and qualitatively across an

agreed-upon rolling planning horizon (typically 18 to 24

months). The re-planning process occurs at least monthly.

Implemented correctly the process focuses on change from

the previously agreed-upon Sales & Operations Plan. The

process helps the management team understand how the

company achieved its current level of performance but is

primarily focused proactively on future actions and

anticipated results.

The output of the S&OP process is a consensus on one set

of operating numbers which the members of the executive

team hold themselves accountable to execute. The output

includes an updated sales plan, production plan, inventory,

customer lead time (backlog) plan, new product

development plan, strategic initiative plan, and financial

plan. Industry “best practices” are to conduct the S&OP

process with open and honest communications and an

agreement among the members of the management team

that they will each “do what they say they are going to do”.

The process is used by many companies to build and/or

strengthen the management team.

Managing a multi-billion dollar global business in today’s

competitive market is a tough challenge. So, you’re a new

executive in an organization that is growing at a 10x growth

rate and it didn’t take you long in the assessment to find out

that the organization is not aligned. So, I called Terry

Johnson, Senior Principal with Oliver Wight America’s to

assist. During the assessment he found no formal planning

and communication structure, poor visibility and fidelity,

lack of control resulting in high costs and diminishing

customer service. Getting everyone on the same sheet of

paper while the storm is raging is near impossible. S&OP

brings clarity and focus to an environment where chaos

lived before. Some people thrive in chaos and make

decisions based on experience and gut instinct. Instinctive

decision making is not good enough in today’s global

economy with competitor’s constantly improving their

offerings and capabilities. Having the right visibility, focus

and alignment across key players in the organization is

critical to making the right decisions.

SUPPORT & MEASURE THE BUSINESS PLAN |ENHANCE THE EXISTING PERFORMANCE OF A BUSINESS THROUGH INTEGRATED PLANNING

S&OP helps you determine whether your original financial expectations (budget), current sales plan, and

operations plans are in sync with each other through monthly reviews.

REALISTIC & ACHIEVABLE PLANS |FORMAL REVIEW AND SIGN OFF BY MANAGEMENT TO ENSURE ACCOUNTABILITY

Key players participate in formulating the new plans to ensure that all recommendations are supported.

MEASURE PERFORMANCE |MONTHLY ACHIEVEMENT OF THE BUSINESS PLAN TARGETS

The main purpose to bring the out-of-control situation to the surface so that an evaluation and recommendation

can be made and corrective action taken to resolve the business issue.

BUILD TEAMWORK |RESULTING IN A BETTER PERFORMING PLAN

The process not only provides a means of updating the operating plan to bring it into step with changes in

the customer base, it also instills a spirit of teamwork and a shared set of goals in achieving the company plan.

BALANCE SUPPLY AND DEMAND

INCREASE YOUR COMPANY’S VALUE AND MAXIMIZE SHAREHOLDER VALUE

The implementation of a standardized global sales

and operations process will uncover demand and

supply misalignment and out of balance conditions.

Most organizations continue to operate with a local

focus. A GLOCAL view where a global plan is agreed

upon and local implementation occurs best optimized

resources. S&OP gets everyone on the same page...

same definitions, standards, data views, and

decisions. Once demand and supply are in balance,

the next issue that will surface is that the most current

S&OP plan is not in sync with the business or

financial plan. At the last company I was with, “fire

fighters” were give hero status. These hero’s spent all

day chasing non-value added activities. This method

of management is not sustainable or effective. When

supply and demand are misaligned chaos ensues.

GLOBAL COMMERCIAL DEMAND REVIEW

NEW PRODUCT DEMAND REVIEW

STRATEGIC VALUE INITIATIVES

EXECUTIVE VISIBILITY

MAXIMIZE YOUR RETURN AND MINIMIZE YOUR RISK WITH IMPROVED DECISION MAKING

As a company implements the S&OP process, the

executive team will realize that this process provides

visibility and regular communications to enable them

to make the difficult choices required to balance

customer and financial decisions. It’s when financials

are coupled with supply and demand at the product

family level that you see the full picture of how

profitable your business is or not. It’s easy to make

decisions when you see the outcomes right in front of

you. An executive team committed to implementing

Class A S&OP will typically see significant

improvements in profitability. When your organization

is not in position to give you the information that you

need in a timely manner, poor decisions are made.

Frustration sets in and a lot of good people take the

blame. Change the game with GS&OP...

DEMAND & SUPPLY REVIEWS

INTEGRATED RECONCILIATION

MANAGEMENT BUSINESS REVIEWS

INTEGRATED BUSINESS MANAGEMENT

SYNCHRONIZE YOUR BUSINESS WITH GLOBAL SALES & OPERATIONS PLANNING

Terry Johnson, Senior Principal with Oliver Wight

America’s recommended their “Proven Path”

methodology and “Fast Track” approach. Terry guided

the team through audit and assessment, education,

design, implementation and follow up.

In my last company I sponsored the design and

implementation of GS&OP and implemented the

solution in sixty days with significant success. The

“Fast Track” approach coupled with executive focus

allowed the company to gain immediate visibility to key

issues quickly.

The final results of the Global S&OP implementation

were compelling. A thirty year view of global supply and

demand. Customer prioritization and segmentation.

Visibility of supply constraints and capacity on a

monthly basis. Global Production Optimization of load

across the entire network. One view, language, metrics

and standards to fairly evaluate decisions. Better

decisions based on facts and data and the S&OP

output drove the business plan. However, we had not

quite delivered our goal of full financial integration when

I left the company.

As a final note, Sales & Operations Planning is really a

disciplined communication and decision making

process. It is a logically simple but tremendously

powerful process that brings with it the benefits of

obtaining focus, alignment and engagement by the

members of a company’s management team.

JIM DIXON

INTEGRATED BUSINESS MANAGEMENT DECISIONS DRIVE THE EVOLUTION OF YOUR BUSINESS.