Sales and Operations Planning Process Overview

S&OP Process Build an integrated, collaborative decision process that guides the execution of the Supply/Demand strategies for the entire business. To Update and Synchronize changes in the market and/or business strategy. This monthly process provides for and addresses: –Variances--Past months, current month, End of Year –Market conditions –New Products –Alternate Plans –Conflict Resolution –Contingency Plans –Business “buy-in”

S&OP Process Issues with Variability

Variability Issues and Buffers in a Make to Stock Environment Deliver MakeSource Order Insertion Point CustomerSupplier Market Demand Back Order Filter FG Filter Production Flexibility Filter Material Inventory Filter Order Cycle Time Forecast

Deliver MakeSource Order Insertion Point CustomerSupplier Market Demand Back Order Filter FG Filter Production Flexibility Filter Material Inventory Filter Production Plan tuning Variability Issues and Buffers in a Hybrid Environment Forecast Order Cycle Time

S&OP Process Variability in the Supply Chain 1 23 Frequency 1. It’s not normal 2. With this shape even the best point is only 50% accurate. 3. Must change the shape Plan

DEC S&OP Process Variability in the Supply Chain 1 23 Frequency 1. It’s more normal 2. With this shape 90% is possible. 3. Still has special causes Plan

S&OP Process Objective 1.Agree on upcoming demand/resource match that balances needs of business and customers. 2.Understand and fix the problems – continuous improvement of the S&OP process. 3.Review results of implementing plan and adjust. It is a collaborative process for making decisions.

What is the S&OP process?

Business Planning Sales Planning Production Planning Master Scheduling Detailed Planning & Execution Systems Forecasting & Demand Management Capacity Planning Basic S/D Planning Process No S&OP

Business Planning Sales & Operations Planning Sales Plan Master Scheduling Detailed Planning & Execution Systems Forecasting & Demand Management Capacity Planning Operations Plan Basic S/D Planning Process With S&OP

Basic S/D Planning Process and Interactions No S&OP Sales Marketing Distribution Operations Customer Plan Source Business Strategies Plan Deliver Plan Return Plan Sales Plan Market Plan Make Plan SC Deliver Commit Goods Order Forecast Account Information Demand Forecast Master SC Plan Sales Forecast Order Information Order Information Order Return

Sales Marketing Distribution Operations Customer Plan Source Business Strategies Plan Deliver Plan Return Plan Sales Plan Market Plan Make Plan SC Deliver Order Commit Goods Order Information Account Information Demand Forecast Master SC Plan Sales Forecast Order Information S&OP Team SOP1 Demand and Sales SOP2 Supply /Resource Order Information SOP3 Decision Meeting Return Basic S/D Planning Process and Interactions With S&OP Feedback

Strategic Planning Business Planning Master Scheduling Detailed Planning & Execution –Plant Scheduling –MRP –Supplier Scheduling Business Strategy Formulated Business Strategy Executed The Bottomless Pit of Good Intentions S&OP Bridge Caused by different time horizons (Qtr v. daily), misalignment of goals, functional silos, lack of information (visibility)

FEEDBACK OUTCOME Demand Plan to Resource # Detail Will include How Much, When and Where Supply Plan Alternatives that best satisfy the Demand Plan Plan selection or proposed Hybrid Input into the Process for Improvement KPI review OWNERS Sales VP Operations VP Business Unit Leaders mm,15,yy mm,12,yy mm,09,yy Demand & Sales Planning Supply/ Resource Planning S&OP Decision Meeting Production Schedule S&OP Process Strategic Business Objectives Market Segment Growth Pricing Inventory ABC Customer List Raw Material S&OP Process

Institutionalizing a Practice The Results 1- never or does not exist. 2 -sometimes, 3- frequently, 4- mostly, 5- always or definitely exists Process Performance Companies (Count) Ineffective or Misleading Institutionalized Effective

Total Company Business Unit Product Family Product Subfamily Model / Brand Package Size SKU (Resource #) SKU (Resource #) by Customer SKU (Resource #) by Customer by Location Increasing Level of Detail Decreasing Forecast Accuracy S&OP Sales Plan Operations Plan Master Schedule Execution Schedules Levels of Detail in Planning Delivery Schedules Orders Business Strategy Business Plan