11. Sales and Operations Planning

[SOUND] Welcome back to our lesson on sales and operations planning. Upon completion of this lesson, learners should be able to describe the role of product and customer portfolio management and discuss the role of sales and operations planning.
In the previous lesson, we learned about alignment of business planning across the various elements of an organization. In this lesson, we focus more attention on the linkages between sales and operations. Sales and marketing functions are responsible for developing and managing the organization’s trade channels, and defining the product and brand’s strategies. However, the sales and marketing strategies must be aligned with the capabilities and strategies of the supply chain function. And must also support the organization’s revenue and profit plans.
The set of products, services, channels and customers that a company manages, and serves can be viewed as portfolios. For large multibrand companies with hundreds or thousands of products, portfolio management can be extremely challenging.
An example of a company with a large portfolio would be Proctor and Gamble. Which distributes hundreds of products through numerous channels. Each of these products has distinct pricing, marketing and distribution decisions associated with it.
Leading companies recognize the importance of formally reviewing portfolios and quantifying the impact of specific pricing, distribution, and marketing plans. Companies that don’t utilize portfolio management techniques may find that they have to many products or to many customer to effectively produce and or service. Leading to sub optimal profit performance. So portfolio management is the process of rigorously and continually reviewing products, service, and customer offerings to determine the best fit between customer needs, company profit goals, and supply chain capabilities.
One technique that is beneficial in analyzing and managing portfolios is Pareto analysis. In Pareto analysis, a company analyzes the unit throughput, revenue, inventory, investment, and profitability of products and customers. By creating graphs of the portfolio performance, companies generally find that they may have a number of products that are producing very little revenue and profit.
For example, this graph shows that 500 of the 1,600 products produce no profit.
While integrated business planning is typically focused on strategic planning. Sales and Operations Planning is an on going process focused on a more tactical at operational level. The objective of Sales and Operations Planning is to arrive at a business gain plan, to help manage and allocate, critical resources to meet the needs of the customer at the least cost to do so.
Sales and Operations Planning is often called S&OP.
And some companies incorporate the word inventory in the description, calling it Sales Operations and Inventory Planning. As a key goal of the process, is balancing sales activities, productions activities, and on-hand inventories.
S&OP is very much a process that involves human interaction. While forecasting and production implanting systems may provide inputs to the process. S&OP is cross-functional, face to face process, where conflicts between demand and supply are ultimately resolved by a forum of senior managers. The focus of S&OP is typically to resolve issues in the medium term, looking out three months or so, to establish a plan which considers inventory on hand.. And production capabilities to determine whether and how aggregate demand plans can be met.
S&OP isn’t focused at detailed stock keeping unit level planning, rather, it is focused on evaluating the requirements at a product family level.
This diagram helps to further depict the various levels of corporate. And supply chain planning and where S&OP fits in over all scheme. Cross functional S&OP meetings are held throughout the year to resolve any conflicts between functional plans. With the goal being that all departments had a common understanding of what products will be made available to meet customer demand in coming months. The individual functions participating in the meetings come prepared with projections, information on environmental factors that may impact demand and supply, and have the materials prepared in a manner that is easily understood by all parties. Skilled facilitator’s lead the process of reviewing demand requirements, and the ability of the supply chain to meet the projections.
In this lesson, we learn that portfolio management is about determining the best mix of customers to serve, and products to provide to maximize the potential for the organization to meet its strategic goals. While considering the needs of customers, and the capabilities of the organization. S&OP is the process with which we bring together all the plans of the business. Customers, sales, marketing, development, manufacturing, sourcing, and financial into one integrated set of plans. Thank you and we’ll see you on the next lesson. [SOUND]

Jim Rohn Sứ mệnh khởi nghiệp