Sales and Operation Planning (S&OP) is a key business tool which enables effective communication links for top management to coordinate the various planning activities across a business and create an overall business plan.
This is why it’s vital to have a robust process in place to make it work. Here’s how you can get started...
- Get buy-in from your team
- Define your KPIs
- Make sure all stakeholders are still onboard
- Ensure your supply planning process is up to scratch
- Implement technology to increase visibility across the business
Get buy-in from your team
This is a key starting point when creating a robust S&OP process. The first step is to ensure your managers are all onboard - which means ensuring they not only completely understand what the process involves but more importantly, why it’s happening and its importance to the business. They should also be involved in the decision-making process.
Then, you need to get buy-in from the rest of your team. This is why getting your managers onboard with your vision is so vital - they can communicate this to the rest of your team having bought into it themselves.
Remember: the success of an S&OP process doesn’t just depend on the tools and technology you adopt. It’s also underpinned by the people working together to execute this (working together is the key phrase here).
Define your KPIs
You’ll need to have well-defined KPIs if you’re to track the impact of any new process/system. Work with your team (not just your managers; think about who else might be affected by a new S&OP process) to come up with some KPIs. Ensure your key team members have a say (and are heard!!!!) which will also help you to secure their buy-in.
A few KPIs to think about are:
- On Time in Full (OTIF) - customer delivery success
- Out of Stock (OOS) - both actual and predicted
- Warehouse capacity and utilisation
- Forecast accuracy
Make sure all stakeholders are still onboard
Once you’ve agreed on your KPIs, it’s time to review them periodically. A monthly review process works great for many organisations.
As well as ensuring you’re hitting your targets, monthly reviews also check that your stakeholders are still invested in the S&OP process. For instance, monthly reports and figures show that the new process is working so serves as validation for stakeholders that it was the right approach to take.
Ensure your supply planning process is up to scratch
This part of the process ensures that your products are available when needed and they’re manufactured at the lowest cost and highest quality. When your supply planning teams hold their review meetings, they should be looking for answers to these questions:
- How much inventory do we hold?
- How should we be responding to demand?
- What are our priorities for production?
- Should we expand capacity?
- How should we be allocating products if there’s a shortage?
Answers to questions like the above help your supply planning teams stay ahead of market forecasts and keep your S&OP team informed.
Implement technology to increase visibility across the business
One core area of an S&OP process is its people. The other areas are your processes and technology. These need to be combined. The process comes first (the people operate within that) and then you need to find the right technology to support the agreed process.
Technology increases visibility across your business, giving you access to valuable data that you need to analyse to make further process changes and can provide that data almost real-time. Here are some examples:
- High stock fill rates or low stock-out rates
- Good inventory turns and high sell-throughs
Introducing new products
Market trends and consumer demands means that new product introduction is a must. But for an efficient product development pipeline, you need visibility of these changing trends and demands, and how your teams are working.
Technology helps by removing team silos (discussed in more detail below), giving you access to predictive analytics on customer behaviour and allowing you to keep an eye on emerging trends. This means you can reduce your reliance on spreadsheets and enhance your sales forecasting so you’re better prepared for demand spikes caused by unforeseeable situations.
Collaborating when forecasting and planning
Marketing, sales, supply chain, finance - these are just a few of the teams involved in the whole forecasting and planning process and yet, they often work in silos. For true forecast accuracy, however, your teams need to be collaborating and sharing information.
Technology consolidates your business data into one system which removes siloed walls and increases visibility. For example, an ERP and CRM system bring data (such as sales, marketing, customer and market trend figures) into one location, making it easier for your teams to access.
It’s also easier for them to keep these figures up-to-date (no need to enter in two different locations) so other teams can access real time figures to create accurate reports.
S&OP for the food industry: The role of industry-specific technology
When it comes to business operations, we all want our people, tools and equipment to be aligned and run in smooth harmony. The reality, however, can be very different with the various planning activities with each department often not coordinated and the people thinking and operating in relative isolation.
These differences often come to light when comes to demand planning, with each department trying to lead the way resulting in a disjointed plan which is not owned resulting in potential chaos. This is part of the reason why digitalisation is so important.
Technology consolidates your vast amount of data, giving you visibility of all the elements that could affect demand. This makes demand planning a simpler and more agile function. Understanding your customer needs, effectively managing inventory levels, and accurate forecasting will help you optimise cash flow. This results in more visibility into your supply chain process.
While implementing technology like an ERP system is one step in the right direction, an industry-specific solution can take you even further. Discover the precise features and benefits a food industry-specific solution could give to your business below.