Models for Sales and Operations Planning

A PLANNING PROGRESSION HAS BEEN UNDERWAY FOR SOME TIME 

Unfortunately, MRP does not specify the capability of internal resources to accomplish the plan in the specified time period. It also caused much confusion as it provided help, because most business plans lacked the element of achievability. With typical MRP systems, there was a disconnect between what people driven to show increasing sales thought would happen and what people who were charged with having the machines and people ready to meet expected demand thought would actually occur. 

According to the thinking at the time, S OP was to represent a single, integrated plan created and monitored frequently, and revised based on actual operating conditions and evidence of shifts in market and customer demand. The actual schedules sent forward, or amended in midstream, would be based on a timely and accurate evaluation of available data. With the schedules better linked to real conditions and connected tightly to business objectives, performance to plan would be more likely to occur than the typical wild fluctuations encountered before S OP. 

The supply chain Level 2 planning and scheduling weaknesses that were to be addressed with this tool included  

To begin this processing, those involved must understand that S OP is to be driven by what is happening in the market and with key customers. Customer demand should be the ingredient that drives the manufacturing 

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In this section, it will be performed a literature review for each one of the four categories of the Demand management - Statistical Forecast, Sales and Operations Planning (S OP), Collaborative Plaiming and Forecasting Replenishment (CPFR) and Vendor managed Inventory (VMI). This review allowed identify the DDSC characteristics for each category which was used to develop the five level maturity model. 

In analogy to the demand side, procurement contracts are fixed by quantity and price with the objective to ensure a basis volume of raw materials. Spot procurement supports company s flexibility requirements and the company can decide the spot procurement quantity with certain flexibility around the offered quantity. Price levels for contracts and spot business differ and are volatile in each period. Typically, companies operate with few key strategic suppliers for a respective product or raw material. Therefore, price-quantity models like in sales planning are less applicable. More often is the case that specifically commodity-type raw materials are procured on many-to-many exchanges, which is out of the scope in our case as described in section 3.2.6. If products are supplied by internal business units, transfer prices are applied following the contract procurement principles. 

Many pharmaceutical companies generate an early commercial assessment of an NCE for planning and strategy development, and traditional forecasts may estimate the number of pahenfs, volume of prescripfions, or fhe resulfing level of sales for a parhcular new compound in each year after its launch. These projections may not be realistic in the current market environment, however, and d5mamic modeling provides a much more operational way to generate such evaluations. 

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