S OP process

Introduce S OP processes based on a strong demand-driven forecasting process that focuses on data and analytics to sense demand signals, and to shape and to translate demand to create a more accurate demand response. 

Over time, organizations realize that supply excellence needs to be defined by trade-offs in source, make, and deliver. The answer lies in aligning these functions to actualize the business strategy. This realization typically happens in stage 3 of the market-driven value chain maturity model (see Figure 1.3) stimulating the development of S OP processes. 

For manufacturers and retailers, supply chain is business. The S OP process aligns the organization to the business strategy. However, as shown in Figure 5.7, one of the issues is clarity of business strategy and the understanding of supply chain processes by the executive teams. 

Each stage of S OP process maturity has a different process goal. More than 75 percent of companies lack goal clarity, which undermines S OP success. Frequently, cross-functional teams form with a different. 

The most mature companies in the seiection of S OP processes can easily answer five questions ... 

Figure 5.10 Benefits Received from S OP Processes (Stage 2 Maturity)...

Each step in advancement of the S OP process delivers incremental, positive business results. In the Great Recession, companies with strong market-driven S OP processes sensed and aligned to the economic impacts five times faster than laggard companies. They were also able to obtain better year-over-year results in days of working capital. 

What Does a Good S OP Process Look Like ... 

A good S OP process is a meeting that executives cannot wait to attend. It is balanced and aligned to action. It is seen as the best way to maximize opportunity and mitigate risk. 

The right time horizon. The number one issue for most companies in setting up an S OP process is determining the right time horizon. It should not be confused as a short-term process. It is not a process of days or weeks. Instead, the S OP process is a form of tactical planning. It balances the needs of demand and... 

The time horizon in the S OP process is the time horizon for planning. If it is too short, companies lose the opportunity to impact important decisions. If it is too long, then companies can spend a lot of time on data that has little meaning. If it does... 

The role of the forecast. The forecast model changes throughout the stages of the S OP process, ft becomes more disciplined, granular, and market driven. As the organization matures, the organization deals more easily with uncertainty, ft comes to realize that it is not the number in the forecast, but the probability of the number that matters. 

Planning skills and capabilities. What-if functionality in predictive anaiytics is evolving, and it is a critical skill set for an effective S OP process. In a recent survey of 80 supply chain executives, when asked, "Has the need for what-if analysis increased in importance in 2010 " more than 60 percent of the respondents said yes. When asked, "Do you have what you need in what-if anaiysis " the answer from the group was mixed 45 percent of the respondents were just begiiming to use what-if anaiysis and 42 percent said that there was a significant gap in what was availabie in the market with only 13 percent stating that they have what they need to perform their jobs today. 

SfrOP playbooks. Base the S OP plan on the predicted level of variability. Ninety percent of companies with strong S OP processes believe that it improves agility. Focus less on precise numbers and more on understanding how the variability of supply and demand impacts costs, customer service, quality, and inventory. 

S OP is an integral part of the Supply Chain Management. A given supply chain will not work well if its various members do not have good volume plans in the first place, and if they are slow to react to the inevitable changes in volume. In companies without S OP process, there is firequently a discoimection between the strategic plans and the detailed plans and schedules. In other words, the plans developed and authorized by senior management are not coimected to the plans and schedules that drive day-to-day activities on the plant floor. 

The firamework in Fig. 4.9 clearly shows the importance of the S OP process, as it links the strategic and business plans together with the detailed planning process at the shop floor level. 

Fig. 4.10 Author s monthly Sales and Operations Planning process 4.3.2.2 Detailed S OP Process...

Lapide (2004) proposed a list of dozen factors that can help to implement an effective S OP process that maintains exceptional supply chain operational performance over time. The factors are listed below and are detailed in the reference provided ... 

Based on Wallace (2004), the implementation of S OP process usually results in the following benefits ... 

Several companies, from different industries and business segments in Brazil, had already started implementation of S OP process and concepts, as described by ILOS institute (BLOS Institute 2009) in Fig. 4.12. 

Companies that implemented S OP process achieved significant business and operational results, as listed below ... 

There is a formal monthly Sales Operations Planning (S OP) process that covers (1) Data gathering, (2) Unconstraint statistical forecast, (3) Demand Plaiming, (4) S OP analysis, (5) Pre-S OP meeting, (6) Executive S OP meeting. 

Intermediate-term roles and responsibilities, often defined as monthly, quarterly, or yearly, involve production planning and customer fulfillment policies. This could include the S OP process described earlier in this chapter. Another option is operating cost reduction — supply chain level This implies that the supply chain manager will undertake or participate... 

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