3/3/2014

Sales and Operations Planning | APICS Exam Warehouse

Supply Chain Management Project Management

Sales and Operations Planning

Sales and Operations Planning: Brings all sales, marketing, development, manufacturing, sourcing, and financial plans together into one set of plans. Held at least once every month Reviewed at an aggregate (product family) level Statement of companys plans for the near to intermediate future Balances supply and demand Focuses on Product Volume Information in both financial numbers and product units What is Sales and Operations Planning Process and its relationship within Master Planning of Resources? S&OP relies on demand info from forecasting and demand management functions Determines supply available based on capacity to meet the demand Produces a Production Plan The Production Plan then drives the Master Scheduling Process Volume Mix in S&OP process

Product Volume Birds Eye View How much to produce? Selling and Production Rates Product Families Sales and Operation Planning

Product Mix Detailed Which Products to produce? Customer Orders Individual Products Master Scheduling

S&OP Process Steps 1. Run Sales Forecast Reports a. Update last months data: inventory, actual sales, production, etc b. Gather information for marketing and sales: forecast reports, sales analysis data, revised worksheets for field salespeople c. Share information to appropriate people 2. Demand Planning Phase
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Sales and Operations Planning | APICS Exam Warehouse

a. Information from step one reviewed by marketing/sales b. Update current forecast or create new one c. Forecast includes: product families product life-cycle phase changes 3. Supply Planning Phase a. Operations review step 2 information b. Review existing operations, which ones need to be changed based on new info? c. If Changes: Validate revised operations plans against available resources using resource planning 4. Pre-Sales and Operations Plan Meeting a. Objectives: Make decisions that will balance supply and demand Resolve differences/problems; single set of recommendations brought to executive S&OP meeting Identify areas of no agreement, propose alternative plans Create scenarios of alternative plans b. Key Players: Decision-Makers from Sales Marketing Product Development Finance Operations The Product Manager c. Family-By-Family review of demand and supply plans d. Check constraints e. Establish priorities f. Focus on actual, not planned demand/supply g. Review inventory backlog plans h. Output: Updated financial plan Recommended action by product family New production introduction plans Recommendations for changes in resources Alternative scenarios for areas not agreed on plus analysis Recommended changes to demand and supply strategies Agenda for the executive S&OP meeting 5. Executive S&OP Meeting a. Objectives Make decisions on each product family,
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Sales and Operations Planning | APICS Exam Warehouse

b. Output Meeting minutes Decisions mad Summary Action plan with due dates and responsibilities Authorized game plan Production plan for each product family Outputs from S&OP: Production Plan: manufactured product families Purchase Plan: purchased production families Inventory Plan: make-to-stock product families Backlog Plan: make-to-order production families

accept recommendations, or determine alternative action Authorize procurement and production changes Compare production plan to business plan, make adjustments if needed Make decisions for non-agreed-on areas Review indicators where performance < planned

Difference between Sales and Operations Planning and Production Plan S&OP is the process in which the production plan is created. The production plan is an output of the S&OP process. Participant/Decision-makers in S&OP Process Engineering: Product development/product changes Human Resources: Workforce availability Operations: Production Constraints General Manager: Business Plan Materials: Supplier Constraints Finance: Capital and Financing Information Marketing: Product Demand Sales: Customer Interface/Concerns Inputs and Outputs of S&OP Inputs oStatement of projected Demand Marketing oMarket Intelligence Marketing oActual Sales and booked orders Sales oManagement Targets Management oIndication of capabilities and capacities Manufacturing or Purchasing
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Sales and Operations Planning | APICS Exam Warehouse

oEstimate of Financial resources required Finance oNew Product information Product Development, Engineering oNew Process information Process Development, Engineering oWorkforce availability Human Resources Outputs oSales plan Marketing and Sales oProduction Plan Manufacturing oInventory Plan Materials Management oBacklog Plan Customer Service oFinancial Plan Finance oProduct and Process Development Plan Engineering oWorkforce Plan Human Resources

Production Strategies in S&OP 1. Level a. As evenly spread over time as possible b. Finished goods inventories buffer for demand variation 2. Chase a. Stable inventory level while varying production to meet demand b. Produce only what you sell c. Just in Time (JIT) d. No Sales = No production 3. Combination/Hybrid a. Combination between Level and chase b. Example: Ice cream producer; 1 shift per day in slow season, 2 shifts during busy season Backlog vs. Backorder Backlog oAll customer orders received but not shipped yet (open orders) oIncludes backorders Backorder oUnfulfilled customer order or commitment oInventory or capacity was insufficient to meet demand oDoes not include all back log Backlog Target Levels Maximum/minimum backlog Planned order times Maximum customer waiting time What is a Resource?
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Sales and Operations Planning | APICS Exam Warehouse

Anything that adds value to a product or service in its creation, production, or service. A constraint could be skilled engineers to design a product, not just labor or machine hours.

Resource Planning The way in which the production plan is evaluated for feasibility Long range capacity Requires top management approval Based on production plan Steps in Resource Planning Process 1. Determine bills of potential constraining resources (bottlenecks, short RM supply, lead times) 2. Determine unit of measure 3. Determine planned capacity 4. Calculate load on each resources (load comes from production plan) 5. Compare load to planned capacity 6. Revise production plan or adjust capacity where necessary Planned changes in resources Facility Startup/Shutdown Adding/removing tooling and equipment maintenance Acquisitions Hiring, layoff, shift changes Education and training Facility issues handled by maintenance Outsourcing/subcontracting

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Sales and Operations Planning | APICS Exam Warehouse

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