Effective sales and operations planning, or S&OP, must strive to have a common focus, which can be difficult to achieve without a process to guide the way.
S&OP in manufacturing environments provides a structure for a culture of open communication, a common language for that communication and measurements to assure optimal results. With a clearly defined strategy, S&OP can drive significant performance improvements through better coordination between commercial and operations activities.
The key is building and establishing dynamic processes that encompass goals across marketing, sales and operations. Processes should break down barriers between commercial and operational functions of a company. From development of new capacity planning tools, to new metrics to drive accountability, transforming a broken system can lead to shorter lead times, reduced working capital, better efficiencies and improved customer satisfaction.
What are some of the key steps to assure successful execution?
- Create shared goals for all areas with a strong commitment from executive management, especially commercial and operational leaders, including the personnel resources to implement.
- Verify data accuracy to assure the capacity planning tools, scheduling systems, production standards and costing methods are aligned and mirror each other.
- Establish a common language throughout the organization to assist in universal understanding of key principles: on time performance, scheduling vs planning, production cycles, inventory targets, etc.
- Provide a forum for ongoing communication to review regular activities and metrics to demonstrate to all parts of the organization how performance is changing.
- Review rewards systems to align them with the shared goals in a realistic manner.
Effective sales and operations planning is essential for all operational aspects of mid-size, large and global manufacturing, as well as driving growth.
– Dave Hornaday, Executive On Demand