Sales & Operations Planning (S&OP) Basics and Why You Need S&OP
ฝัง
- เผยแพร่เมื่อ 25 มิ.ย. 2024
- What is Sales and Operations Planning (S&OP) and why do you need it?
Also know as IBP, Integrated Business Planning. At a recent seminar Steven Thacker explained.
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👇 TIMESTAMPS (in case you want to skip) 👇
0:00 Intro
0:48 What a good S&OP process needs
3:11 Sales & Operations Planning
3:42 S&OP Process Map
7:41 Q&A
8:25 Outro
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#S&OP #sales&operationsplanning #demandplanning
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What an amazing voice to teach! You can keep it confortable, soothing and at the same time engaging and easy to listen to. 👏
Glad you think so!
There can't be a better example to define s&op than this. Awesome
Glad it made sense
I am just getting into the “real world” of business and have been hired at a job as a sales and operation manager. Looks like this channel is a great place to gain perspective of this field! 😁
Welcome and I'm sure you'll do really well in your new job!
This is Pure Gold. no matter how many videos I see on this channel, there is always something new to learn.
I guess we'd better keep going then!
Make the complex simple to understand and entertaining. Steven does all 3 very very well done!!!!! Thanks for the education.
Glad you enjoyed it!
Thank you for this amazing video 🙏
Glad you found it of value...
Good video. In effect S&OP is a joined at the hip approach to operations.
Nice description!
the best!
Thanks
Dear Friends, I understand that demand plan is the supply chain department's forecast based on sales history and market sensitivity, and it is used to counter the sale forecast from sales department, right ?.
It's becoming more proactive and forward looking though. (Predictive Forecasting) Just looking at historical sales is no longer enough.
@@supplychainsecrets , I will look what other sources?
Standard operating procedures
Yes SOP = Standard Operating Procedures. S&OP = Sales and Operations Planning. So S&OP should be an SOP !
I have many questions:
1/ IBP= S&OP + Financial Plan, right?
2/ The finance department creates a financial plan to reconcile what important information (KPIs) with the demand plan and supply plan ?, example: gross profit and net profit.
3/ In what cases, the demand plan must be adjusted according to the financial plan or supply plan ?.
4/ Inventory policy is agreed and set up by the sale + finance departments?
Lots of questions ! I might do another video with Steven to cover these. 🙂
@@supplychainsecrets , Could you answer question 1 and 2?.
Steven as very kind to provide this long answer, as he was stuck on a flight. Don't expect this again 🙂
1. IBP stands for Integrated Business Planning. The expectation is that an Integrated Business Plan is created across the entire business, involving all of the key departments of a business, including finance. In that respect, it is a truly integrated process with all players being accountable for contributing to, and delivering against, the agreed and signed off plan.
Traditionally, S &OP or Sales and Operations Planning was restricted to, as the name implies, balancing a sales forecast with an operations plan. In a lot of cases, the plan was balanced based on units forecast and units to be supplied but was not very often financialised. Although this was always the intention.
Integrated Business Planning in that sense, is a more advanced iteration of S&OP.
2. The finance department does not create a financial plan to reconcile against important KPIs with the demand plan and supply plan. In the meeting sequence leading up to the creation of an Executive Review Deck for review by the managing director or head of the business and his executive team, the finance role involves firstly, vetting and validating that all of the data and costings that are created as a result of the production of a 13-month rolling plan for the business are accurate and can be relied on. Additionally, they have a specific role to review the plan prior to presentation to the executive team in its entirety. In other words, the combination of the demand plan and the supply plan, aggregated together, is reviewed by finance prior to submission to the exec team, as part of the executive review meeting.
The finance lens on the deck involves understanding the implications of the forecast in terms of gaps to budget, at both the gross profit and net profit level, also inventory implications and whether the forecast inventory levels are consistent with the budget and determining whether the plan is sustainable from a working capital point of view, and whether there are sufficient funds to support the plan.
3. The demand plan is not adjusted according to the financial plan or supply plan. An inherent in under-pinning key foundational platform of a proper IBP process is that the demand plan is unconstrained. It is not constrained or limited by financial concerns or constraints, nor supply constraints. This is a fundamental and essential component of IBP working effectively. The only time that the demand plan is constrained is after it is reviewed by the supply team and the financial team, but in its first iteration, it is completely unconstrained.
4. The inventory policy is not agreed and set up by the sales plus finance departments. The inventory policy is created by the supply side of the business. In other words, supply planners will have an input and the policy is then vetted prior to approval by finance to ensure that it is consistent with the financial goals and objectives of the business. In particular, finance need to understand whether the policy guidelines will deliver the inventory budget which is created annually as part of the annual budgeting process. Sales are not involved nor concerned with the inventory policy. Sales should not be talking about nor concerned about inventory levels or lead times or supplier delivery performance. Their obligation is to create as accurate a forecast as possible and then to sell to the forecast. The only transfer between sales and the inventory policy is via the customer service policy which contains, amongst many other components, one KPI which is inventory availability targets for A, B and C class customers. This is used as an input into the inventory policy and use to calculate appropriate inventory levels to support the sales plan.
i sleep in minute 3. Great saleman. 8 min talking nothing about nothing xD
Well at least if you didn't want to learn about Sales and Operations Planning, it helped you get to sleep 🙂
P
I'm not sure what P means LOL