Demand Planning / Sales & Operations Planning

Overview

Sales and Operations Planning is a systematic communication and decision making-process to:

Balance demand and supply on a mid-to-long term basis to manage mismatches
Create a consolidated, viable operating plan for the organization
Integrate strategic business and financial plans with operational plans
Develop a capability to track and control performance

The goal is to profitably meet customer demands, improve customer service (higher fill rates and shorter lead times), and maximize return on operating assets while achieving lower targeted inventories.  Soft benefits include forward visibility for early issue identification, organization cooperation and teamwork, data consistency and knowledge sharing.  

Practical applications include:

Align demand and supply; “build what we sell and sell what we build”
Diverse product lines and frequent new product introductions
Link company business and financial plan to operational plan
Develop a discipline process of a holistic view with forward visibility


Business Problem

Are you experiencing these business challenges?  Do these questions sound familiar?

Common Business Challenges

High forecast error/low forecast accuracy
Lack of ownership of the forecast and inventory levels; lack of consensus forecast
Excessive swings in inventory levels
Few performance metrics in the demand and supply process
Insufficient analytical tools/techniques to manage demand and inventory
Lack of process discipline and poor communication across departments and with customer and s suppliers
Business complexity; high number of SKUs sold across multiple divisions in many geographic regions
Inability to react quickly to rapid changes in the market with a diverse product line and frequent new product introductions
Gap between business and financial expectations of top management and operations management
Lost sales, canceled orders or consistent late deliveries
Limited use of technology; Manual process and data management using complex Excel spreadsheets, 
email and offline phone conversations
Poor capacity planning and utilization

Key Questions for Consideration

Should we invest in a Sales and Operations Planning software solution?  How should it improve our planning process effectiveness and efficiency?
What is our process for building a consensus forecast?  Is it reviewed and revised with operations managers?  Is the 
                forecast shared with customers and suppliers?
How can we identify potential demand and supply issues earlier vs. responding to “after the fact” challenges?
Why is there a disconnect between top management business and financial goals versus the operational forecast and 
                plan?
Does the demand forecast drive supply or supply plan drive demand forecast?  How are inventory levels effected?
Do we have a structured, disciplined monthly process to match demand and supply?
How do we track performance to plan?  Does the organization have the visibility to metrics and results to control 
                performance?  How do we maintain accountability?


Service Solution

Supply Chain Acuity’s Demand Planning/Sales and Operations Planning service helps our clients develop a structured, disciplined approach to planning and operating according to one game plan.  We evaluate the current forecasting and demand planning processes, as well as the manufacturing capacity planning processes, and suggest improvements as part of an integrated plan.  

Delivered Benefits and Desired Outcomes

Increased revenues , profitability and asset utilization; increased customer service levels, more stable production rates,
                reduced warehousing and transportation cost, appropriate supply of raw materials and inventory levels
Vertical and horizontal agreement on a single, integrated, plausible plan
Holistic view with forward visibility; linked business and financial expectations
Focus on volume and dollars across operational, financial and customer service metrics
Improved communication, clear decision making and accountability
Planning focus and efficiency following a disciplined process; improved forecast, prioritized product lines/aggregate 
                volumes, routine communication and knowledge sharing
Improved collaboration with customers and suppliers
Use of analytical and integrative technology resulting in analytical rigor, data consistency, and reliability