Sales and operations planning
Sales and operations planning is a centralised approach to managing all of the core business activities that form the entire planning and execution process for the organisation. It is an opportunity to review the actual versus plan for all functional areas from Sales, Finance, Inventory, Production and Supply Chain. The aim is to work on one set of numbers for the entire business.
Depending on the size of your organisation, the sales and operations planning meetings can be conducted monthly and weekly. The monthly team will focus on reviewing all performance areas of the business at a company, business unit to category level while the weekly meetings concentrate on operational aspects of the business as a SKU level. Following is a representation of the review areas by function:
- Forecast accuracy at company level, department, category or class.
- A review of all new launch plans to identify which were successful, on time, delayed and which needed further support.
- A review of promotional plans to determine their success rate or if further support is required.
- Marketing point of sale, collateral to support launch plans, store openings, timing, delays etc.
- Convert lost sales or under performing sales to days cover to better understand the impact on inventory investment.
- Vendor performance to determine quality of supply, shipment delays, industrial action etc.
- Measure vendors historical performance to better understand areas of deficiency.
- Measure vendor cycle times and lead times for each consignment air or sea.
- Convert lost or late deliveries into lost sales to understand the financial impact.
- Evaluate production plan versus actual production to determine real effectiveness and efficiency.
- Production bottlenecks, delays due to equipment failure and remediation plans.
- Industrial disputes, planned or unplanned that impacted production.
- Lost days due to injury, LTI's.
- Over production impact on inventory holding costs translated to days.
- Service level performance reviewed by customer or region.
- Warehouse labour cost against plan.
- Warehouse pick productivity against planned target.
- External assembly provider supply.
- Inventory policy review at company level, department, category or class of actual versus plan.
- Review of inventory metrics, days cover, stock in transit.
- Value of Inventory in quarantine or hold pending release.
- Inventory write off, theft, aged inventory, obsolescence.
- Value of inventory at cost above or below plan against inventory policy settings.
The weekly meetings are primarily focussed on the operational performance of warehousing, manufacturing and supply. Changes are regularly made to supply plans due to the dynamic nature of daily issues caused by late deliveries, resources availability, equipment issues and lost time due to poor productivity.
The key take out is that an organisation must have a fully integrated supply planning process from top down. Their ERP, WMS and CRM systems must be integrated to provide real time data and reports for decision making. As we have seen, even though it is a structured process with regular meetings each month and week, stakeholders are bound to actions and timeframes that will ensure more accurate outcomes are achieved.
Feel free to contact our office for advice or to discuss any specific project requirements.