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SEEING THE BIG PICTURE

Then, out of necessity, along came Sales & Operations Planning (S&OP), originally called Production Planning. It required the grouping of a company's products into homogenous families, so that trends and patterns of the marketplace could be seen in aggregate. This then en­abled rough-cut resources requirements to be calculated and the placement of appropriate resources. Today, S&OP has matured into a very disciplined practice, in many cases making the long-term maintenance of the MPS unnecessary and non-value-adding. S&OP is de­fined as:

A process that provides management the ability to strategically direct its businesses to achieve com­petitive advantage on a continuous basis by inte­grating customer-focused marketing plans for new and existing products with the management of the supply chain.

 

In short, S&OP sets the stage so that the MPS can effectively and efficiently schedule to the needs of the marketplace. Today, we see this balancing process in three dimensions.

 

As can be seen, the closer the planning is to the cur­rent day, the more detail that needs to be dealt with. The further into the future, the less detail that is necessary. Each of these practices overlap but does not duplicate each other. They are very different in their objective, but very connected.

INTEGRATING THE PRACTICES

 

As you can see, in the very short term, factory schedul­ing takes place. This practice sequences production planned by the MPS, taking into account every detail, including packaging requirements, final configuration, changeover issues, and the like. Someone working on the factory floor typically does this function.

 

The master production schedule drives the proper ordering of parts and materials, assuring detailed ca­pacity is proper and adequate. It takes input from the Sales & Operations Planning process and breaks it down into the detail necessary to drive both detailed material and capacity planning. T

 

As can be seen, the relationship between MPS and the S&OP is iterative. That is, it is circular. This whole process typically begins with S&OP, for a horizon of 18 to 24 months. As the aggregate supply and demand plans approach the CTF (typically one to three months), they are broken down into sufficient end-item detail to plan parts, materials, and capacities.

 

Outside the CTF, the MPS does nor necessarily reflect the total of the S&OP production plan. It well might con­tain schedules for long lead time customer orders, or long lead time materials, it is nor comprehensive. It is impor­tant to understand that S&OP is nor simply the summa­tion of the MPS. It is projections and plans that represent aggregate trends, not getting lost in the detail.

Continued

Part 1  Part 2   Part 3


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