Sales/Operations Planning Process
The existence of a Master Scheduling process is not a guarantee that
operations planning and execution will be successful. Top Management
needs a way to communicate the Master Planning management processes
to Master Scheduling. When making this linkage, the
Sales/Opera≠tions Plan and Review Process seems to work well for
most companies. Sales/Operations Planning brings together all the
product line and product family Demand and Produc≠tion Plans. This
gives a total picture of the business and provides a platform for
Top Management to coordinate their strategies. The outputs from the
process should be the tactical directives that initiate the detail
actions for daily operations.
The Sales/Operations Plan report represents the culmina≠tion of Top
Management planning and coordination. The effective implementation
of strategic initiatives should involve a monthly review processes
that bring Finance, Marketing/Sales and Operations together. The
Sales/ Operations Plan provides a structure and important
infor≠mation for these discussions. Top Management should first
review the performance of the immediate past period
and then focus on the current and future periods. During
the review the key Business Plan information, like current period
sales revenue projections, can be compared with planned shipments.
Forecast changes from the Demand Planning process, by product line
and families, are lined up with current Production Plans.
Significant swings in plans can be seen by evaluating the absolute
changes in units or dollars and keying in on the percentages. For a
Make-To-Stock company the changes in the planned inventory are an
important consideration and reflect the ability of the business to
stay on track in reaching its goals. The Sales/ Operations Plan
shows the significant differences and signal Top Management that
some adjustment may be needed.
One of the key principles that tie the Master Schedule to the
Production plan is that the sum of all the Master Production
Schedules for a product line must equal the Production Plan for that
product line. Similarly, the sum of the product line Production
Plans must equal the total of the Production of the product family
in the Sales/ Operations Plan. This check and balance applies to
De≠mand Planning where the sum of the item forecasts in the Master
Production Schedules equals the product line fore≠casts in the
Production Plan, etc. The result is that Top Management can review
the complete Master Plan with everyone using the same information.
The results of their decision are show in quantitative terms.
As an example, Sales/Marketing could be considering a product
promotion and take advantage of an opportunity to gain market share.
Simultaneously, Operations may be concerned about increasing
inventory levels and is consid≠ering a cutback in production
activity. For the product lines involved the Sales/Operations plan
should show a significant change in forecasts and production
schedules accompanied by a dramatic inventory reduction. This is a
clear signal that the tactical implementation of their strategies
are out of line. Even when all the Master Plans are coordinated, Top
Management can monitor progressó like the inventory buildup for a
seasonal demand peak.
Master Planning is a Top Management process that begins with
Business Planning and takes the mission, strategies and objectives
of the enterprise and converts them into executable plans through
Demand Planning and Produc≠tion Planning. The Sales/Operations
Planning process synchronizes these plans and guides the preparation
of the Master Schedule. Then the Master Schedule becomes an
important way to carry out business strategies within daily
operations. The results can be a significant improvement in the
quality of the material and capacity plans. Top Management can
better see and understand how the daily operations tie back to their
strategic objectives. Effective Sales/Operations Planning is top
management's responsi≠bility and their best means of carrying out
business strat≠egies through the Master Schedule.