For a number of years now, consultants have
been prescribing regular Sales and Operations Planning (SOP)
meetings as an effective way for management to bring together the
separate, often warring factions of Sales and Manufacturing to
agree on a common course of action—the Sales and Operations
Plan. The primary purpose of this meeting is to sanction aggregate
production plans in support of demand, to get the manufacturing
company's left hand and right hand working together on the same
However, in today's competitive, capacity and
material-constrained manufacturing environments, there are many
possible aggregate plans. How can SOP meeting participants quickly
evaluate alternate plans? How can they generate feasible variants
of these plans? And how can they ultimately agree upon the best
plan to put into action?
Despite the importance of these meetings,
participants routinely rely on preformatted reports, Rough Cut
Capacity Planning, spreadsheets, and scratch pads to support the
decision-making process. The fact is that without responsive,
interactive Demand Management and Finite Capacity-based MPS
systems to support these meetings, it is likely that the loudest
voice will prevail, not the best plan.
The practical alternative to stacks of paper
and shouting matches is a set of flexible, responsive systems on
notebook computers that allow SOP participants to prepare for and
work through these crucial meetings, using up-to-date planning
data and techniques.
SOP Process Review
Numerous books and articles have been written
detailing the why and how-to of Sales and Operations
Planning meetings. By now, there is general agreement on who
should attend, how the agenda should be set, even on how the
meeting should be led or coached. Unfortunately, there has been
relatively little discussion of the tool set required to support
these meetings—even though the absence of such tools in standard
Sales Order and MRPII systems is often noted.
If we deliberately look at SOP from a tools
perspective, the following is clear. The meetings occur regularly—at
least monthly, typically not daily. There are several participants
including management from Sales and Marketing, Manufacturing
(Production), Finance, and other departments such as
Engineering. The CEO or General Manager is present to facilitate
and arbitrate. The participants come prepared to discuss recent
performance against plan, to evaluate and change plans based on
the latest business conditions.
The SOP meeting typically begins with a review
of recent performance against plan for each functional area
represented. At minimum, actual customer order bookings are
compared with the demand forecast, actual production is compared
with the production plan and actual inventory levels are
compared with planned levels.
The meeting focus then shifts to the future.
Based on the latest demand forecast and any pertinent information
production capacity or business strategies, the
SOP participants may suggest changes to the current plan. One or
more alternate plans are proposed.
Alternate plans are evaluated and compared on
the basis of their feasibility and the benefits they deliver. In
the end, the participants agree either to continue with the
current plan or to adopt an alternative. Ideally, before they
leave the room, each functional area is confident that it can
support the new plan of record and committed to do so.
Let's look now at the two most important steps in the SOP
and the types of data and tools required to support them.
To be Continued
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