Sales and Operations Planning

The Sales and Operations Planning process in a manufacturing company is necessary to address the key manufacturing business strategy questions needed to remain competitive. It should be a forum for discussion and timely resolution of any obstacles, barriers, and problems preventing the achievement of the com­pany goals and objectives. However, many companies are strug­gling with their Sales and Operations Planning process. It is misunderstood, informal, and unsuccessful, but companies aren't certain what steps to take to make their SOP process better. Many companies feel they already do Sales and Operations Planning. Often, they are doing Sales and Operations Planning, but the key question is how productively is it being done? Let's start with a look at what, unfortunately, is a common Sales and Operations Planning process:

It's October 15 and into the conference room for the monthly meeting comes the Manufacturing entourage that includes the Vice President of Manufacturing, Material Manager, Plant Man­ager, two Superintendents, Production Control Manager, Pur­chasing Manager, and Quality Assurance Manager. They all line up on one side of the massive conference room table. About ten minutes later, in comes the Sales/Marketing entourage: Vice President of Sales/Marketing, Sales Manager, Marketing Man­ager, two Regional Managers, Distribution Manager, and Cus­tomer Service Manager.

The first thirty minutes of the meeting is spent throwing insults back and forth about the accuracy of the forecast and Production's ability to make a quality product on time. The two groups question each other's parental status and use some of the foulest language outside a barroom. Once they have vented their emotions, they then settle into the key topic: What will be the forecast for the month of October—the month that is half over! Again, charges and counter charges fly about the validity of the forecast.

Finally, they agree on a forecast for October. Everyone appears satisfied. The Sales/Marketing entourage gets up and leaves the meeting. But, the Manufacturing group does not. They hang back and wait for the Sales/Marketing group to clear the room. After the Sales/Marketing group is gone, the Vice President of Manu­facturing closes the door and announces, "You know we can't trust their forecast. Let's cut it down by an additional 15%."This is welcomed by loud cheers from everyone in the Manufacturing group.

Unbelievable! This is a Partnership meeting between Sales/Mar­keting and Manufacturing? This is an effective and productive Sales and Operations Planning meeting! I was shocked by the following:

• Lack of trust.

• Changing the forecast number without the other party know­ing.

• Lack of communication on any of the major manufacturing business issues besides the forecast.

• No review of any performance measurements.

• No root cause analysis of problems on any manufacturing business management processes that are out of control & not producing the desired results.

• No agreement on a realistic shipping plan to meet the customer needs on time, and no proactionary production plan that drives material and capacity needs.

--- To be continued ---

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