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Best Manufacturing Practices
Sales and Operations Planning
PART II.
Lean Manufacturing, Basics, Principles, Techniques
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After having witnessed and audited this so-called Sales and Operations Planning activity, I felt it was crucial to talk to the Vice President of Sales/Marketing, Jim, before the wrap-up meeting with the Executive group about the status of their company's SOP process and what should be done to enhance their SOP process. I spotted Jim, approached him, and tactfully started to point out that the agreed upon forecast number was reduced after his group left. Before I could complete my discussion, he interrupted me, held up his hand, and said: "I'll bet you're going to tell me the blankety-blank, $@#?!!, so & so's from manufacturing cut our forecast, aren't you?" Before I could answer, he said: "I'll even tell you the percentage they cut it by. They are on a 15% kick right nowthey cut it by 15%, right?" Again before I could answer, he smiled, put his arm around me and said: "No problem, we have 35% fat in our forecast number anyway" and walked away whistling. Sales and Operations Planning process? No way in this company! The challenge here is to figure out what multiplier the other group is using so you can divide by a larger number. What is missing in this company's so-called SOP process? Are some of the same things missing in your company's SOP process? There are many problems in this company. Let's see what could and should be done to turn around their so-called SOP activities and change them into a productive, proactionary, progressive, and functioning process that will help address the key business issues for this company. Where to start? It is important for this company to recognize that there is a basic and fundamental manufacturing equation that must be kept in balance. The simple manufacturing equation that every manufacturing company must balance is Demand = Supply. On the Demand side of the equation are the following variables: Forecast Customer orders Branch warehouse requirements Inventory buffers Interplant requirements New products Specials On the Supply side, the scarce resources are: Equipment Facilities People Dollars Time Suppliers The constant challenge for every manufacturing company is to keep this Demand = Supply manufacturing equation in balance and to minimize the variability on both sides of the equation. This isn't easy when the following is constantly changing: Customer wants and needs Technology Competition Marketplace
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