Sales and Operations Planning

Since the above business conditions are constantly changing, the manufacturing business strategy of the company may have to make significant changes to remain a competitive force. The need to handle change effectively brings up the following questions: How is this done? What is the format to address these critical business issues? Who should be involved? What are their roles and responsibilities? What type of information should be dis­cussed? In what time zone should the focus be?

The Sales and Operations Planning process provides the vehicle needed to address the key business strategy questions. It also provides for timely discussion and resolution of any obstacles, barriers, and problems preventing the Demand = Supply equation from being in balance. The SOP process provides visibility and focuses on the following:

• Out-of-balance capacity

• Excess inventory at all levels

• Long manufacturing, purchasing, and customer lead times

• Excessive costs in managing the business

• Poor product quality and excessive scrap & rework

• Non-value-adding activities

• Lack of flexibility

• Lack of productivity increases

• New product introduction that is too lengthy and too costly

• Lack of good on time customer performance

Once a formal SOP process is in place and functioning, the management team can work together to change the way the business is managed. They can focus on the root causes of the problems. Moving from an informal and reactionary way of managing to a proactionary and formal way of managing is the goal of the Sales and Operations Planning process. Instead of multiple plans all being developed in individual functional silos, the SOP process allows the management personnel from each silo to get together once a month and provide the required leadership to pull together and come to a consensus on a single company game plan. The single game plan is presented to executive management for their approval. This action sends an extremely positive sign to the rest of the people in the company that the executive group is serious about changing the way the company is being managed.

The SOP process does not reside solely in the executive's domain. Through their leadership efforts, executive management delegates accountability, responsibility, and authority to middle managers and other key people in the organization. This activity helps involve middle management and other key people in the organi­zation in the SOP process. These people are involved in helping develop detail plans in areas that are under their control, which helps ensure the company game plan is achievable and realistic. The people who helped set the plan now have ownership in the plan. They are motivated and enthused to make sure the plan is converted into actions and results. This is "People Empowerment & Involvement" at its best.

--- To be continued ---

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