How Integrated Is Your Sales & Operations Planning Process?

May 30, 2023
  • operations
  • discrete manufacturing
  • retail
  • SAP

Operational day-to-day and S&OP processes need to be better integrated. Decisions taken at an executive S&OP meeting should have a direct impact on the production floor...

...There should be no broken connection between S&OP and the operational daily production planning and execution processes. 

S&OP processes are often conceived of as a standalone in organisations. It is true that in themselves they can be good practice. But the usual process cycle all too often slows down a business’ responses to market fluctuations and impedes their ability to stay competitive. 

The Usual S&OP Process Cycle

The S&OP cycle usually has a start and end process step that repeats itself over a monthly cycle. The process start is generally introduced with an upload of historical transactional data, followed by a well-organised demand-planning process. 

In some cases, a consensus demand flows into an S&OP supply cycle, where the focus is mainly on capacity and raw material planning. At the end of the supply cycle, there is a formal executive S&OP meeting where tactical decisions are taken. After this official meeting, a decision log is updated and a new monthly S&OP cycle starts.

The connection between the operational day-day to business and S&OP at the start of the monthly cycle is the upload of operational and historical data into the process. Generally, every week or month, the transactional data is refreshed to restart a new monthly S&OP cycle.


Steps Towards a Fully Integrated S&OP Process

An evolved S&OP (Sales and Operations Planning) process requires full integration through connecting operational, tactical, demand, and supply planning cycles, with a strong emphasis on accuracy and rapid responsiveness. 

While traditional monthly S&OP processes remain crucial for aligning stakeholders on tactical decisions, they are often seen as slow for addressing daily operational needs. 

The key to overcoming this problem is to implement smaller and more agile supply cycles, that allow for quicker response to market fluctuations and changes in both S&OP and operational processes.

In this approach, the S&OP process becomes the central driver of the entire business, seamlessly connecting the S&OP demand and supply processes with operational activities, whilst the shorter cycle follows a faster track, repeating itself on a weekly basis.

During their weekly meeting, your tactical supply planners and operational planners and schedulers should discuss and hand over an updated supply plan. In your operational and execution process, these supply plans will then be translated to daily and hourly scheduling plans.

Optimising Order Fulfillment and Supply Planning: The Role of S&OE and SAP IBP

In our daily operations, we deal with various types of orders: sales, purchase, and production/process orders. Sales and Operations Execution (S&OE) helps to drive order fulfillment and logistical execution. 

During our S&OP processes, we look at data differently. We analyse data at aggregated levels like product groups, customer segments, and regional or global scales, rather than examining individual orders. After S&OP, the planning cycle continues, with consensus demand integrated into operational processes. 

For organisations with a regional or global presence and complex supply networks involving warehouses or 3PLs, it's advisable to integrate 'IBP planned orders' for enhanced supply planning, including network and stock management. 

IBP, while not a scheduling tool (SAP S/4HANA ePPDS is recommended for scheduling), is valuable in S&OP for consolidating network demand, conducting time series-based capacity and raw material planning, and utilising S&OP operators (heuristic and optimizer) to optimize the supply plan. Additionally, IBP supports the use of time series planning wheels and campaign plans for proactive supply planning. 

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