Many businesses create their annual budget and fixed annual operating plans for the year, and then just walk away. If that’s your approach, how do you deal with changes in supply availability, demand, operating costs, or other internal and external conditions? Are you confident that your operations plans line up with your growth strategy?
As a management strategy, S&OP is designed to bridge the gap between strategic and tactical planning processes. Its focus is to bring all of your departmental business plans together into a single cohesive, integrated master plan – one that reconciles demand and supply.
Benefits: What you can do
With a unified S&OP, you can continuously refine and synchronise all of your manufacturing and distribution activity, and respond more strategically to market or internal changes. It bridges that gap between the annual budget process and Material Requirements Planning (MRP).
For example, if you experience a seasonal sales spike, you may have capacity issues, so you need to preload inventories. The S&OP process would determine when and how much to order.
Sales and operations planning improves the integration of your strategies, capabilities and goals across sales, marketing, operations, research and development, finance and other departments. S&OP processes enable companies to:
- Improve cross-functional planning
- Ensure that operational plans meet strategy objectives
- Resolve demand vs. supply tradeoffs
- Evaluate resource constraints to validate production plans
- Update production, financial and sales plans on a continuous basis
- Enhance team collaboration
Leveraging ERP for effective S&OP
Successful sales and operations planning is often harder than it sounds, in part due to inconsistencies in forecast accuracy, service-level calculations and variable definitions of success. Most organisations use spreadsheets as part of their S&OP process, which have limitations.
By implementing Enterprise Resource Planning (ERP) software, such as SYSPRO ERP, you can enable effective S&OP from start to finish. The right ERP solution enables you to:
- Leverage real-time information from a variety of sources to provide stakeholders with a holistic view of the business
- Improve supply chain management, with
- Report on key financial metrics such as gross margin and cash flow
- Enable simulation of numerous “what-if” scenarios to support demand planning
- Deliver complex analytical tools and dashboards to support in-depth, on-demand analysis and reporting
- Support secure data exchange across different systems as needed
- Use alerts to prompt exception handling and potential change management