Sales and Operations Planning overview An executive overview of the processes required for effective sales and operations planning

Jargon Warning If this document uses terms with which you are unfamiliar, you can look them up in the Jargon Buster or in the book Business Excellence.

A formal Sales and Operations Planning process normally consists of a series of meetings, finishing with a board level meeting at which key long term decisions are taken and the current progress against the Business Plan is reviewed.  The review has to cover at least 15 months so must be at a family level (dividing the product range into less than 20 families of products) and in monthly time periods.  A spreadsheet is often used to produce the sales and operations plan.

The four stages in the process are normally:

Demand Review - chaired by the Sales and Marketing Director, attended by Sales and Marketing Managers plus development engineers where relevant.
Supply Review - chaired by the Logistics Director, and attended by manufacturing and planning personnel
Partnership Meeting - bringing together the demand and supply reviews and often chaired by the Finance Director
Sales and Operations Planning Meeting - full review and commitment to the plan, chaired by the Managing Director

The key elements that are reviewed are :

Current plan for each product family
Performance Measures
Forecast Accuracy
New Product Introduction
Customer Service
Special Issues - e.g. :
      Capital Expenditure
      Additional Resources
      Reorganisation
Comparison against Business Plan.

The Sales and Operations Plan must be checked to ensure that there are sufficient of the critical resources (i.e. any resource that could limit the ability of the company to take on business) to support the Sales and Operations Plan.  A key component of Sales and Operations Planning is a common language.  If your sales forecast is financial, that is the value of sales, then production people have to translate this value into product in order to be able to tell whether there are sufficient critical resources to meet the forecast.  Companies sell product not money so it is more accurate to forecast in product quantity so that material and resources requirements can be more accurately forecast.  If sales people are used to thinking in terms of money it does take a while to get used to thinking in terms of product but, once the conversion is made, sales forecasting is easier, more accurate and more relevant.

To purchase an e-book on Sales and Operations planning for just £4.95 (about US$8 or €7), please go to sop_e_book.pro.htm.

Now please return to the ABCD checklist part 2

Phil Robinson www.bpic.co.uk