It’s astonishing how much attention has been paid to S&OP (sales and operations planning) in logistics magazines and on websites over the past, say, two years. It’s as if this were the one planning level that everything revolves around. Of course, it’s an important planning function, but so are the other levels and functions. So why all this attention? Perhaps it’s because it’s nice and high-level, strategic – something to do with VPs, C-level executives and senior management – and it’s always nice to identify with that as an author or reader.
And what do we know now, after those 1,001 posts about S&OP? That it’s really very important. That you have to do it. That it’s an agreement between production and sales. That there’s very expensive and sophisticated software available, which you can use to generate a plan. Or no, wait – it wasn’t actually about automated planning, but about consultation. It has to be an agreement. The software is merely there to support the process.
Fine, imagine the following: it's Monday morning, 9 o'clock, and you need to go create an S&OP, in a spreadsheet. Where to start? How do you define a product structure? On one side it has to be recognisable for sales (the S side), on the other side it has to be planable (the O side). Do we make 1 product definition that we both forecast and plan, or do we translate from the sales to a planning hierarchy, which we then translate back? How is the result of S&OP passed on to the underlying planning levels, and what is then fed back to 'above'?
In short, setting up an S&OP process and planning can only be done in relation to the other planning functions in an organisation, especially demand management (Demand Management), order planning (Master Production Scheduling), inventory management and procurement. These surrounding functions make demands on the S&OP process, provide input to it, and use the result. Hence, I do not understand the one-sided focus on S&OP: setting up a working planning structure can only be done by looking at all parts.
Vincent Wiers - Expert Planning & Scheduling
