Across industries, the sales & operation is a monthly planning process to integrate different cross-functional departments such as Sales, Marketing, Operations. The planning exercise is carried out to come up with a single coherent plan, which will ensure that all the different plans viz., Strategical, Tactical and Operational Plans are aligned with your Financial Plan, making it easy for key executives to take timely & informed decisions.
From Supply Chain perspective, it focuses on making Demand meet the Supply while making sure that the outcome is profitable.
For this blog let us consider a scenario wherein S&OP will help in integration of cross departments while ensuring the financial goals are synchronized as well.
S&OP typically involves the following 4 steps:
- Data collection and Product Review
- Demand Review
- Supply Review
- Pre-S&OP and Executive Meeting
For our scenario we will be looking at Demand Review & Supply Review and see how IBP as a tool will help planners to synchronize Demand & Supply Plan with Annual Operating Plan and Executive meeting.
The typical monthly S&OP process starts with Data Collection and Product Review, where you collect all the relevant information and do Product Analysis such as launch date for a new product, impact of the new product on other products from product family, and more.
Once you have come up with the Product Review, you must follow it up with Demand Review, which typically involves:
To see how different products are behaving in market?
To make sure that the product history doesn’t capture any Outlier or Promotional Data or to remove missing values as shown below:
To see how product might behave in future:
Accuracy and Bias Review:
It tells us how accurate our plan is or if it is biased or not?
As depicted in the figure below, the final forecast is copied to another key figure (consensus demand) and is then fed as an input to supply heuristics to see if there is any bottleneck by finding the DC to customer demand.
Once both Demand Review and Supply Review are done, then in the pre-executive meeting, all the key Driver Metrics and Alerts are evaluated.
To view or define the alerts you must go to Web UI as shown below and click on Define and Subscribe to Custom Alerts.
Under the Alert Tab, a list of alerts is populated. Review the ones related to your planning area.
In order to review it, go to Subscription Tab and see if the alert exists there or not. If existing there, click on it as shown below:
On clicking the alert, you will be directed to next screen providing a detailed view of the alert. Now click on the Excel Tab to view the file content.
And, as you can see, the Demand Planning Quantity is quite less compared to Annual Operating Plan Quantity, which will lead to loss of customer.
But in the meeting the sales department was confident about being able to sell more than 3,000 quantity for the month of June 2020 and hence added that to Combined Final Demand as shown below:
As you can see, just adding the Sales Data the Combined Final Demand changed. And, if we review the alerts related to Financial Planning, depicted in the figure below, you can see, there are Zero Alerts!
Now, you can copy Final Demand to Consensus Demand and re-run the supply heuristics to look for any new bottlenecks.
As in our scenario, the alerts were removed once the sales data was integrated. One can see that IBP helps a lot in collaborative planning, where not just Sales, but different departments are involved as well, viz., Marketing, Production, Product Development. It helps you to evaluate the impact of adding a new product on Annual Plans or the impact of adding Promotional Data on your overall Supply Chain.
Hence, IBP simplifies the work for planners by providing integration and visibility to your supply chain and execute planning in a more effective and agile manner.
As an SAP’s preferred partner, Krypt has successful SAP IBP implementations & solutions across industries. We offer following time-saving processes to expedite SAP IBP implementation and future-proof your business –
- Pre-configured solutions
- Process Mapping to carry out S&OP
- Pre-Built Planning View Templates to plan ― S&OP, Demand, Supply, Inventory, and Shelf Life
- Dashboard & Analytics View set up for demos
- How-To-Do S&OP videos & PowerPoint presentations
- What-If scenarios
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