Sales and Operations Planning – is it a missing link in your business???

Benefits of Sales and Operations Planning

  • Increased customer service levels
  • Improved profitability
  • Reduced time to market with new products
  • More products to increase revenue
  • Lower inventories and obsolescence
  • Reduced lead times
  • Quicker responsiveness
  • Top-down management control
  • Predictable operating performance for shareholders

The Sales and Operations Planning process is the primary tool by which there is a systematic review of the business, out of which plans are established. It brings Sales, Marketing, Manufacturing and Finance together to agree on the volume of products to be produced over the next sales horizon. The process should be incorporated into the business calendar to coincide with the key activities of, strategic reviews, budget preparation, quarterly forecasting, monthly performance reviews and MRP/ERP timing.

Alignment from S&OP Process goes beyond just the meeting, the entire company is aligned to a given direction. This is one of the huge benefits from the S&OP Process. The Master Scheduler is implementing the decisions made by the S&OP team. The planners and buyers are aligning to the Master Scheduler. Capacity is being increased and decreased in accordance to the plan. Changes to the financial plan are made in advance given the decisions from the S&OP meeting. The monthly meeting allows for issues to be raised, tracked and resolved. Key department heads are present so that the entire company can be aligned behind a decision and as it is cascaded and communicated to the levels below.

The sales and operations plan looks 12 – 18 months into the future, this level of visibility opens the door to a different way of thinking: a longer term view. The process facilitates the bringing together of data from different departments and presents it to the team (Operations has visibility to Sales plans. Sales have visibility to the supply plan. Finance has visibility to expected revenues and expenses)

Finance are an integral part to making the process successful, they ensure the alignment of the financial plan to the operational plan so ultimately the objective of making money is achieved and on track. It’s no good planning to ramp up 30% if you only have the resources to ramp up 10%.

New product introduction (NPI) can be a headache (new suppliers, ramp up, technical issues, capacity, obsolete inventory, etc) but again the S&OP process facilitates the discussion. It enables all stakeholders to be aware when a new product introduction is happening. Sales needs to be talking to Operations. Operations needs to be talking to Finance. Many companies deal with NPI separately and have a project plan dealing specifically with new product introductions With NPI on the agenda within the S&OP process, issues can be raised, actioned and tracked, (releasing of capacity for trials, product traceability, etc) are managed carefully.

A big part of the S&OP agenda is reviewing the key business metrics in order to identify and resolve performance issues, when issues are raised, the key stakeholders are in the room to get things done.

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“Performance Rooms” a powerful Visual Management Tool.

Over the last few months I had a number of discussions regarding what I call “Performance Rooms” others call “War Rooms” (never really been keen on that expression but as long as the process is followed what does it matter) or the Japanese term “Obeya Rooms”. I will use Obeya in this article.

These rooms and the disciplined approach to the process behind them helps businesses to reach their strategic/tactical goals and promotes the creation of solutions and actions that can be developed and implemented quickly. The aspect of Managing Performance Improvement for any business undertaking Growth or Lean.

Strategy Room

The following is an overview to understand the theory behind it.

Obeya is based on a simple idea that we dedicate: time, space, the coordination to root cause analysis and problem solving so that organisational barriers are minimised. This ability to maintain a disciplined approach to real-time problem awareness, listening to team members concerns, making discoveries, resolving problems, collaborating and above all developing/mentoring our people is critical to the success of a business.

They promote the coordination and implementation of Strategic and Tactical issues by mobilising and pulling together the intellectual resources of all employees in the service of the firm.

The following are different types of Obeya Rooms (not limited to):

Product Launch; when developing a new product, managers responsible for decision making in design, production engineering, and manufacturing gather in one place to shorten the lead-time through real-time problem resolution.

Business Process Layout: Centralised data collection, prioritising and action planning.

Focused: Project Performance Rooms, SQPDC, A3 Problem Solving, Continuous Improvement rooms.

Observations to consider when looking at Obeya Rooms :

  • Use two colors when tracking status, Red and Green. This avoids ambiguities; the status is ON TARGET or NOT.
  • Define SMART metrics (Specific, Measurable, Attainable, Realistic, Timely), no more than 3-5 focused metrics as more would be impractical for every day review.
  • Problem, Follow-Up and Countermeasure Boards are mandatory, the team must be prompted to solve issues immediately. The deferment/stalling to solving the problem is not allowed.
  • Meeting Discipline – Punctuality, Question and Challenge with dignity and Respect and the meeting should last no more than 30mins.
  • The flow for review takes the shape of Check, Plan, Do, Check, Act instead of the normal PDCA.

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We’re different it won’t work here

It’s been an interesting month, great meetings, new contacts and one of the most interesting presentations I‘ve given regarding Operational Excellence and Problem Solving.

The presentation was given to the Manufacturing and Construction sectors as part of a Seminar/Workshop.

The comments at the end we’re ones I have heard over and over again, “We’re Different, it won’t work here!

Is “we’re different” an excuse not try to improve?

This got me thinking in one of my reflective moments, what is it that naturally creates this push back? Do we think that Business Excellence, Operational Excellence, Lean or Six Sigma is a technical tool and technique, only applied to manufacturing, high volume processes, etc? Is it we naturally assume that it’s for the automotive industry?

There are a number of answers you can come up with that can be assigned to this emotion and push back.

So we have to ask ourselves

Do business improvement principles (as that is all they are) apply to pretty much every process? Yes, I’d say so. Does that mean its easy to put in place? Absolutely not. But that, along with being different, should be no reason to not try.

Which leads me on from last month’s article REFLECTION! and into OPERATIONAL EXCELLENCE TRANSFORMATION

We must first seek to understand what is it we are trying to solve, what problem? This could be as an organisation, function, sub-process.

Then we must ask,

What process improvement needs to be done? What do I need to design, re-design, improve to solve our problem and achieve our objective?


Do I have the capability in house? Do I have the skillset within my team?

We then come to,

What mindset do I need to have? Growth? (One of learning as we do not have the capability in house), Implementation (I have the capability so execute, or get support if you don’t), Experimental (try and test)

Remembering that Leadership behaviour and Programme Management are the key. The governance process you apply.

Final thought – it’s often said that “Operational Excellence doesn’t succeed or fail… it’s just a set of principles. What succeeds or fails is the organisation or the leaders who try.” Success isn’t guaranteed — it requires hard work and creativity to figure out how will work in your setting, because you are different!

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