By Chaman L. Jain, Ph.D.

Tobin College of Business St. John’s University 8000 Utopia Parkway

Jamaica, New York 11439 USA

Jainc@stjohns.edu

•  How S&OP works •  What obstacles do we encounter, and how to

overcome them •  Benefits of S&OP

Step  5  Exec  S&OP  

(Review,  finalize  and  implement  plans)    Source:  Adapted  from  the  book,  Thomas  F.  Wallace.  Sales  &    Opera+ons  

     Planning:  The  How  to  Handbook.  CincinnaG,  Ohio:  T.  F.  Wallace  &          Co,  2004,  p.  59.  

 

 

   

 

     

   

 

   

Step  3  Supply  Planning  Group  

(Ability  to  meet  the  demand;  if  not,  what  opGons  do  we  have)        

Step  4  Pre-­‐Exec  S&OP  

(Prepare  a  proposal  for  the  Exec-­‐S&OP)  

 

   

 

     

   

 

   

Step  1  Data  Gathering  

(Gather  data,  and  prepare  staGsGcal  forecasts)        

 

 

   

 

     

   

 

   

Step  2  Demand  Planning  Group  

(Finalize  forecasts,  and  send  them  to  the  Supply  Planning  Group)        

Working of Sales and Operations Planning Process

 

   

 

     

   

 

   

1.  Align demand with supply 2.  Integrate operational plans with strategic

goals/budget 3.  Manage product portfolio 4.  Integrate product mix with total volume/profit  

 

Obstacles to Implementation •  Lack of support from upper management •  Silo structure •  Excuses and excuses for not attending meeting •  No champion •  Concentrating on SKUs, not on category and brand •  Goals and metrics are not clearly defined •  Guidelines for resolving conflicts and courage to act

on difficult issues •  No centralized data warehouse •  No technology to facilitate the process •  Conflicting incentives

5

Benefits of S&OP

•  Improves forecasts •  Increases sales and reduces stock-outs and

inventory •  Improves customer service •  Reduces cost of production •  Reduces obsolescence •  Reduces freight cost •  Enables to make decisions faster and with

less efforts •  Creates harmony among different functions

6

7

BENEFITS  DERIVED  FROM  THE  IMPLEMENTATION  OF  S&OP  PROCESS  

Company   Period   Improvement  in  Forecasts  

Improvement  in  Inventory  

Improvement  in  Customer  Service  

Source  

Air  Products  &  Chemical          JohnsonDiversey        Syngenta          On  Semiconductor    

2003-­‐06          

2002-­‐05        

2001-­‐06        

2004-­‐05  

21%          

23%        

49%        NA  

20%          

18%        

5-­‐10%        

14%  

10%          6%        NA        1%  

Stephen  P.  Crane,  Dir.  of  Supply  Chain  Performance  Polymers      Greg  Reyman,  Director  GAPAC  Value  Chain    Richard  Herrin,      Currently,  Director  of  Supply  Chain,  Georgia  Gulf  Corporation      Tim  Williams,  Demand   Forecasting  Mgr.    

1. Herrin,  Richard.  “Managing  Products  via  Demand  Variability  and  Business  Importance.”  Journal  of  Business  Forecasting.  Spring  2007,  pp.  6-­‐10.    2. Reyman,  Greg.  “How  JohnsonDiversey  Implemented  S&OP  in  Europe.”  Journal  of  Business  Forecasting.  Fall  2005,  pp.  20-­‐23,  28.  3. Williams,  Tim.  “Forecasting  Journey  at  On  Semiconductor.”    Journal  of  Business  Forecasting.  Spring  2006,  pp.  29-­‐32.    4. Crane,  Stephen  P.,  “How  to  Incorporate  Market  Intelligence  into  Statistical  Forecasting,”  Presentation  at  the  Demand  Planning  &  Forecasting  Best  Practices  Conference  in      Orlando,  Florida,  of  Institute  of  Business  Forecasting  and  Planning,  Appeared  in  the  Conference  Manual  (New  York:  Institute  of  Business  Forecasting  and  Planning,  October  2006):  327-­‐347.