Sales and operations planning (S&OP) is an inclusive planning procedure aligning a company's demand, supply and financial planning cohesively. Sales and operations planning is a designed and executed decision-making procedure for the company's master planning.
An enterprise's Supply Chain Managers help produce feasible material in adherence to a steady financial plan and available supply and resources. Since S&OP incorporates a strategic and tactical planning procedure, it provides insights into the shifting demand for resources in different geographies.
Generally, an S&OP takes a comprehensive planning procedure between 18 and 36 months. In this article, let's discuss the roles of Supply Chain Managers in sales and operations planning, their benefits and challenges.
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Supply Chain Manager: With Special Emphasis on Supply Chain Management
Supply chain management primarily deals with the flow of goods and services from processing raw materials to final products. It helps streamline a business's supply activities and integrate maximum customer value.
Supply Chain Managers control the purchase of raw materials for production and ensure that the products come at the right time. They also coordinate on storing the raw materials so that no material gets misplaced or damaged in the procedure.
The goal of a Supply Chain Manager is to enhance and develop the company's supply chain strategies. He/she strives to improve productivity and efficiency and reduces costs by securing materials of optimal quality and quantity at the lowest price.
Role of a Supply Chain Manager in Sales and Operations Planning
A Supply Chain Manager maintains the alignment of daily operations with corporate strategies and closely examines the demand and supply in the department to keep equilibrium. Let's see what the roles of Supply Chain Managers are in S&OP.
- Gathering Data: One of the primary roles of a Supply Chain Manager in an enterprise is to collect forecasts based on the existing predicament with various key variables. The key variables include inventory, recent sales and cash on hand.
- Planning Demand: Supply Chain Managers help analyse, forecast and influence demands, thus shaping a pattern. As a result, they make an inventory to match the demand for raw materials.
- Planning Supply: Supply Chain Managers have the role of assessing the production and distribution capacity. They also examine the constraints that might cause an untimely delay.
- Reconciling Production Plans and Demands: Supply Chain Managers adhere to the demand and production plan alignments and ensure that they meet the company's financial requirements and objectives. They also make recommendations to the management to ensure the best for their department.
- Attending Executive Meetings: It is pivotal that a Supply Chain Manager attends executive meetings. He/she generally takes the inputs from the S&OP team, reviews the plan and subsequently makes a final version that would suffice well for the company.
Benefits of Sales and Operation Planning
Sales and operations planning comes with many benefits that help integrate the company's mission and goals through various departments. It does not use a segregated approach but focuses on bringing different pieces of the company together and thus creating an overview. Let's find out about the benefits of S&OP in the context of Supply Chain Management (SCM).
- Resource Optimisation: The S&OP helps in resource optimisation by helping the company know the right amount of materials needed for production. It avoids any circumstances for potential waste and uses the resources to their fullest with maximum efficiency.
- Collaborative Improvement: S&OP helps in the alignment of the sales department alongside different production goals. It understands the effects of performances and thus improves communications accordingly to enhance efficiency. S&OP does not let production limitations be an issue for seamless collaborations.
- Profit Maximisation: Once the sales and operations are substantially aligned, the company thus maximises its profits. They help greatly in terms of cost efficiency, lowering storage needs and eliminating complex issues in the supply chain. This would help the management set realistic goals and create a realistic forecast of future budgets.
Besides improving forecast accuracy, S&OP is efficient for curtailing inventory costs that boost the working capital. It is also responsible for increasing market revenues and shares by proving its effectiveness to new initiatives and products.
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