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Monthly SOP Process


By Anonymous - Posted on 18 February 2012

A Sales and Operations Planning process normally includes a series of meetings, finishing with a board level meeting at which, key long term decisions are taken, and the current progress against the Business Plan is reviewed.  The review has to cover at least 15 months.

The inputs to the SOP are forecast values and/or requirements from customer order management, sales information system, and controlling.

The main purpose of SOP is to establish production rates that will achieve management’s objective of maintaining, raising, or lowering inventories or backlogs, in order to keep the workforce relatively stable. This plan helps in planning the labor, equipment, facilities, material, and finances required to accomplish the production plan. This plan can be formed with information from marketing, manufacturing, engineering, finance, materials and so on.

Sales and operations planning can also be described as, "a set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning, and to link high level strategic plans with day-to-day operations”.

SOP is the result of monthly planning activities and is usually based on an Annual Operations Plan (AOP). Therefore, the SOP is a main factor to gradually accomplish the AOP targets, by linking monthly sales and marketing planning directly to the operations side of a business. 

Run Sales Forecast Reports
Occurs in IT department shortly after the end of the month. It consists of:
Updating the files with data from the month just ended, actual sales, inventories, production, backlog etc.
Generating information for sales & marketing representatives to use in developing the new demand forecast.
Disseminating the information to the appropriate people.

The Demand Planning Phase
Sales & marketing staff review the information received from step 1, analyse & discuss it & then generate the new management forecast over the planning horizon. The forecast must include all existing products & any product life cycle phase changes that are planned for in time frame covered by the planning horizon.

The Supply Planning Phase
Representatives from the operations review the output from step 2, the revised demand forecasts over the planning horizon. All existing operations plans are reviewed to see which ones need to be changed from the previous plan. The o/p from the revised supply planning phase are operations plans that must be validated against the availability of existing supply resources using resource planning. 

The pre Sales & Operations Plan Meeting
The objectives of this phase are:

  • Make decisions regarding the balancing of supply & demand.
  • Resolve problems& differences, so that a single set of recommendations can be brought to the executive SOP meeting.
  • Identify those areas where agreement can’t be reached & determine how the situation & supporting data will be presented in the executive SOP meeting.
  • Develop scenarios showing the impact of alternate courses of action to solve a given problem.

Several people from demand planning, a representative from product development, a representative from finance, several people from operations & the SOP process owner are involved in this phase. Family by family review of the demand & supply plans are done & adjustments were made where necessary & appropriate. This review should focus on actual vs. planned performance in demand & supply & the impact regarding to inventory or backlog plans.
The output from the presales & operations plan meeting includes:

  • An updated financial plan.
  • Recommended action for each product family.
  • New product introduction plans.
  • Recommendations for changes in resource plans.
  • Areas where agreement could not be reached with alternative scenarios & impact analysis.
  • Recommended changes to demand & supply strategies.
  • The agenda for executive SOP meeting.

The Executive SOP Meeting
The objectives are:

  • To make decisions on each product family, to accept the recommendations from the pre SOP team or to determine alternative courses of action.
  • To authorize changes to the production or procurement rates, where major changes are foreseen.
  • To compare the sales & operations plans to the business plan in both product units & financial units & where there are discrepancies to make adjustments as required.
  • To make decisions where there was no agreement from the pre SOP team based on further analysis & information.
  • To review key business performance indicators & follow up on areas where performance is less than plan.

The O/Ps from the executive SOP meeting are the meeting minutes. A summary of decisions taken, a summarised action plan with due dates & responsibilities & the authorized company game plan, the complete sales & operations plan for each product family.

The SOP process is an iterative closed loop process, starting with the development of a preliminary plan based on balancing supply & demand information. The out puts of the SOP process are:

  • The production plan.
  • The purchase plan.
  • The inventory plan (for MTS product group).
  • The backlog plan (for MTO product groups).

The approved sales & operations plan provides the framework for the master scheduler to develop specific master schedules for items within each product group. The sales & operations plan limits the aggregate rate of production to the level stated for each product group for each planning period.

 

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