I recently read our new white paper “Enabling Sales and Operations Planning with RapidResponse” that describes four capabilities required for sales and operations planning in the 21st Century.

I found this interesting because in my past life I was responsible for creating and presenting the sales and operations plan for a small division of a large aerospace manufacturer.  Recalling how that process worked, then contrasting it to what is described in the white paper makes me wish I could go back in time to leverage some of the new tools.  At that company, the process would start with pulling information from various sources; customer orders, forecast and supply orders were extracted from the ERP system.  Headcount, sick leave and vacation information was pulled from HR.  Labor allocation was provided from operations management and finally variance data was provided from finance.  All of this information went into individual Excel spreadsheets.  The sales and operations spreadsheet was a large Excel file with complex macros which pulled data from each of the individual files.   Often files were missing or were incorrectly updated.  I’d then need to track down the person(s) responsible.   Other spreadsheets were updated for the purpose of presenting key divisional metrics at the sales and operations meeting.   Once all the data was pulled together and met the sanity test, we would pull a subset of the sales and operations team together for the pre-sales and operations meeting.  The outcome of this meeting was invariably adjustments and a recalculation, often requiring a refresh of data from the ERP system.  Occasionally we required an additional pre-sales and operations meeting to get the numbers right.  Finally we were ready for the full sales and operations meeting.

Does this sound familiar?  If you have a stable sales and operations planning methodology today, you probably follow a similar process.

Total time for this process?  2-3 weeks. From my discussions with our customers, I have found that this is actually a pretty tight timeline.  Some have sales and operations cycles that last 5-6 weeks!

If your world is relatively stable, you might be able to live with 3 weeks to create a sales and operations plan.  After all it’s a monthly plan right?  But what if your world isn’t very stable?  We had a situation where we were preparing for a possible strike at our parent plant.  We had to create several versions of the sales and operations plan looking at different strategies for maintaining our inventory position while also trying to retain our highly skilled workforce.  Each version needed to be reviewed, modified and revised – not fun when the tool is Excel!

This is an aerospace example where demand is fairly constant.  What about other markets where demand is far more volatile?  Long sales and operations cycles are far less effective.  As is pointed out in the white paper, companies are starting to move to weekly sales and operations cycles, with additional meetings as required to address specific problems or opportunities.

Look at your own sales and operations process today.  How long does it take to run a sales and operations cycle?   What would it mean to your business if you could do sales and operations planning on a weekly basis?  What would it mean to your business if you could convene the sales and operations team to evaluate the impact of a significant change within hours of it occurring?  What if the decisions you make at the executive level could be instantly evaluated in terms of revenue, margin, inventory and customer service?

Sales and operations planning is moving into the next generation.  Is your sales and operations tool moving into the next generation as well?

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Tags: Inventory, Sales and operations planning (S&OP)
Posted in Sales and operations planning (S&OP)
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