If you’ve found your way to this blog, there’s a good chance you already know about S&OP, which stands for sales and operation planning. It’s generally just called shortened to S&OP, though. Perhaps you’re already a user of S&OP, and you’ve implemented a new strategy, but you have a few questions. No matter your reason for being interested in S&OP, make sure to keep reading to learn more.
What Is S&OP and 2 Reasons You Need One
With S&OP, you can take advantage of a process that helps you deliver superior customer service while reducing inventory and taking advantage of shorter lead times. You’ll also enjoy several other benefits, like the ability to better manage your company and generate more stable production rates. If you’re thinking of establishing an S&OP but not sure if you want to, here are two definite reasons you should.
Some of the top reasons to establish an S&OP are:
No surprises: When you don’t have an S&OP, you end up with a negative vibe around the company and your workers constantly thinking that someone else will complete certain tasks. But with an S&OP, you can get rid of surprises because you’ll be able to rest assured that each task is being completed not only effectively but on time.
Key to business communication: When everyone is on the same page, it’s much easier to complete tasks on time and efficiently. An S&OP is a key to making sure everyone is communicating the same information, and it also helps you ensure all pertinent information is making it to the right workers at the right time. Additionally, it helps with making sure appropriate and accurate information is being relayed to customers, which is pertinent for sustaining good customer satisfaction levels.
Questions to Ask Yourself When Developing an S&OP
There are several questions to ask yourself when it comes to S&OP. But before you start asking too many questions, you’ll need to take a realistic look at whether you have the ability to optimize your sourcing solutions along with your manufacturing site alternatives. If you have this ability, then you should then start asking yourself the following questions:
- Do you have the ability to take advantage of order-level pegging?
- What does your current modeling looking like?
- Can you model the capacities in buckets without using a spreadsheet technique that comes from the ’80s?
- Are static and fixed-lead times being assumed for your manufacturing operations?
- Does your current S&OP help you without the need for constant user modifications?
- Are your bottleneck work centers defined statically or are you operating according to a system that allows you to pinpoint them dynamically and based on your product mix?
- Are your demand orders traceable to their supplies and according to the attributes of those suppliers?
Answering these questions is key to establishing an S&OP that truly helps your company increase profit margins while decreasing overhead expenses. If you need further help on creating an S&OP, please don’t hesitate to reach out to us today.