Three Steps to Getting a Better Handle on Sales and Operations Planning
Sales and Operations Planning as we’ve known it since 1987, has a major pitfall – it is heavily biased toward supply-chain thinking and light on considering the demand side. The if-you-build-it-they-will-come mentality may have worked for businesses in a field of dreams thirty years ago, but it’s time to wake up and deal with reality. Businesses operate in a hyper-changing environment – one in which businesses find themselves in permanent disequilibrium brought about by the often unpredictable and rapid evolution of consumer demands, which is further intensified by the effects of global interconnectedness.
One of the first steps to getting a handle on your S&OP planning is to realize that it is a collaborative process. Integrating S&OP planning with the development of a rolling forecast and budget will greatly increase the organization’s ability to bring precision execution to its strategy – ultimately increasing sustainable profitability. The rolling budget analyzes trends in the company’s current transactional data and forecasts what consumer demand will be over the next 12 – 18 months. This allows for accurate planning of demand, putting your company in front of the hyper-change curve.
A further step toward maintaining earnings potential in a hyper-change environment is to unify the sales operations planning and workforce planning functions. Schedule your workforce, plan for hiring, even for cross-training of employees with the demand planning well established. With a unified sales operations and workforce planning the entire production team from receivables to production to shipping will be ready to meet the challenge, and do so just in time.
The coup de gras is to ensure that the real-time information gathered by the finance department can be processed by operations managers and communicated to other stakeholders throughout the organization efficiently. According to supply chain experts, “using an internal S&OP communication strategy to address the right stakeholders with the right information through the right channel at the right time can have a powerful impact and keep employees engaged with strategy, budget, resource allocation and execution in a structured way.”
Everything Depends on the Truth
Nothing creates more headaches for the finance department than having multiple versions of the truth. And nothing makes sales and operations planning less effective than having inaccurate, untimely data. The current hyper-changing business environment, a threat to businesses that move at traditional speeds, becomes your strategic advantage as a set of accurate consolidated financials, based in real-time, are communicated throughout the organization alongside the rolling budget and S&OP plans.