17-1: Describe the basic ideas behind sales and operations planning.
Sales and operations planning (S&OP), also known as aggregate planning, integrates customer-focused marketing plans for new and existing products with supply chain management. For the medium time frame (often viewed as 6 weeks to 18 months in the future), the sales and operations planning process attempts to match the company’s supply of resources efficiently to market demand expectations by integrating the specific, tactical plans in every business area (sales, marketing, R&D, manufacturing, sourcing, and finance) into a single set of plans that aligns with the company’s overall strategy.
17-2: Describe the benefits of sales and operations planning.
Sales and operations planning (S&OP) is a medium-term planning process that bridges the gap between the long-term strategic planning and the short-term operational plans. It is a structured collaborative process that generates a single sales and operation plan to match supply and demand. It is also known as aggregates planning, as the sales and operations plan is expressed in aggregate terms. The objective of the S&OP process is to generate plans for production levels, employment levels, and inventory levels at the minimum cost. An effective sales and operations plan can improve revenues, decrease costs, and increase customer satisfaction.
17-3: Demonstrate the sales and operations planning process and its key features.
The S&OP process is demonstrated in Figure 17.2 to consist of a variety of elements. Several organizational functions (e.g., marketing, engineering, operations) offer their input to help develop the sales and operations plan. This plan is then used as a medium-term planning device to develop sales plans for marketing, including demand management activities, monthly sales estimates, and expected customer service levels. It is also used to develop the operations plan, including developing workforce and inventory levels, anticipating backlogs, and creating workflow charts for employees, which include overtime and regular hours to complete all assignments.
17-4: Compare the options for influencing demand and supply in implementing a sales and operations plan.
To match supply and demand, planners can employ options that influence demand or supply in their sales and operations planning strategies. To influence demand, the firm can use price, advertising and promotion, backorders and reservation systems, and production of counterseasonal products and services. To influence supply, the firm can vary its workforce size, use overtime or slack time, build inventories, hire part-time workers, and subcontract.
17-5: Identify alternative sales and operations planning strategies for product families.
Three basic strategies can be used to create product family-level sales and operations plans: level, chase, and mixed strategies. In the level strategy, the production output rate and workforce levels are held constant. Variations in demand are balanced by inventory and generation of backorders. In a chase strategy, workforce levels are changed through hiring and layoffs to compensate for variations in demand. A mixed strategy is a hybrid of the level and chase strategies.
17-6: Use the trial-and-error method to develop a sales and operations plan.
A variety of techniques can be used in the task of developing a sales and operations plan. These techniques include informal trial-and-error approaches and mathematical techniques such as the linear decision rule (LDR), the transportation method of linear programming, the management coefficients model, and simulation. For this chapter, we demonstrate the use of trial-anderror as a method for developing a sales and operations plan.
17-7: Explain the benefits of sales and operations planning in supply chains.
Companies that have an effective global S&OP realize the following benefits: (1) reduced inventory; (2) increased forecast accuracy; (3) full use and optimization of the supply chain; (4) improvements in communication, accountability, empowerment, and teamwork; and (5) improved customer relationships as a result of better visibility and planning.
17-8: Describe sales and operations planning for service firms.
Sales and operations planning for businesses in the service sector poses some unique challenges because most service companies are unable to carry inventory. The focus of S&OP strategies in the service sector is primarily on workforce schedules because services are more labor intensive and labor resources provide the flexibility to satisfy a variety of service requirements.
17-9: Detail the importance of sales carbon operations planning.
Sales carbon operations planning (SCOP) is an extension of S&OP that integrates sustainability into the traditional sales operations plan. A sustainable sales and operations plan offers a number of benefits including risk mitigation, increased revenues, and the manufacture of green products.
17-10: Describe the ethical issues that can arise in sales and operations planning.
Because one of the primary activities of S&OP is acquiring human resources to meet expected demand, it is important that companies pay close attention to the type of human resources acquired and how these resources are used. For example, the use of child, forced, or prison labor violates ethical principles. Hiring practices used to support S&OP should ensure that no one is denied employment because of gender, ethnic origin, or religious affiliation. S&OP decisions should ensure that employees work in a safe and healthy environment.
›Chapter Outline
