The rule “This month’s sales should have been released for sale last month or even better, the month before” may have seemed simplistic at the first reading, so to understand this, we need to step back (again…….) and look at what Sales and Operations Planning is.
The sketch above explains it perfectly, S&OP is the axis that the entire supply chain rests on, and will determine if the process is in balance or not. There are 2 main components.
Executive S&OP refers to aggregate planning and is a decision-making tool for the Executive when setting and managing the business plan. The reporting provides both financial and operational information, giving a clear view of the future of the business.
Sales & operations Planning underpins this and comprises of all the detailed processes that are rolled up into the Executive S&OP for high level business decisions.
S&OP is not separate from all of the tools we currently have in business, what it does is bring all of these together to provide a meaningful and representative picture of the detailed Supply chain and a summary for executive decision making. Once the requirements of the S&OP cycle are met and signed off, the production schedule is finalized and signed off by the operations team. This includes planning, production, QA, QC, engineering, and in the case of Pharmaceuticals, the releasing authority. (In other industries, this role is covered by QA)
Lead Time relates to many different cycles in the business, and our function as the Supply Chain and operations teams is to ensure that the business maintains this balance, taking all the lead times (and a host more events) into account every time we make decisions. To do this, we generate sales forecasts, materials requirements plans, production plans and schedules to convert the materials into finished product for sale. We also set up buffers to absorb peaks and troughs in the form of inspection areas, warehouses, time buffers and work in progress buffers. All of these are dynamic, and change in real time, so each member of the team needs to carefully schedule and manage their individual areas of responsibility.
So in summary, while plans may change (and quite often at times), it is critical to the business that we start the planning cycle as early as possible and include every player in the business so that we don’t end up chasing our tails trying to deliver product on or after the committed delivery date.