In a previous article, Gunther Fonteyne wrote about the importance of communication in Inventory Management. Today, he elaborates on Sales & Operations Planning and the important role of communication in this process.
How will
demand forecasting and inventory management be handled, and how will the alignment
between sales and production/purchasing be organised? Best practice
nowadays through the S&OP process (Sales and Operations Planning process), where all
all the above elements come together and are linked through communication
.
Sales &
Operations Planning, or S&OP for short, is a process in which a
company or organisation aligns the supply and demand for products in such a way that
an optimal financial result is achieved. This is usually done
on a monthly basis, with a rolling plan drawn up for the next 24 months.
A key component is the reconciliation of forecasts with available
stock levels and the various supply chain plans, and translating this into the
financial side.
Unfortunately, it is
all too often that the S&OP process does not deliver what was expected of it.
Quite a few companies struggle with S&OP implementation and just
properly up and running. It’s a shame, because with the right approach and priorities, an
S&OP process can deliver significant benefits. Here, too, communication is key, and
things often go wrong. No clear process, no ownership, everyone looking at
different data, no clear reporting on the outcome of the
S&OP process, no follow-up…
As described
, communication is key in, amongst other things, the processes relating to forecasting, inventory management and
S&OP . What are some of the most important factors that can help?
- setting up
of a permanent organisation dedicated to stock management,
forecasting and S&OP. This organisation will need to coordinate closely with purchasing,
sales, the warehouse, production… In this context,
coordination meetings. A Supply Chain department
within a company or organisation should take the lead in this, but it is a
shared responsibility of many other stakeholders within a
company or organisation.
– ensure
that processes are clearly defined and are actually implemented.
Ensure that processes are regularly reviewed and optimised
.
- setting up
KPIs (Key Performance Indicators) that are published and discussed
are discussed regularly can certainly help in this regard. Golden advice: work
with just a few KPIs that will ensure everyone has a clear focus and
maintain that focus!
– Supporting
technology will need to be regularly adjusted so that it can optimally support the process of
inventory management, forecasting and S&OP. This means
means that current ERP solutions must be supported by additional
optimisation technology!
- Make sure that
everyone is looking at the same data. It’s better to have one good report that
everyone can use to make the right decisions, rather than
everyone having their own report and thinking that their report contains the correct information
! Within a company or organisation, a great many people
creating all sorts of reports that are subsequently never
.
- Communicate with
everyone via a communication platform. This means open communication between
all stakeholders, rather than email messages where everyone is copied in.
At the end of this structured communication process, there is a report detailing what
has been decided and who is responsible.
- Keep it
pragmatic and manageable!
Gunter Fonteyne - partner at Xeleos Consulting and Optimact
