S&OP: 5 tips for implementation in large companies

The S&OP process (Sales and Operations Planning) integrates strategic sales and operations planning in small and medium-sized companies, but mainly in large companies. This is an approach that aims to make management and decision making more efficient through the integration between various sectors that make up an organization, synergy that provides integral visibility of processes, helping to balance demand and supply.

To implement this process effectively, it is essential to understand how sales and operations work, performing preliminary business analysis. However, before starting this journey, it is necessary to evaluate some points and indicators, to ensure that the task is performed efficiently:

 1 'To understand the demand

Understanding the historical demand, as well as the macroeconomic situation of the country, the effect of the climate, seasonal dates, the political situation and any other adverse circumstance that impacts or may impact demand is essential for S&OP, as the forecasts of future sales depend on past patterns. It is necessary to identify which products and families have the highest volume, turnover and margin, in addition to which customers or channels are more representative. It should also check the existence of seasonality, whip effects, and if there is loss of sales due to lack of inventory. Basic evaluations include: monthly sales per product family in the last three years, charts of representativeness of family and families in the last 1 months sell in versus sell out, percentage of cancelled orders or Backlog of historical requests.

2 ^ Yes statistical prediction

Statistical forecasting simulation uses models to anticipate demand, assessing how these projections have behaved in the past and how they will behave in the future. Relevant issues may include understanding the performance of each model in recent months, the variation of this performance with different anticipation periods, and which products, locations or channels require greater attention in the process. Safe analysis covers the table of accuracy and bias of the estimates of the best models in the last 6 to 12 months, the comparison of accuracy in different anticipation periods and the classification of the portfolio of items through the ABC vs XYZ matrix to prioritize planning.

3 'To analyze the stocks

To optimize the management of goods, it is essential to analyze the behavior of the stock, aiming to reduce the capital employed and improve the service. Substantial issues include the average coverage in the last 12 months, the total cost considering lack and excess, the need for additional products by seasonality or production stops, compliance with established inventory policies, the current capacity of warehouses and the evaluation of the percentage of rupture by product family and distribution center.

4 'Mapping critical assets

The mapping of critical assets is paramount to strategically direct planning efforts.This involves identifying and evaluating the most important assets of the company, analyzing their occupation, efficiency and long-term availability.It is also necessary to check for external critical resources, such as suppliers with limited capacity. Important analyses include the assessment of the historical occupation of assets, the verification of efficiency through indicators such as OEE, the accuracy of demand plans over time and the analysis of inventory disruptions related to lack of capacity.

5. Establish a base case

Establishing a base case for S&OP is indispensable for evaluating the success of implementation when comparing pre and post-process results. Graphs are valuable tools for visualizing the costs associated with inadequate planning, helping to answer questions about the current uncertainty level, service levels and stored items, and efficiency in the use of critical assets. Examples of assessments include measuring the accuracy history and bias of forecasts, assessing the service level through OTIF, identifying disruptions and backlogs to improve inventory management, and analysis of distribution center coverage to optimize replenishment processes.