The Sales & Operations Planning process is designed to create and periodically update a common business plan across organizational functional boundaries. The plan for the foreseeable future, and in particular for the next month, is agreed upon by the operating groups.  With a common plan, all groups within the business are concentrating their efforts on meeting and exceeding the common vision as defined in the S&OP plan.

Traditional S&OP processes fall short of meeting lean objectives in that the supply chain is managed by conventional MRP/ERP planning and/or building finished goods to forecast.

The Lean Roadmap process has improved traditional Sales & Operations Planning in numerous ways:

The development of material flow through the factory utilizing manufacturing cells and kanban material replenishment is well known and understand in lean implementation.  For the most part manufacturers have been successfully implementing production cells for decades.  But the organization and management of information in the supply chain is less obvious and often escapes us.  It is this facet of lean that makes for a successful and dramatically profitable implementation.

Poor information flow in, out, and around the MRP/ERP business software creates a tremendous need for excessive overhead to manage the daily chaos present in a conventional MRP/ERP process flow.  Lean Roadmap defines what you must do to utilize your current business software and easily configure it into a weapon in your competitive supply-chain arsenal.

Consider the following.  Let’s say the actual elapsed clock time required to assemble, test, and package one of your products is 15 minutes.  The customer wants the product shipped today.  Is there any reason why you cannot eliminate finished goods inventory, assemble the unit ordered, and ship it today?  The answer is likely no.  The reasons for not doing so will be due to lack of information planning and management, and not cellular operation.  To drive the point home, verify this for yourself, with one of your products: actual touch time (hands-on assembly, test, and packaging time) as compared to the actual elapsed time from the first element of work on the product to the last.

Available to Capacity (ATC) is a process developed by Bottom Line Consultants, Inc. and is the key process for matching final product assembly cell capacity to customer demand at the time of customer order receipt.  This is a tremendously powerful process, yet very easy to implement.  Essentially customer demand is matched to capacity in weekly buckets of time.  When a customer order line item exceeds the customer want date, the master scheduler is alerted and action is taken to meet the date and satisfy the customer.

The customer build plan is available at each final assembly cell and is sorted by due date and then item type. The customer build plan also supplies a Takt time for the final assembly cell, which is used to plan manning for that day or week of assembly.

Sales & Operations Planning (S&OP) is a company wide shared forecasted sales plan, whose function is to adjust the supply chain levels of materials and capacity to meet expected customer demand. Participants in the S&OP process generally include operations, sales, engineering, accounting, and management.  Other groups can be invited as required.

You will find that committing the time during each monthly financial planning period to participate in the forecast establishment and review is an effective method for communication, and of establishing common goals and plans across the business.  This process has the effect of reducing adversarial positions between sales and operations while significantly improving service levels to customers and meeting of financial targets.

Note: Because we are forecasting purchased materials, sub-assemblies, and capacity, and making the necessary supply-chain adjustments, forecast accuracy is not nearly as critical to success as when we attempt to forecast finished goods.  Products sold and included in sales planning bills of material require common material to produce.  It is this commonality of materials and assemblies that makes the development of forecasting at the family level valid and extremely effective.  We forecast at the family level and fill the bins at the component level.  When the customer orders, we assemble the components into a product and ship the product, then replace the material as required.

The plant master scheduler should be capable of developing a forecast for the short-term future, based on history.  In addition to history, considerations include planned events the master scheduler may not be aware of, such as:

A typical S&OP flow chart and steps is illustrated and discussed here, with an explanation of the inputs and outputs of a successful S&OP processes.