As a business owner, you have to plan and strategize your company around an assortment of different highly valuable data sets. One such data management methodology is Sales and Operations Planning or S&OP. By making proper use of S&OP you can keep your supply chain carefully controlled, keep costs down, and reduce waste.
Sales and Operations Planning Defined
There are many strategies used to maximize access to information and make informed business decisions. S&OP is focused on finical planning, supply, and product demand. Other factors and company resources such as manpower are also considered as they relate to the ability to meet demand. Having such information on hand allows you to make adjustments to the product, costs, resource use, and specific changes such as product sales in a particular geographic area or other outside factors. S&OP can be used to adjust for changes both in the present and years into the future.
Sales and Operations Planning Challenges and Implementation
When implementing a sales and operations planning strategy, you need to collect data from all areas of your company. This wide-reaching process (and keeping it current) can present challenges and requires buy-in from several departments and people. Here are some of the common challenges you may encounter when implementing such a strategy.
- A common issue with setting up sales and operations planning strategies is collecting the data itself. S&OP is reliant on accurate information, and you have to ensure you are getting information regularly and that it is current.
- A regular analysis will have to be performed to recognize and catalog changes in product demand and also in product supply.
- Business moves fast in the modern world and the products your company sells and its overall size and market share can also change consistently. Because of this, it is important to keep track of events such as mergers and acquisitions of outside companies, the retirement of existing products and product lines, and the introduction of new products.
- S&O planning makes use of several data points such as revenue, costs, customer service figures, and others. With so much data to track you need to develop an outline of how this information should be displayed and communicated to others. If your reports are too confusing or hard to read, their effectiveness can be greatly reduced.
- Finally, don’t overlook how your data will be collected and stored. Multiple databases, accessibility of information, and backups are all factors in the information collection process you should keep in mind to prevent potential future problems with report creation and tracking.
Final Thoughts
When managing your business, your supply chain and product production are key to your success. While product shortages can cause lost sales, the opposite can also be damaging as overproduction can lead to increased costs in both production and labor. In addition, not being prepared to handle situational changes such as local market changes and the introduction of new products can cause damage to your bottom line as well. By using S&OP you can carefully plan for both the present and future production needs and respond quickly to changes in your business needs.
