| explain Demand Planning Improvements | Excess inventory can result in high costs associated with holding this extra
stock and will increase the risk of obsolescence.
In order to balance the cost-service trade-off, demand planning aims at improving forecast
accuracy and reducing forecast error. |
| ........ (FA) in the supply chain is typically measured using the Mean Absolute ......... (MAPE) | Forecast accuracy (FA) in the supply chain is typically measured using the Mean Absolute
Percent Forecast (MAPE) |
| formulas Demand Planning Improvements | Error(%) = (actual forecast – forecast) / actual
FA(%) = (1- error(%)) |
| Supply Planning= | Means deciding when and how much to order:
Deciding when to order: order cycle management
Deciding how much to order: calculating economic order quantity |
| In a continuous review system with a fixed order quantity, inventory is reviewed daily and
fixed quantity is ordered whenever the stock drops below a certain point. This point is
called the? | re-order point. |
| Min-max policy = | stock planner tries to keep inventory between a min and a max stock level. |
| Order cycle management has two approaches to timing of orders: | Continuous review (fixed order quantity)
Periodic review (fixed order cycle) |
| deciding how much to order; | trade-off between inventory holding costs and ordering costs |
| how much should a company order? Calculate Economic Order Quantity (EOQ) | formula: EOQ=square root 2CR/PF
C= ordering costs per order
R= annual demand in units
PF=holding cost per unit per year |
| Sales and Operations Planning Can be understood as a concept of ............... planning. ..... and ..... need to be aligned. It is a process of constantly realigning decisions in ...., ......, ...... and ..... planning areas with the aim to synchronise with the strategic financial plans | Sales and Operations Planning Can be understood as a concept of integrated business planning. Demand and supply need to be aligned. It is a process of constantly realigning decisions in sales, marketing, demand and supply planning areas with the aim to synchronise with the strategic financial plans |
| steps Sales and Operations Planning consists of 3 fases; | pre-S&OP
S&OP
Post-S&OP |
| pre-S&OP; | step1. demand planning
step 2. supply & resource planning
step 3. financial integration |
| S&OP; | Step 4. S&OP meeting |
| Post-S&OP; | Step 5. Authorisation & execution |
| summarize S&OP | S&OP is a set of business meetings and processes that enable the
company to respond effectively to demand and supply variability. The outcome of
the S&OP process is a reconciled plan that maximises financial and strategic
opportunities and overall business profitability.
The process aims to take place on a monthly basis and typically looks at a mid to
long-term planning horizon of four weeks to two years on a rolling forward basis. |
| Guiding Principles for successful S&OP implementation | 1. Stakeholder commitment – it is important that stakeholders across the business are
engaged and educated to understand the whole process.
2. One set of numbers – all the different numbers of sales, marketing etc. in one set of
numbers.
3. Accountability and decision making – as the size of the organization increases so
does the complexity of decision making. It is crucial to define in detail during the design
phase what will be the participants role and responsibility in each meeting.
4. Alignment of business objectives – effective S&OP solutions have to align to KPIs
that drive the best result for a company as a whole.
5. Appropriate time horizon – when things gowrong, the temptation is to micro-manage
the crisis rather than to plan for the future. Moving the conversation into the future will
help managers to reach best for business solutions, and therefore do less fire fighting on
a daily basis.
6. Understanding the benefits of S&OP – a sound S&OP process recognises
imperfections on a regular basis and re-optimise plans across the supply chain. Also
customers should benefit from better customer service and more efficient response. |
| Customer Service Improvements through S&OP
1. From S&OP principles to ......
2. From improved forecast to
3. From improved reconciliation of | 1. improved forecast
2. improved reconciliation of demand and supply.
3. demand and supply to improved customer
service |
| reasons Why S&OP Implementations Fail | 1. People
2. Process
3. Strategy
4. Performance |
| elaborate why S&OP implementations fail | First, It is essential to obtain executive-level people sponsorship. It will fail if there is no topdown support for the agreed plan.
Next, cross-functional teams need to be created consisting of marketing, sales, planning and
finance team members
Although the formal meeting structure is extremely important, effective S&OP involves more
than holding monthly meetings. The project is also about producing real-time supply and
demand visibility and making sure that business intelligence can be added continuously.
Also important to compare all planning scenarios on their profitability and strategic customer
impact.
Lastly, if you don’t measure, you can’t improve. The risk of failure deals with the inability of
an organisation to show, share and adjust their performance measures and metrics. All people
involved in the S&OP process need to share the same vision and need to be measured along
the same line. This will foster an environment of continuous improvement and business
growth. |
| steps of S&OP principles | Strategic planning, demand planning and sales and operations planning are considered long
term planning activities. They interlink with the medium term capacity planning and
materials requirement planning. The short-term activities centre on the daily operations in
planning: scheduling, materials operational call offs and adjustments to production plans. |
