Re-engineering the Business through sales and Operational Planning
Many companies have difficulty establishing a valid plan for sales, production, and inventory levels. The result is that:
• performance suffers
• customer service is poor
• production is inefficient, and
• inventories are too high.
The missing ingredient in these companies is a rigorous Sales and Operational Planning (S&OP) process. The purpose of this paper is to introduce the reader to the basic principles of the S&OP process, to present its objectives and key factors for success, to framework the process as to how and when it will take place, who will attend it and what the agenda should be. In addition, it aims to assist the reader, through a detailed analysis, to appreciate how a correct use of this mechanism combined with the full and enthusiastic participation of the management will help to achieve better performance and meet business objectives, through a balanced demand and supply, and by establishing the overall level of inventory and production required to satisfy customer orders and planned demand. The introduction of a well and disciplined S&OP process could be the right tool to begin with when reengineering or improving business process as it provides informed and multiple levels decisions about allocation of resources.
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