Acme has been using S&OP for a relatively short time to support their business.
They have used S&OP for around two years. Already now the S&OP have reformed the philosophy of planning. According to the employees they are nowadays focusing more to future than the history and budget. By better assessing the future demand and they have noticed to have improved demand planning accuracy. In supply planning steps Acme is more able to optimize the production and material procurement better and through that negotiate with suppliers about the raw materials (prices and delivery) in a more effective manner. Supply chain management have got positive effects with the S&OP process too. For example if Acme receive information that some product demand is going to reduce in next year they can balance the effects to other products. (Region Sales and Marketing Manager-M, interview 13.8.14)
However, the recent needs were to get better S&OP tool to get more systematic way to make plans and through that make the S&OP process more effective. Before
Acme had made the S&OP plans, especially demand plans, by having last year's plan as the baseline and compare that with the change in percent and made the final modifications to the planning with "gut feelings”. (Sales & Operations Planning Process Owner, interviews 23.7.14). The better S&OP tool, which should be user-friendly and easy to use and utilize part of the S&OP planning, Acme can get better focus to handle correct issues in S&OP. They can focus to make more accuracy S&OP and demand plans with shorter time.
Acme decided to invest in a better S&OP tool including good practices to support their S&OP process. They found a good S&OP professional partner, Chainalytics, to support and construct the tool. Chainalytics is global supply chain consulting company. They support customer companies to capture the maximum value from their supply chain. With expertise of end-to-end supply chain they can support transformation in every planning horizon (strategic, tactical, and operational) in supply chain in numerous domains. Their advantage is to support decision-makers with objective insight by employing specialized knowledge, using proprietary content, and powerful technologies. Their specialties areas are for example Supply Chain Design, Sales & Operations Planning (S&OP), Logistics Operations and Service Supply Chain. They are located in Europe, North America and Asia and are offering their services globally. (Chainalytics – website)
The new S&OP tool will help Acme’s to make their S&OP plans easier and more effective via implementing more systematic way to make plans. These new practices to perform the monthly S&OP cycle with personal responsibility areas will tell what is expected in each step of S&OP. In addition, it will present the suggested assume inputs and outputs in each steps of S&OP to get the S&OP process effective. The tool will improve statistical forecasting and get more accurate and relevant aggregated plan distribution to the detailed and lower-levels (mix-level). (S&OP tool reg. –document, Acme)
The different business units (BU) of Acme have their own practices to do their S&OP, because of the business characteristics. Acme-M makes demand plans with
product groups in regions and globally with flexibility. Acme-D made demand planning with product group in the regions and production units more like region by sales region planning. With the new S&OP planning tool all BU’s are going to use the same platform and they need to adjust their planning practices a bit. The planning elements are same and the main planning level is defined to be planning area – product group, which can be divided to more detailed levels (e.g. frame size, planning item). Next the whole monthly S&OP practices are presented. Although the name is monthly S&OP cycle it does not mean that they are calendar months.
Future monthly S&OP cycle is suggested to be estimated 3,5 weeks long. The reviews and meetings during the S&OP cycle are meant to control decision and plans. (Business Development Manager, interview 30.6.2014; Sales and Operations Planner, interview 21.8.2014; Väisänen interview 6.9.2014)
6.2.1 The monthly S&OP of Acme
Figure 11. The monthly S&OP of Acme (adjust. Acme SOP Tool Req Spec-Annex 1- v1.02)
Above is presented the monthly S&OP (figure 11.) of Acme with the main actions that are discussed in the following:
Week 1: Regardless of the business units the first week will start to compose demand plans in regions using regions planning guidance and product review on the baseline. This is a bottom-up demand planning. After regions’ demand plans are made the week will continue with demand plan reviews (in global sales / sales regions). End of the week there is global demand plan creation and validation in global sales, and after that the global demand plan will be published.
Week 2: Next week is named as Operations planning (also known as supply planning). The week will start with inventory and production requirement planning in global logistics. The week is going to end with global operations plan review with ready planning data of global operations.
Week 3: Is named to bee local operation planning and it will start with planning the local production in production units, including the capacity and material planning.
It follows with a local S&OP management meeting, followed by another review with local units with focus in operations planning. Before the final local operations planning publishing the final activity is finalization of the global plan in global logistics.
Week 4: The final week is starting with the pre-meeting where the main target is to balance the S&OP plans, where they should made the proposal of balanced plan and solve any conflicting issues. Continuing with the final executive meeting where they make the last decisions and actions points to the future months. Wednesday is named to be the day to get the balanced S&OP plan ready.
The new S&OP tool is going to support the monthly S&OP process of Acme (look the Figure 11). The new tool will create a good base for the S&OP process.
However, with the new S&OP there is the question on how to manage soft information in S&OP. In this thesis the development and improvement suggestions to the S&OP process are presented as well as practical improvement action for the S&OP tool. Those improvement suggestions are in relation to the soft information management and utilization, and its’ supporting functions.