Talking to a client last week about his S&OP processes, (or lack of them despite the software) I realised that we were both using English, but were talking a different language. This is often a challenge in S&OP implementations, and even amongst those who have successfully implemented in different businesses, as a local jargon usually emerges to accommodate the vagaries particular to the organisation, product type, and culture. 

    Following is a simplified list I gave to him as a basis from which the conversations could be translated, in the common order of S&OP preparation.

  1. Demand planning. A compilation of data (past sales, orders received & delivered, orders received and undelivered) and qualitative data from the marketplace (competitive activity, accounts won & lost, distribution changes, seasonal influence, and so on). This is not a forecast of what will be sold,  it is a quantification of the influences on demand. This data is assembled in a huge variety of ways, often collated by the “Master Scheduler”, but not ideally to avoid capacity bias emerging too early, and the sales/customer management function, and operations management.
  2. Forecasts. A suite of forecasts for product families rolled into a consensus outlook based on the output of the demand planning process. At this stage it is unconstrained by questions of capacity & input availability. This is usually a specific role held by an individual, often titled “Master Scheduler” and is an ongoing responsibility, but signed off weekly for submission to the Capacity & planning meeting.
  3. Capacity & supply planning meeting, normally weekly. Puts the acid test of reality on the sales forecasts by adding the capacity and input availability constraints. The output is the daily/weekly production schedule to be executed based on the requirements and trade-offs/compromises that emerge from the more senior SOP processes.
  4. Pre-SOP. A meeting (normally bi-weekly) of the implementation level of management that makes the trade-offs and decisions that emerge from the Pre-SOP, ready for implementation, and identifies strategic resource allocation  issues for resolution. This is the key meeting, and provides input to the senior S&OP meetings, and the capacity & supply planning meetings
  5. S&OP sign-off by senior management, normally monthly. Over time in successful implementations this  becomes a rubber stamp on most occasions, but it retains the control of major decisions that need to be made that have more of a long term and capital utilisation impact than is available to the Pre-SOP management level. Things like new equipment, outsourcing, choices between major customers, contractual compliance, shift additions, and so on are usually signed off at this level.