Sales and operations planning of supply chain

 

Sales and operations planning (S&OP)  is an aspect of supply chain which aims at creation of a unified, aligned and lucrative business plan. It draws input from various functional aspects of a business including sales, marketing, manufacturing, logistics, etc. This cross-functional and diverse collaboration can create consolidated plans which most stakeholders are interested to contribute towards, 

S&OP is a key component of the manufacturing supply chain process, helping companies control their input costs to be able to provide effective goods or services to their customers. By leveraging a supply chain optimization logistics planning software, this goes beyond just maximizing the overall supply chain performance in terms of material delivery excellence. It also stretches much beyond the scope of simply relying on the performance of an individual business unit or department in isolation without taking into account its impact, positive or negative, on the organization as a whole.

The S&OP process involves finding the critical optimal solutions that can generate the most productive and lucrative organizational performance while including all possible operational constraints and bottlenecks in the process. It also evaluates the various possibilities such as the best plants to manufacture the required product lines. Also, it includes the key considerations such as how much of the product or service to sell and finally choosing the most cost-effective markets to operate in.

Gartner predicts that by 2023, intelligent algorithms and AI techniques will be an embedded or augmented component across 25% of all supply chain technology solutions. Advanced technologies like machine learning, AI, and data science, when applied to the supply chain planning process, automatically create a seamless and optimized supply chain for manufacturers. This helps solve several problems for them including:

Inventory Control - Managing inventory is one of the most crucial aspects of supply chain optimization as it affects several other parts of your supply chain, including procurement, order fulfillment, and production capacity planning. This includes procurement of raw materials, spare parts planning, and final product delivery, all of which come under inventory control. 

Demand Forecasting- With an optimized assortment planning software, manufacturers can significantly benefit from accurate planning and forecasting demand. An accurate view of the demand enables supply chain managers to get the right picture of the market demand and supply fluctuations and maintain the right amount of inventory available at all times. With effective demand planning, manufacturers can also cut costs significantly and can create an effective production and delivery plan while also drastically reducing lead times.

Factory Floor Control-  Manufacturers can also see great benefits with respect to the overall factory floor control. Having a single system in place which gives accurate inputs about what’s going where across the entire factory floor, can help manufacturers reduce dependencies on external purchase orders or forecasts to make supply chain decisions. Also, the customer, more linked to the process, enjoys an improved ordering experience. And with a smart supply chain management solution, manufacturers also get an accurate estimate of the workers’ time allocation throughout the project lifecycle, which means they can bill more frequently and with better precision.

Critical Decision Making - Day-to-day decision making on the plant floor can be extremely time consuming and conflicting too for manufacturers. In fact, the ability to make better decisions is often overlooked when optimizing a supply chain. Yet, it is also a critical aspect to consider demand sensing. With supply chain network optimization, you increase the efficiency of your supply chain, and therefore you are better informed and ready to make more positive and impactful decisions.

Bottleneck Elimination-  Untimely, operational bottlenecks cause a $12 trillion dent on the global production market and contribute to a major share of this waste. This waste can keep manufacturers far away from achieving operational targets and deeply impact their logistics management system and supply chain management strategy. When manufacturers optimize supply chains, this helps them predict and eliminate operational bottlenecks which result in clogging productivity, profitability, and growth. With this real-time visibility to production and performance indicators, plant managers can flag bottlenecks early so they can be resolved with minimal impact. This helps eliminate the ever-shifting bottlenecks.


AI in SKU optimization and the S&OP process, helps you arrive at the optimal decisions. AI and machine learning work together to recognize patterns and use this information to predict and provide insights that help and accelerate the decision-making process.  AI provides a deep understanding of customer shopping patterns and helps you increase sales by suggesting the right products to stock on your store shelves. This helps you achieve high market penetration for all top-performing SKUs, enhancing the portfolio management process, and preparing your business leaders, managers, and field operators with data-driven insights. With an intelligent AI-driven solution, S&OP can yield several benefits such as increased customer service levels, greater profitability and product revenues, reduced inventories and lesser obsolescence, shorter lead times, better responsiveness and business control