Sales & Operations Planning

Integrated Planning

Sales and Operation Planning is “a process that directs operations strategically to continuously gain a competitive advantage through integration of customer-oriented marketing plans, both for new and existing products and supply chain management. This process gathers all the business plans (sales, marketing, new product development, manufacturing, purchasing, and finance) into a single planning cluster.” – APICS, (The Association for Operations Management)

Improving communication and coordination between different departments on sales and marketing activities, trade promotions, production, new product launches, and similar issues is essential to provide timely, required information for supply, production, and demand planning and for delivering all orders on time, in full, and at the minimum cost.

Although this process is critical for manufacturers in terms of reaching high-level supply chain performance, most companies do not possess well designed and/or properly applied sales and operational processes.

It could be the result of top management either not being interested or not aware of its importance. There may be obstacles which prevent knowledge sharing and reaching an agreement on plans and also contradictory performance metrics and incentives. Various departments might not have the right tools to develop forecasts and to share detailed data across the board. There could also be a perception that shared forecasting is a zero sum game where someone loses constantly. Many companies do not comprehend the constraints regarding supply chain and finance. Hence, they may agree upon a demand plan, but they still don’t know whether they are capable of delivering products according to this plan. Even if they can merge several functional plans within the organization, they still have a belief that the plan cannot be executed effectively.

Deloitte recognizes that developing world-class sales and the operational planning process is– more complex than making one sole agreement. Operational planning is related to acknowledging market dynamics and being responsive to demand. When there are constraints preventing the easy match of supply and demand, there will be financial consequences in terms of the product and the customer. In order to obtain the required results, misalignments between performance metrics and the causes of these misalignments should be overcome and a change management approach should be applied.