Forecasting and demand planning

Sales & Operations Planning

Sales & Operations Planning (S&OP) – Align resources and capacities specifically with market demand

Companies – whether manufacturing or trading-oriented – face the ongoing challenge of deploying their resources and capacities in a way that ensures customer demand is met reliably, on time, and efficiently. However, the necessary prerequisites are often lacking: reliable market demand forecasts, coordinated and forecast-driven planning processes, cross-functional collaboration, and the rapid communication of changes in market demand to the relevant business units.

Frequently, there is a lack of clearly defined methods and concepts to systematically capture and forecast market demand, and to pass it on as an aligned and consensus planning basis to production, procurement, and assembly. The result: stockouts of high-demand products, excess inventory of slow-moving items, delayed deliveries, and costly rescheduling in production.

  

S&OP as the Key to Integrated Planning

Sales & Operations Planning (S&OP) is a central element of modern supply chain management. The goal is to optimally synchronise market demand with available resources and capacities through a company-wide, structured planning process. In doing so, strategic, tactical, and operational plans are interconnected across departments – from production and assembly planning to procurement and workforce planning, all the way to inventory management.

A professionally implemented S&OP process creates transparency, improves cross-departmental alignment, and enables reliable, market-oriented business management.

SIOP – The Next Step

By integrating intelligent inventory planning strategies, S&OP evolves into an even more comprehensive concept: Sales, Inventory & Operations Planning (SIOP). This enables not only capacities and market demand, but also stock levels to be managed in a targeted and efficient manner – ensuring maximum delivery capability with minimal capital tie-up.

Through our customized support as supply chain management consultants, we work with our customers to develop the optimal S&OP process or optimize existing processes.

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Our Services as a Supply Chain Management Consultancy in the Area of S&OP

  • Development of practical concepts and processes for demand planning and forecasting
  • Design of holistic S&OP concepts at strategic, tactical, and operational levels – for make-to-order and make-to-stock production across all industries
  • Development of inventory planning strategies and their integration into S&OP
  • Design of company-specific, customised S&OP or SIOP processes
  • Definition of the necessary S&OP/SIOP meeting structures for strategic, tactical, and operational levels
  • Development of suitable organisational structures for S&OP
  • Definition of appropriate KPI systems for monitoring, performance measurement, and control of S&OP/SIOP concepts and processes
  • Specification of functional requirements for supporting IT systems
  • Selection of suitable IT systems for S&OP or SIOP
  • Training of departments and support during the successful implementation of S&OP/SIOP
Logistics consulting in Stuttgart, Munich and Dortmund

Benefits for Companies from the Implementation of S&OP and SIOP:

  • Improved forecasts of market demand
  • Increased delivery reliability and customer satisfaction
  • Efficient and demand-oriented use of the company’s capacities and resources
  • Early identification of potential supply bottlenecks
  • Faster response to market changes and supply risks
  • Optimised inventory levels of purchased parts, semi-finished goods, and finished products – less excess stock and write-offs
  • Greater transparency and improved cross-departmental collaboration within the company
  • Fewer ad-hoc actions and emergency measures (“firefighting”) in day-to-day operations
  • Enhanced financial control and greater predictability

Challenges in Implementing an S&OP Process

Although the benefits of S&OP are considerable, companies can encounter various challenges during implementation. At ebp-consulting, we are familiar with these challenges and work together with our clients to develop suitable solutions. Common challenges include:

1. Data Integration

An effective S&OP process relies on accurate and up-to-date data from the involved departments and organisational units. However, many companies struggle with integrating data from various sources, which can lead to inconsistent forecasts and unreliable bases for decision-making.

2. Resistance to Change

Changing established processes can meet resistance from employees accustomed to the status quo. Furthermore, each organisation traditionally pursues its own goals, which must be aligned and synchronised. A successful S&OP process depends on data from sales, procurement, logistics, and production. To overcome this resistance, effective change management strategies and a clear communication plan highlighting the benefits of the new S&OP process are required.

3. IT Support

While technology plays a crucial role in S&OP, selecting the appropriate software support and integrating additional software into the existing ERP landscape can be challenging and costly. Ensuring seamless and effective data communication, including between different operational IT systems, is vital for success.

4. Continuous Improvement

An S&OP process is not a one-time implementation but a continuous improvement process. Companies must regularly review and refine their processes to adapt them to market changes and evolving business requirements. This ongoing commitment can be resource-intensive and requires the approval of senior management.

Further consulting focus areas in supply chain management:

  • Network optimisation

  • Transport optimisation

  • Make or Buy

  • Inventory Optimisation

  • SCM strategy

  • Procurement & supplier management

Selected Examples of Successful Projects by ebp in the Development and Implementation of S&OP Concepts:

  • Development of an S&OP concept for a medical devices trading company in Europe
  • Development and implementation of a plant-wide Sales, Inventory, and Operations Planning (SIOP) concept for the production of semi-finished goods, finished products, and procurement of raw materials for a manufacturer of specialty high-speed cables in China, the USA, and Germany
  • Establishment of a comprehensive concept and organisational structure for Sales and Operations Planning (S&OP) for multi-plant planning at a leading manufacturer of insulating glass
  • Development and implementation of a global S&OP concept, including the associated processes and organisational structures, for a pharmaceutical manufacturer
  • Development and implementation of a global SIOP concept and an integrated production planning concept with the necessary organisational structures for a food manufacturer
  • Development and implementation of an S&OP concept at a manufacturer of door fittings
  • Development of an S&OP concept at a manufacturer of consumer electronics
Forecasting and demand planning by ebp-consulting

Sales & Operations Planning Processes with ebp-consulting

In summary, the S&OP process (Sales and Operations Planning) is a necessity for both international corporations and medium-sized companies aiming to succeed in today’s competitive environment. By focusing on aligning supply and demand, improving collaboration, and optimising decision-making, companies can achieve significant benefits such as increased efficiency, greater customer satisfaction, enhanced flexibility, and improved financial performance.

However, successful implementation requires overcoming numerous challenges, such as data integration and resistance to change, which necessitates the expertise of experienced consultants like ebp-consulting. Collaborating with professionals familiar with the intricacies of S&OP can facilitate a smoother transition and ensure long-term success.

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Irene Kocher

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