ABSTRACT
In the face of increased requirements for timely reporting to Wall Street and other investors, a significant limitation facing every senior level executive is the lack of integration between what sales plans to sell, what operations plans to make, and what the financial plan expects to return. Each of these plans is typically a silo within each function. The sales team develops and manages to the sales forecast. The operations team develops and manages to a master production schedule (MPS). Finance develops and manages to the budget. In reality, each of these three plans is dependent on the other. According to Dick Ling and Andy Coldrick,
Sales and Operations planning is the process that brings together all the plans for the business (customers, sales, marketing, development, manufacturing, sourcing and financial) into one integrated set of plans. This process is accomplished once per month and is reviewed by the senior management team at an aggregate level. The process must reconcile all supply, demand and new product at both the detail and aggregate level and tie to the business plan. It is the definitive statement of what the company plans to do for the near to intermediate term covering a horizon sufficient to plan for resources and support the annual business planning process. Executed properly the Sales and Operations Planning process links the strategic plans for the business with execution and reviews performance measures for continuous improvement. With financial simulation it develops into an integrated business management process. Sales and Operations Planning is the integrated business planning process that provides management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer focused marketing plans for new and existing products with the management of the supply chain.
