S&OP (Sales and Operations Planning) is not a computer system that can, at a flick of a switch, resolve your business issues. S&OP is a way of life, a way to help control your business, presenting the ability to formulate objectives at suitable levels of detail to ensure inventory levels are met, production schedules can (or cannot) be achieved and most importantly sales plans can be met.

Using S&OP as a tool

Having had many years experience at running an S&OP process the key is to become disciplined in the way it is approached. You need to know what your sales people are doing, ensure they submit both forecasts and deforecasts (and have tools to track if they are doing what they should do), collect data, analyse and share the information down the supply chain to ensure demand can be met by the capacity that is available in production, or service areas. S&OP can also be used not only to drive volume estimates but it can also be a critical tool to drive revenue forecasts as well. In many cases the Operations Director is the person to drive this process forward.

S&OP Planning

Sales & Operations Planning is a key alignment process that can bring all relevant areas of the business into position to meet business objectives. The process can enable organisations to achieve business growth and at the same time, depending on the forecasting horizons, define clearly what is going to happen in the future. This can help build sufficient capacity for a growing business or just a critical, identify where lower capacity is required and thus forward plans can take a new direction in order to bring costs in line with market place decline. At manufacturing level the S&OP can help develop rough cut capacity planning which in turn can cascade further down as far as raw material procurement. The S&OP is the master tool for balancing the business and if managed correctly can be one of the most critical elements in a business tool box.

Business Operations

If you are new to the S&OP process, it can actually be started in a very simple way with the use of market intelligence, sales data, requirements data (which can be calculated of you have the sales and forecast data) all in an excel spreadsheet. If you have multiple sites, then through spreadsheets the consolidation of the data can be easily achieved by a person with intermediate knowledge of worksheets. You have to have the passion to follow the process through and have the support of the company’s management. If you do not have this then there is a chance that all the good work you put in could actually result in nothing.

Management Buy-In

When creating S&OP plans ensure there is senior management buy-in as it gives the whole process suitable credibility. Key performance measurement (otherwise know as “KPM’s” or “KPI’s”) can ensure that the execution of the S&OP meets the expectations and performance of the business e.g. you plan to meet 98% stock availability by forecasting in your S&OP and creating suitable statistical replenishment plans to hit the probability of 98%. The theory of the S&OP should be understood by all right from the CEO down to the shop floor worker; everyone is aligned to meet the company’s objectives.

Supply and Demand

It is always a balancing act in terms of demand and supply. Businesses, in order to keep unit manufacturing costs at their lowest possible levels obviously want to keep their order books as full as possible. S&OP should not only be just a spreadsheet full of numbers, the process relies on excellent communication between sales and manufacturing in order that everyone benefits. Poor forecasts can influence a businesses success; forecasts that are too high can result in under utilisation of manufacturing, one that are too low and the businesses credibility can be severely dented as sales people wont hit their commissions and more importantly customers are let down. The ultimate issue could be that if you are a public limited company, then your share holders could be asking some serious questions on how the company is being run.

Forecasting

Forecasting is probably the most key element within the S&OP process. Business intelligence, Customer Relationship Management and dialogue with sales are all elements that should be used to acquire excellent forecasting performance. If you are developing a forecasting tool at this moment in time, I would certainly recommend it has a feature that can measure demand versus forecast and if possible an output (report) which can advise you of the forecast error being given every month (or whatever your forecasting time period is that is critical to your business).

In Conclusion

If you have not already done so for your business, no matter how large or small consider introduce an S&OP process. Keep it very simple and one that can be maintained on an ongoing basis. If you have CRM or other information ensure you use it to build a forecasting profile. The process will assist in ensuring all elements of the business are in alignment and it will flag any business critical issues, even ones that may be occurring in two years time!

Statistics on franchising are astounding in the US there were approximately 1500 brands franchised with more than 767483 outlets with a turnover of USD62460 billion. The figures are an indication that franchising is an accepted concept that is profitable.

All over the world people are choosing to run franchises instead of floating new businesses as with franchising all the basic market surveys, research, and business plans are already in place and working. So, entrepreneurs young and old choose to become franchises of a running and profitable chain and be their own bosses. If working for a company is not your cup of tea then consider franchising as a business module, it has many benefits:

1. When you take up a franchise you are taking on a business that is already flourishing. The business module is complete in all respects and any problems have been ironed out by the person who first established the business. What you get is a ready made package that just needs to be run.

2. By franchising you get not just a business by all the support you need in terms of marketing, customer relations, accounting, staff training and deployment, as well as in the day to day running. You become part of a local or global group that networks and interacts on all aspects of the business.

3. Solutions to hitches or problems encountered in business are always on hand, the franchise chain will lend complete technical support and any other assistance required. The chain will function as a single unit as far as technology, machinery, group branding, and advertising and so on is concerned.

4. The progress or expansion in the business will occur as a collective group and professional consultancies and so on will be carried out for the whole group of units. This means the think tank is much large as also the resources.

5. Aspects like future plans, product research, buying power, expansion of activities, market surveys, and more will be done as a chain and so you will just reap the benefits. The risk will be collective and not individual as in other business modules.

6. You will be your own boss and be working towards securing your own future. The devotion and long hours will help you reap many benefits and respect.

7. With franchising your staff would be trained by the franchise major and so what you will get is people who can function well without constant supervision and watching over. As the world innovates your business will keep abreast of the changes.

World wide business gurus advice that “a franchising business module is the safest and most dependable choice in business entrepreneurship.” A franchise can make dreams come true of owning and running your own business without the accompanying heartaches.