One of the most critical tasks for any manufacturing company is balancing assets (capacity, materials, and resources) with future demand.
Essentially, the main goal is to determine how to best meet demand given the available assets.
Ideally, your supply and demand should match. Striving for an alignment overnight is not realistic. However, by figuring out the obstacles hindering an alignment, you are one step closer a much better performance.
This article’s focus is on the obstacles faced in your supply-planning that hinder an alignment in your S&OP.
Let’s get started!
1. Different Timings
A typical obstacle many organizations experience is the segregation of timings. Sales and operations simply work according to different time dimensions; a remarkably simple, yet potentially very damaging, problem.
In our experience, sales planning is typically working on a monthly basis, whereas production needs to work in timings of weeks (or even days in some cases).
Preferably there should be an alignment of the timings used in sales and production. If your departments are working according to different timings, then it might be a place to start aligning forces.
One way to start overcoming this issue is by understanding why sales and operations are working according to different timings. What are the different needs sales and production have that make the timings different?
This leads to my next point and the next obstacle in line.
2. Different Focus
This step is, potentially, one of the reasons why there is a disconnect in the different timings used.
Sales planning’s focus is on the market side of the sales channels – paying attention to meeting the market’s demand.
Production’s attention, on the other hand, is on meeting the requirements of the distribution centers and serving the sales organization and the production plants to make sure every component for the process of making the products sold is available.
Sales is all about selling, and production about the manufacturing of products. When there is a separation of attention, it can lead to feeling disconnected from the planning issues occurring on the opposite end.
There is nothing wrong with separation of attention – it is there for obvious reasons. Nonetheless, we need to be aware of it happening, taking these dimensions into account in our systems and future planning if possible.
3. Different Spreadsheets
Another issue worth looking into is the BOM breakdown.
The bill of materials (BOM) breakdown can create disturbances if it is not handled continuously. The process of moving between sold goods, semi-finished materials and raw materials can be a difficult area to align.
This is especially true if data is recorded in different spreadsheets. It is an issue we come across frequently; sales and operations working according to different sets of data. Operating in different spreadsheets makes it harder to control changes and make revisions continuously.
It ultimately creates separation of information resulting in inconsistencies and confusion across your internal teams and external supply chain.
Consequently, all data should be kept in your ERP systems making sure everyone is working according to the exact same information.
Speaking of data, this next step touches upon a similar issue.
4. Different Unit Measures
Another rather simple yet annoying obstacle is that of sales and production working with different units.
Sales is working according to one unit of measure, whereas production is working based on different units.
Another issue related to different unit measure is how specific the units used are.
In our experience, production tends to work according to more specific unit measures (such as the specific machine lines, work centers etc.), whereas sales are working on a much more general level.
Naturally, switching between unit types is not optimal for an alignment between sales and operations. One way of dealing with the issue could be to implement the more specific measures, needed for production, into the sales procedures.
Another way of dealing with the issue is simply by defining a standard unit of measure moving forward, while considering the needs of both sales and production.
Where to Go From Here
The purpose of this article was for you to identify key gaps and disconnects in your supply plan.
Once you have noticed these common obstacles, you might initially want them fixed immediately. Honestly, this is completely fair. However, it is not that simple.
No matter how much work you put into it – and you ought to put work into it – you will never be able to completely avoid these issues.
Rather than thinking about fixing everything all at once, these obstacles should be seen as starting points for fixing your supply planning in the future. They should always be something to be aware of in your S&OP process.
Being aware of a problem is often the first step in the right direction.