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Summary Chapter 10 - Introduction to Operations and Supply Chain Management (Bozarth)
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Summary of 4 pages for the course Supply Chain Management at UM
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sales and operations planning (S&OP; also: aggregate planning): a process to develop tacticalplans by integrating marketing plans for new / existing products with the management of the
s.c.; brings together all the plans for the business into one integrated set of plans
10.1 S&OP in the Planning Cycle
- planning takes place at several levels, each covering a certain period of time into the future (g Figure
1)
- strategic planning: takes place at the highest levels of a firm; addresses needs that might not arise for
years into the future
- tactical planning: planning that covers a shorter period (usually 12 - 24 months), although the planning
horizon may be longer in industries with very long lead times 1
- strategic planning: covers time periods ranging form weeks down to just a few hours (lowest risk)
- S&OP aims at helping businesses develop superior tactical plans; specifically:
i) it indicates how the organization will use its tactical capacity resources to meet expected demand
ii) it strikes a balance between the various needs / constraints of the s.c. partners
iii) it serves a coordinating mechanism for the various s.c. partners
iv) it expresses the business's plans in term that everyone can understand
Detailed planning and control Tactical planning Strategic planning
- limited ability to adjust - decisions about workforce, - "Bricks and mortar" and
capacity inventory, subcontracting, major process choice
- detailed planning (day to day, logistic,... decisions
hour to hour) - monthly planning - quarterly / yearly planning
- lowest risk - moderate risk - high risk
Now
Days/weeks Months out Years out
out
Figure 1: Different levels of Planning
10.2 Major Approaches to S&OP
- two major approaches: top-down planning and bottom-up planning (g Figure 2)
- top-down planning: a single, aggregated sales forecast drives the planning process; tactical plans
based on the overall forecast, resources divided across products / services later on
1 e.g.: engineer-to-order firms
- 63 - Jannis Mertens
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