S&OP Process

Summary

This video provides an overview of ALA's Sales and Operations Planning (S&OP) process, highlighting its importance in managing a complex global supply chain. The process involves forecasting demand, identifying capacity constraints, and making cross-functional decisions to ensure product availability while minimizing costs. The example of butter production for Christmas is used to demonstrate the process, from pre-alignment meetings to global executive decision-making. The S&OP process operates on a monthly cycle, optimizing milk handling, ensuring high delivery accuracy, and driving the company’s operational efficiency through continuous planning and decision-making.

Takeaways

• 😀 Ala's Sales and Operations Planning (S&OP) is a global, tactical decision-making process that focuses on achieving a structured approach to manage demand and supply over a 1 to 15-month horizon.
• 😀 The S&OP process is designed to create transparency by providing a clear overview of numbers and potential issues within the supply chain.
• 😀 Capacity constraints at Ala's production sites are carefully reviewed, with decisions made to optimize their utilization and meet milk inflow requirements.
• 😀 The process emphasizes the importance of forecasting, with a goal to handle inaccuracies and improve the ability to forecast demand effectively.
• 😀 Ala's complex supply chain spans over 100 markets, 60 dairies, 200 brands, 1,000 product types, and over 20,000 SKUs, requiring careful planning and coordination.
• 😀 The S&OP process includes monthly meetings that begin with a product forecast and are followed by cross-functional meetings to resolve potential supply chain issues.
• 😀 In the example of butter for Christmas, sales forecasts are made, and any discrepancies between supply and demand are identified early in the process.
• 😀 All plants participate in the S&OP process by reviewing upcoming demand and identifying potential issues, with global planning stepping in to help resolve any challenges.
• 😀 Unresolved supply chain issues are escalated to a global executive S&OP meeting, where representatives from markets, supply chain, finance, and global planning collaborate to find solutions.
• 😀 Key decision factors in the executive S&OP include profitability, forecast accuracy, market impact, and strategic importance, with decisions being reviewed periodically to establish operational principles for similar future challenges.

Q & A

What is the purpose of Allah's Sales and Operations Planning (S&OP) process?

The S&OP process is designed to provide a structured meeting framework that allows for timely decisions, focusing on a 1 to 15 months horizon. It creates transparency of the numbers and issues, ensuring that capacity constraints, material flow, and forecasts are handled efficiently.

What are some of the key issues managed within the S&OP process?

Key issues include managing capacity constraints at production sites, securing milk inflow, demand shaping, and improving forecasting accuracy to ensure the right product is on the shelf at the right time.

How does the S&OP process help manage forecast accuracy?

The S&OP process enhances the ability to forecast by identifying and handling inherent inaccuracies. It helps balance supply and demand over a 15-month horizon and makes adjustments when forecasts are not met.

How complex is the supply chain that the S&OP process manages?

The supply chain is highly complex, involving over 100 markets, 13 billion kilos of milk, 60 dairies, 200 brands, more than 1,000 product types, and over 20,000 stock keeping units.

How does the process begin each month?

Each month, the process starts with a product forecast for the coming 15 months from the markets. This forecast is then reviewed and adjusted by various teams to align supply chain capabilities with expected demand.

What happens if there are issues in meeting the forecasted demand?

If there are issues in meeting the forecasted demand, corrective decisions are made during a global cross-functional meeting called the Global Executive S&OP. If needed, issues are escalated to further meetings for resolution.

What is the role of the Global Executive S&OP meeting?

The Global Executive S&OP meeting brings together markets, category teams, supply chain, finance, and global planning to make decisions on how to address unresolved issues and determine the best course of action, often prioritizing profitability, strategic importance, and forecast accuracy.

Can you explain the butter example used in the script?

In the butter example, the business unit head predicts Christmas sales to be at an index of 120. The forecast is reviewed by various stakeholders, and the supply chain evaluates whether there are any capacity issues in meeting this demand, such as milk and fat balance, production capacity, and freezing storage.

What is the process if supply chain issues cannot be resolved within the local teams?

If local teams cannot resolve supply chain issues, they escalate them to the Supply Review meetings. If these issues affect multiple markets, they are brought to the Global Executive S&OP for a global discussion and resolution.

How does the S&OP process ensure continuous improvement?

The S&OP process ensures continuous improvement by reviewing decisions made in the Global Executive S&OP to determine if they should be operationalized as standard principles for similar future situations. This helps refine the process and optimize decision-making over time.