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S&OE: Sales & Operations Execution

In the post of 17/02/2016, I commented on the importance of deploying the tactical plan, aligned with the S&OP process, into weekly operational plans, which guarantee the correct execution of what was planned. I received a number of requests for information about how this should happen, which motivated me to write this new post.

The process of breaking down S&OP into operational plans is commonly known as Sales and Operations Execution, S&OE, and seeks to detail sales plans for the preparation of weekly production, receipt and shipment plans, allowing for adjustments and the best possible allocation of resources in the face of demand variations.

In a scenario where it is increasingly difficult to estimate demand and its behavior throughout the month, alignment at the tactical level, with a monthly number, by product family and for the company as a whole, discussed and agreed upon in the S&OP process , does not seem to be enough to avoid the misalignment of the decisions of the different organizational areas.

It is necessary to guarantee, for example, that a low-turnover product, which is only produced once a month, will enter the scheduling of production in the most suitable week for restocking, and not just in the last week of the month. Or even that the weekly receipt plan is adequate to guarantee the availability of inputs that will be used in that week's production.

In practice, the S&OE is a shorter planning cycle, which begins with the revision of the sales forecast for the following week, analysis of the net inventory needs resulting from this revision and, from there, the elaboration of the receipt plans, next week's production and shipment. Every Friday, as the conclusion of the S&OE process, there is a meeting where the numbers are discussed and published.

Companies of Fast Moving Consumer Goods (FMCG), inserted in highly competitive and dynamic markets, are the ones that most feel the need to unfold their monthly plans. For companies in more stable industrial sectors, with more predictable demand over time, and with a more restricted product portfolio, the number of S&OP may be sufficient for the breakdown of operational plans by each area, without the need for new alignments to the throughout the month.

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Executive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.

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