Sales & Operations Planning by 3SKfe0tk


									 Sales & Operations
Chapter 3
MPC – 5th Edition
SOP provides the framework

 Materials resources and plant
  capacities can be coordinated
  consistent with the strategic business
 Key input into the capital budgeting
     1. SOP Fundamentals
   Balance between demand and supply
      D>S customer service suffers because the
       customer will not be able to receive the products.
       Costs increase because of overtime and fast
       freight (lett.: trasporto, cioè qui: spedizione)
      S>D Inventories increase because of the
       imbalance. Layoffs results from production rate
       cuts. Profit margin is reduced because of price
       cuts and discounting.
      SOP should provide a strategy for how demand
       will be met over the business cycle.
   The operations portion of the SOP is a plan for
    manufacturing that if followed will meet the
    strategic objectives of the firm from a
    manufacturing view.
   The Sales & Operations Plan (SOP) is stated
    in terms commonly understood by upper level
    management: aggregate units of output per
    month (sometimes per week) while the MPS
    (Master Production Scheduling) will be in
    units per week (sometimes per day).
      SOP Management (Cont.)
   The operations plan is not a forecast. It is the
    planned production, stated on an aggregate
    basis, for which manufacturing management
    is to be held responsible (sulla base del sales forecast).
SOP Management
 Links through the MPS to material
  planning and other MPC functions can
  provide the basis for what-if
  simulations of alternative plans.
 The value of the MPS function is
  questionable if there is no monitoring
  of performance – for instance
  deviations of performance.
  Reconciliation of the MPS with the
  operations plan is a constant activity.
    1. The monthly SOP process
   Run the sales forecast reports.
   Reviews the impact of changes & determine
    whether there is enough material and capacity
   Demand planning phase (override statistical
    forecasts when appropriate and bring mkt. in.)
   Pre-SOP meeting (Formulate agreed-on
    recommendations for top management
    regarding changes in the plan).
   Executive SOP meeting – Make decisions on
    the plans including spending for changes and
    break ties where there was no consensus.
2. SOP Planning Displays
 Forecasts – Bar chart of monthly
 Chase Strategy – Production output
  changes every time period to match
  the value of forecasted sales.
 Level Strategy – Production is at a
  constant rate of output with inventory
  buildups and depletions.
 In either strategy the plan is to satisfy
  the forecasted demand.

 Figure 3.11
 SOP committee is made up of the
  firms top management group
  representing all functional areas.
 Mission is
     To assure that SOP plans are
      consistent with annual business plan
     Establish performance measurements
      for evaluating the SOP process

  To monitor actual results against
   plans and make adjustments as
  To manage the FGI with the targets
   established in the SOP
  To provide direction to the
   development and execution of the
   master production schedule

    Figure 3.13

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