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Chapter 4
Rough-cut capacity planning applies simple capacity-estimating techniques (like
those shown in the spreadsheet example in Figure 4-5) to the production plan to see if
the production plan is feasible. Frequently, rough-cut capacity planning techniques are
applied to critical resources—those machines or production lines where capacity is
usually limited. For a company with a simple manufacturing process, these estimates
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can be very precise. For more complex manufacturing processes, these estimates will
not be completely accurate, but they will ensure that the production plans are at least
reasonable. Managers can use SAP ERP’s more sophisticated planning tools at the detailed
scheduling level, when the plans that are developed will actually be converted into
manufacturing decisions.
While an integrated ERP system like SAP can provide sophisticated tools to support
the sales and operations planning process, the plan will only be successful if the
interested parties are committed to the process. If Marketing and Sales and
Manufacturing cannot agree on sales forecasts, promotions, and production plans, then
the company will find it is overstocking some items, running out of others, and spending
a lot of money on overtime production and expedited shipping. Successful sales and
operations planning depend on developing a culture of cooperation between Marketing
and Sales and Manufacturing; that requires continuous support, encouragement, and
enforcement from top management. As you will learn in Chapter 7, changing a
company’s culture is usually a much more difficult challenge than the technical
challenge of installing new hardware and software.

ANOTHER LOOK

Sales and Operations Planning for Blood Banks
Sales and operations planning (SOP) is typically used in for-profit manufacturing
organizations; however a recent article in the Journal of Blood Services Management
suggests there could be significant advantages to applying sales and operations planning
concepts to the blood-banking process. The supply chain necessary to supply blood is
significant and complex. For example, the nonprofit America’s Blood Centers is a
network of more than 600 donor centers supplying over 3,500 hospitals and healthcare
facilities in North America.
In the article “Benefits to Blood Banks of a Sales and Operations Planning
Process,” authors Donald A. Keal and Phil Hebert make the argument that sales and
operations planning concepts are applicable to blood-banking systems. The key reason,
they argue, is that sales and operations planning is a process “that links high-level
strategic plans to day-to-day operations.” Through the use of sales and operations
planning, managers can better manage change by proactively addressing potential
problems and opportunities.
One of the unique features of blood banking is that there are customers at both ends
of the supply chain. Blood donors are the suppliers but are also customers for the
donation centers. While there are still a significant number of blood plasma centers that
pay for donations, most blood donation is unpaid. On the distribution end, while hospital
patients are the recipients of donated blood, the healthcare provider is the blood bank’s
customer.
(continued)

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