Page 358 - Orlicky's Material Requirements Planning

CHAPTER 20 Sales and Operations Planning 337

You’ll note that in this model there is no such step as a pre-S&OP meeting or exec-
utive S&OP meeting. Our thought is that the aligned and integrated five steps define the
entire S&OP process, and we have deliberately omitted reference to an S&OP meeting.
We have seen too many examples in large companies of the S&OP meeting being the
focus, and within large multinationals, S&OP meetings were springing up everywhere
by country, by cluster, by business unit, by manufacturing plant, and so on. Our view is
that the senior business management review would be similar to an executive S&OP
meeting; however, if this is preceded by a traditional pre-S&OP meeting, the agenda
would be more operational. Our view of a senior business management review is col-
ored by how different the integrated reconciliation process is from the traditional pre-
S&OP meeting.

Managing the Portfolio and New Activities
New activities have developed significantly over the last 10 years. As with traditional
S&OP in the 1980s, the notion of integrating new-product planning with supply and
demand planning of the existing portfolio was something of a breakthrough despite
being common sense. With increasing focus on innovation and the use of stage and gate
decision processes and innovation funnel management, some companies took the oppor-
tunity to integrate these emerging approaches and developing them in parallel to S&OP.
Early attempts at integration often focused on the commercialization/introduction stage
of the funnel. The aims were to ensure preparation for launch and phase-in/phase-out
and to see that cannibalization effects were understood, motivated by helping production
not to be caught out when introducing a new product.
Progressive organizations, often those driving very aggressive innovation agendas,
realized that connecting only the back end of the process missed opportunities to man-
age the innovation funnel in an integrated way.
The scope also was broadened in another direction by those who saw the need to
manage new activities beyond the narrower definition of product. Although the list is dif-
ferent in every application, a common theme in opening up this step beyond just prod-
uct is identification of the activities that:
■ Have a significant impact on demand and/or supply (volume and value) and any
other support resources
■ Need to be managed across the business in a joined-up way, with decisions driven
through a structured review process
■ Require visibility and management across a portfolio of activities, leading to better
prioritization, resource allocation, and decisions

This redefinition from new product to new activities opened the scope outside a
business-as-usual situation and in so doing opened up the appeal to a much broader
audience in the business. This changing context had a dramatic effect on the view and
understanding of the demand and supply steps of the process.