Page 374 - Orlicky's Material Requirements Planning

CHAPTER 20 Sales and Operations Planning 353

demand from the marketplace, and they need a process mechanism to evaluate the
impact on their resources; they do not manufacture products, but they supply services
through people. Some practitioners call this sales and resource planning, but the principles
of S&OP are inherent in the process.
Are there some businesses that would not use S&OP properly? If a company does
not want transparency, for whatever reason, S&OP is a threat. Strategic moves such as
acquisitions or secretly preparing a business for a sale to other bidders, where the inten-
tion is only known to a select few, is not a fertile ground for S&OP. Businesses that are
only interested in maximizing year end regardless of the effect on the following year are
not good candidates either. S&OP treasures cross-functional strengths and medium- to
long-term success.

Global and Regional Considerations
This guide must be tailored to businesses that operate globally. The S&OP process works
globally, regionally, and locally (in countries). It also must work in conditions where there
is more than one business unit or routes to market.
Some companies have approached this issue with a traditional bottom-up approach,
where country S&OP processes are aggregated to the regions, which then aggregate to a
global S&OP meeting, as shown in Figure 20-15. This approach, called old S&OP on the
left-hand side, results in a bottom-up aggregation of numbers facilitated by ERP, seen
wrongly in our view, as the S&OP integration system. Global management sees its task
first as, “Can I believe the data?” and second as, “How can we communicate that we do
not like this number?” Disaggregation in these scenarios becomes a nightmare.
A better approach is shown on the right-hand side of Figure 20-15, where action can
be taken at the global level, and specific changes can be made to regions and then coun-
tries. This entails understanding that each element in the three- or five-step process takes
place globally, regionally, or locally and that these steps need to be aligned and integrat-
ed (Figure 20-16).

FIGURE 20-15 Old Style S&OP New Style S&OP
Old versus new
“Can I believe Global
S&OP.
the number?”
make decisions and take action.”
Global
Bottom-Up
Aggregation “Let us understand the major strategic levers
of Numbers and assumptions behind these numbers,
Region Region Top-Down and
Bottom-Up
Reconciliation
Country

Country