Differences btw Sales and Operations Planning, Demand Planning and Forecasting

To maximize profits is the goal of a business.So how do we accomplish this goal from a supply chain perspective? Let us analyze the main aspects of how supply chain can contribute to the company’s goals.

We know the importance of demand planning which is to ensure timely, cost effective and efficient operations.We also want to make sure that product is available to maximize marketplace revenues. A variety of information is required in demand planning in other to forecast the demand of the products we sell. The objective is to give useful information for the Sales and Operation Planning in other to ensure that demand is planned properly.

“Demand planning is can be frustrating and most misunderstood of any application of Supply chain planning (SCP) as noted by Supply Chain Insights. The following aspects are important to the success of our demand planning.

Our products demand should be understood

There may be dependent demand, inter/intra plant demand, demand for service parts and independent demand for any given product. Usually, we are forecasting service parts and possibly independent demand but we have to plan all demand types in our supply chain processes so that availability can be ensured.

Demand volatility of one of the main points. Generally, the more knowledgeable we are about the demand for our goods and services, the better our predictions will be. For instance, the demand volatility is created by the bullwhip when it is moving via the supply chain.

You should understand the meaning of Demand Planning

The use of experience and forecast to estimate for various products at various points in the chain of supply is known as demand planning. Generally, who does the predictions, what products are we dealing with, in their life cycle, where are they, how does their demand pattern looks like, do we comprehend the market volatility, & who is disseminating the required additional information so that appropriate forecast is ensured? Of course, there may be more questions that require answers depending on the particular company.

For example, a firm that over forecast a lot of large product lines consistently which leads to lower inventory turn and increased inventories. While the firm might or might not see this as an issue, the demand planning enables one to understand what should be the inventory objectives, and also what should be the suitable forecast via ongoing analysis.

Understand how Forecasting and Demand Planning Tie into Sales and Operations Planning

Forecasting and demand planning work hand in hand. So to provide value, they must be incorporated into other operation aspects.Sales and Operations Planning is among these processes.  Sales and Operations planning (S&OP) is defined as “a process which is poised on ensuring a continuous alignment between supply, demand, manufacturing, and inventory plans on one hand, and between these strategic plans and the business plan on the other hand, so that operational performance can be maximized.”

According to the study made by Aberdeen Group, it was noted that Sales and Operations Planning is seen by more than half of Best-in-Class firms as a tactical priority. This process can make the company to be successful as it offers a tool for decision making used in S&OP management. But Sales and Operations is essential to more than just these company areas. It is as well an essential aspect in Finance, Manufacturing, and R&D.

Reasons to opt Sales and Operations Planning

Sales and Operations Planning

Sales and Operations Planning(S&OP) is the high-level plan that you create every one to three months to optimize and balance supply and demand across the enterprise. With the Adexa's powered S&OP solution, you can set inventory levels based on your service-level commitments and use them to establish optimal inventory buffers. You can set time varying business rules -- such as sourcing across multiple plants and multiple suppliers with qualifications and postponement strategies -- as well as identify imbalances, capacity bottlenecks, and material shortages.

Reasons

• Accountability
• Teamwork
• Alignment
• Decision Making
• Visibility
• Finance Integration
• Responsiveness
• Monitoring
• Risk Management
• New Product Introduction

Implementing S&OP application can gain broader value and competitive advantage by using it with connected applications such as:

Demand Planning
Supply Chain Planning
Capacity Planning (Constraints)
Inventory Planning
Inventory Management

opt Sales and Operations Planning

Logistics and Supply Chain Management

Most entrepreneurs and business leaders would have heard about Logistics and supply chain planning. A business has to manage all of the systems within itself and has to deal with several factors within the productivity line in order to cope up with orders, withdrawal, refunds, relations, and other issues.

The Logistics and supply chain management is generally a method in business that includes planning, controlling, data collecting, carrying and storing, other services, communication services and network which enhance product quality and promote improvements as well as further developments from the beginning of a productivity line to the end of a productivity line to ensure that customers at the end will receive the best of all. The management itself cares about feed backs in order to compute out the percentages of likes and dislikes so that products can be improved or produced to supply the demands and wants of the customers.

The supply chain planning allows relationships within a business to flow smoothly (having inventory planning, demand planning & Sales and Operations Planning is a plus). A relationship between a purchaser and a manufacturer is also one of the chains within the supply chain management. There are different kinds of supply chain management in logistics which vary from case to case due to different demands and situations. Its complexity in management could also vary from each other depending on the size of a business and the numbers of items manufactured.

Elements of the Supply Chain

Logistics and supply chain management has numbers of elements that are linked together to allow a smooth flow of productivity. The chain begins with a supplier always and ends with a customer once the whole system is processed.

1. The customer or purchaser starts off by purchasing and deciding on items needed for sale offered by a company. Then, by contacting a sales department of any specific companies or suppliers, the amount of items needed, the date of delivery, and a specific receiving place should be written down or noted down once asked and ensured. If products are needed to be manufactured, the sales order will include additional fees and requirements that are needed to be fulfilled by the production facility.

2. The requirements for the customer's ordered sales will be combined with other orders. The production facility would also have to make plans and discuss several topics in relation to productivity to ensure customers high-quality products and make sure not to jump out or move away from the deadline. Plans include records of what is needed to be bought; items that are needed to be manufactured, and raw materials.

3. The purchasing facility receives all the information and raw materials; what is left are for them to follow the orders made by the customers and know what is needed. The purchase facility then sends all information including orders to selected suppliers to deliver raw materials and other things that are needed to the manufacturing department for them to complete the production of products within a required time period.

4. Once raw materials are accepted and received by the suppliers, they will have to check for quality and accuracy; if approved, materials will move into a warehouse. The suppliers will then send an invoice to the company number of materials delivered; these materials will be kept in storage until they are called out by the production department.

5. When the time has come for products to be produced, raw materials will be called out to the production department to complete orders. The finishing products ordered by customers are manufactured by raw materials that were once purchased from suppliers. Once production is done, all products will be sent back to the inventory or storage and will later be delivered to the customers.

6. After finished products are moved into warehouses and kept in storage, the shipping facility will determine which method to use in order to ship all products efficiently and consider the costs of transportation to minimize as many expenses as possible plus, deliver all products on time. Once all finished products are delivered successfully, the company will send an invoice repeating the number of products delivered, time, date, and what products are delivered.

A Healthy Operation

To make sure the supply chain planning will work well it is important to have associated technology and tools. In order for a business's productivity to improve, operate efficiently, and have the highest level of customer satisfaction, the supply chain planning has three main activities where businesses and different parts of companies have to focus on: strategic, tactic, and operational activities.

1. Strategic activities- the company has to consider the size of the whole system, the location, partnerships with suppliers, products needed to be manufactured, and other factors that will affect the whole organization. At this level, managers will have to look closely at strategic decisions whether or not it covers the whole entire system.

2. Tactical activities- Tactical decisions include various techniques and ways to reduce costs and use up its benefits for the system. These decisions might include performing ethical practices, working with logistics companies for suggestions and tips, and get advice in order to reduce transportation costs and warehouse or storage costs.

3. Operational activities- Decisions are made daily within the system from the beginning of the productivity line to the end of the line of production. Operational practices include making plans, schedules, purchasing agreements with suppliers, taking orders from customers, and moving products into warehouses.

Technology and its Effects on Businesses

In order for a business to succeed and be able to compete with other businesses (especially international businesses), it is a must to have technological devices, tools, and a working or an operation system. Technology has now become our daily tools we use in life; without technology, businesses wouldn't flow or run efficiently in our modern world today. Behind the scenes, every large business has technological systems and one of them is called the Enterprise Resource Planning. This expensively purchased software does so many things that will squeeze down the need for employees and reduce costs as a long-term effect. This software will monitor the whole supply chain system and keep records of all information which includes date of purchase, time of purchase, the amount of orders, and other information set by the settings of the software to ensure safety and accuracy.

Forecasting and Demand Planning Tie into Sales and Operations Planning

To maximize profits is the goal of a business.So how do we accomplish this goal from a supply chain perspective? Let us analyze the main aspects of how supply chain planning can contribute to the company’s goals.

We know the importance of demand planning which is to ensure timely, cost effective and efficient operations.We also want to make sure that product is available to maximize marketplace revenues. A variety of information is required in demand planning in other to forecast the demand of the products we sell. The objective is to give useful information for the Sales and Operations Planning (s&op) in other to ensure that demand is planned properly.

“Demand planning is can be frustrating and most misunderstood of any application of SCP” as noted by Supply Chain Insights. The following aspects are important to the success of our demand planning.

Our products demand should be understood

There may be dependent demand, inter/intra plant demand, demand for service parts and independent demand for any given product. Usually, we are forecasting service parts and possibly independent demand but we have to plan all demand types in our supply chain processes so that availability can be ensured.

Demand volatility of one of the main points. Generally, the more knowledgeable we are about the demand for our goods and services, the better our predictions will be. For instance, the demand volatility is created by the bullwhip when it is moving via the supply chain.

You should understand the meaning of Demand Planning

The use of experience and forecast to estimate for various products at various points in the chain of supply is known as demand planning. Generally, who does the predictions, what products are we dealing with, in their life cycle, where are they, how does their demand pattern looks like, do we comprehend the market volatility, & who is disseminating the required additional information so that appropriate forecast is ensured? Of course, there may be more questions that require answers depending on the particular company.

For example, a firm that over forecast a lot of large product lines consistently which leads to lower inventory turn and increased inventories. While the firm might or might not see this as an issue, the demand planning enables one to understand what should be the inventory objectives, and also what should be the suitable forecast via ongoing analysis.

Understand how Forecasting and Demand Planning Tie into Sales and Operations Planning

Forecasting and demand planning work hand in hand. So to provide value, they must be incorporated into other operation aspects.Sales and Operations Planning is among these processes.  Sales and Operations planning is defined as “a process which ispoised on ensuring a continuous alignment btwsupply, demand, manufacturing, and inventory plans on one hand, and btw these strategic plans and the business plan on the other hand, so that operational performance can be maximized.”

According to the study made by Aberdeen Group, it was noted that Sales and Operations Planning is seen by more than half of Best-in-Class firms as a tactical priority. This process can make the company to be successful as it offers a tool for decision making used in S&OP management. But Sales and Operations is essential to more than just these company areas. It is as well an essential aspect in Finance, Manufacturing, and R&D.

Inventory Planning managing records with other benefits

INVENTORY PLANNING BENEFITS

Business managers pay attention closely to inventory due to its huge impact in their various businesses. It’s has its impact on various daily routine activities or on other planning like Supply Chain Planning, Demand Planning, Sales and Operations Planning (s&op)   The creation of forecasts in other to know how much inventory should be available to meet the demand of the consumer is known as Inventory planning.

Inventory control is defined as the process by which managers keep records of inventory items.

Facts

Internal procedures and policies for inventory planning are usually created by business owners. When managing the company’s inventory, the procedures and policies must be followed. Procedures and Policies give an outline on who can make inventory orders and methods to deal with outdated goods. Several benefits can be derived from inventory control and planning when companies implement them.

Here are the benefits of Inventory Planning

Improved Cash Flow

Companies can manage their cash flow with the help of inventory planning. Large amounts of inventory cannot be purchased by small businesses due to lack of large capital. Procedures and policies are implemented by business owners limit inventory spending. Improvements in cash flow can also be derived from buying the available lowest cost inventory.

Higher Profits

Higher profits can be generated by business owners when they implement inventory planning. When the right inventory type is purchased to meet the demand of the consumer, it can increase profitability in the business. Companies can generate higher profits when they sell via their whole inventory a number of times every year. The outdated inventory amount can be limited by the implementation of inventory planning & control.There must be a disposal of obsolete inventory by the firm. When obsolete inventory is written off, loss is created on the account statement.

Prevents Stealing

Inventory planning enables an organization to adopt better strategies that will aid them to control products right from manufacturing site until the products are available for consumers to purchase.The inventory policies adopted will deter staff from abusing inventory. Usually, when the work environment is loosed, inventory items can be stolen by the employees.The business will certainly make a loss when inventory items are stolen by the employees.

However, such cases cannot occur and the profit can be continuously made when the right inventory procedures and policies are followed judiciously. Normally, in inventory planning, latest technology is adopted by businesses in managing inventory.  The latest technology is able to receive, order, manage, sell and also receive inventory. When this software is employed, it deters the employees from stealing any product which means that no further losses will be incurred by the company.

Inventory planning is the most important aspect of any business. Therefore the right inventory planning strategies must be implemented by business owners so as to make more profit as well of reducing inventory shrinkage issues.Increase in gross profits can be enhanced by the reduction of stock shrinkage's since the firm is able to meet with the consumer demand. When the company implements this, it can enhance high return of investment and improved cash flow.

Considerations

Business technology should be implemented by Business owners to enable them manage inventory. The business software can enable business owners to save time when managing inventories. This will increase the business profitability.

Supply Chain Planning :In depth analysis on algorithmic

Today’s customers are continuously demanding higher quality, better service and lower costs. So for all operational excellence is fast becoming “The strategy” for manufacturing companies. 

So as we shared before Amber Sally and few other experts did an in-depth analysis on algorithmic Supply Chain Planning (SCP).

Amber Sally says that the data streams coming into the business can be decoded with the help of an algorithmic SCP (Supply Chain Planning) software. She also said this software will enable businesses to align the supply chain to respond in kind and understand the patterns as well. She forecasts an automated and a self-adaptive environment.

Burkett emphasized the importance of focusing on the customer experience when implementing algorithms to supply chain planning. He says that data and customers are the keys. This will enable one to understand where demand is coming from.

He also said that connected data will be of help. Gartner predicts that in the year 2025, the marketplace will be filled with 50 billion connected end points which is about a ten-fold increase from today.

Just keeping up with the competition is no longer enough, Surviving in the new competitive environment is clearly a challenge. Consistently doing the Right Things Well, Implementing this strategy requires new solutions that focus on key business issues, continuously measure performance and drive the organization towards continuous improvement, so without taking any more time contact Adexa for Supply Chain Planning, Demand Planning, Sales and Operations Planning.

Supply Chain Planning maintains Scheduling | Inventory Planning from Gamelover Bali

The future of supply chain planning

A lot of algorithms have been seen by Gartner and he has taken a look at the future as well. The analyst firm says“the available wealth is feasted by algorithms, thereby leveraging the cloud”. They have reached a point where Gartner regards them as a “significant disruptive trend.”

During the Gartner Supply Chain Executive Conference held recently, the impact of algorithms on supply chain planning was described by two analysts and 3 Tools Group clients were included as examples.

Supply Chain Planning 2025: Planning the future supply was presented by Michael Burkett followed by Algorithmic Supply Chain Planning presented by Amber Sally. Before we describe their vision as they predict the future of supply chain planning, here are the few instances of business algorithms that are well known:

The algorithm that virtually defines the firm known as Google's PageRank.

Trading Algorithms from Goldman Sachs

Amazon’s recommendation engine

Specific offers made to customers.

Burkett emphasized the importance of focusing on the customer experience when implementing algorithms to supply chain planning. He says that data and customers are the keys. This will enable one to understand where demand is coming from.

He also said that connected data will be of help. Gartner predicts that in the year 2025, the marketplace will be filled with 50 billion connected end points which is about a ten-fold increase from today.

You can understand this data and forecast inventory needs and demand with the help of a software with learning capabilities. Burkett gave a reference to Lennox which is a firm that makes use of machine learning as part of demand planning. Even when faced with a broad product mix and seasonal variation, this machine will enable this company to find data patternsand to accurately predict demand.

Burkett sees the interaction between humans and smart machines in the business of algorithms which will bring about improvement in business decisions and process automation. Burkett calls this interaction between people and machines as “augmented workforce”.

Burkett also says that this interaction between humans and smart machines is an extension of Metcalfe’s Law.

Amber Sally did an in-depth analysis on algorithmic Supply Chain Planning (SCP). She says that the data streams coming into the business can be decoded with the help of an algorithmic SCP software. She also said this software will enable businesses to align the supply chain to respond in kind and understand the patterns as well. She forecasts an automated and a self-adaptive environment.

Sallysays that the company that implements this today is known as Costa Express. This company identifies stands with a lot of capacity using a demand planning software. Algorithmic supply chain planning also aids Costa Express topredict incidentals like as cream and sugar, enables inventory cost to be lowered and revealing patterns of consumption over time.

With the help of human workforce, these algorithms learn constantly. Sally went ahead to state that “Planners are now managing the algorithm itself rather than doing the work actually”. In this case planners will program the algorithms by modifying their logic and Adexa is best @ at it, so try all other Adexa's services including Inventory Planning, Factory Planning and Scheduling, Sales and operations planning(s&op), Network Optimizer, Supplier Visibility and Planning.

How Inventory Planning Can Make or Break a Company

Inventory planning is something that can seem like just another process of business management, but it can often be the deciding factor in how successful a company is, making it an essential aspect of whether or not a company can make it or break it in the business world. The reason for this is that in most cases, the inventory of a company can be the largest expense and if it isn't carefully managed and planned accordingly, it leaves your company with a very precarious hold on the overall revenue. To get a better idea of why this is the case, we've put together the top 3 reasons why inventory planning is vital to the overall success of your company.

Protect Your Inventory from Theft through Inventory Planning

This reason can often get marginalized, but theft or pilfering is a bigger problem than many businesses realize. You could be losing millions of dollars a year (that is a very conservative number based upon a small to medium sized company) from theft or pilfering and the only way to effectively combat it is to know exactly what your inventory is, where it is going and who has access to it. The more you know about your inventory, the more you will be able to spot and impede further theft or pilfering of your inventory.

Inventory Planning Reduces the Risk of Overstocking and Lost Sales

When your business doesn't follow a proper inventory planning procedure, your inventory is more likely to either be in overabundance or insufficient for the amount of customers willing to purchase the product. This can cause damaging losses in revenue for three reasons: because of stock sitting on a warehouse shelf with no buyer to speak of, buyers unable to purchase products because of a lack of available inventory, or customers cancelling orders already placed due to a long wait on actually receiving the products. However, through the use of inventory planning services, you can have an inventory that is carefully planned to optimize your distribution process so that you have the inventory you need and nothing more. This will increase the overall revenue of your company, allowing it to have a better chance at succeeding in your business sector.

Insure Customer Satisfaction with a Supply Process by Using Inventory Planning

When a business has an inventory that is mismanaged or not thoroughly planned out, there is a far higher likelihood of delays in the distribution process, causing increased customer dissatisfaction that can damage your business reputation and your bottom line. By using inventory planning and its sister service, inventory management, you can have an inventory that is always where it needs to be and always in the exact numbers that are required. When the inventory is properly maintained, the distribution of products runs smoothly, shipping your inventory to customers in an efficient and timely manner so that your customers stay happy and willing to return for further orders.

Find Professional Inventory Planning Services

Inventory planning is a vital necessity in the business world, so let a professional company take care of planning and managing your inventory so that you can focus on other aspects of making your business succeed.

Feel free to contact for Supply Chain Planning, Sales and Operations Planning, demand planning, factory planning & scheduling.