The Ex-ante Use of Planned Revenue in a Sales & Operations Planning (S&OP) System, for More Timely and Effective Decision Making, by Senior Managers, in Multi-National Environments
Jerry Shanahan ()
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Jerry Shanahan: University of Limerick, Ireland
Interdisciplinary Management Research, 2009, vol. 5, 77-88
With supply chains continuing to get more complex, companies struggle on a day to day basis when making critically important decisions about how to positively influence the future performance of their businesses. In particular, attempting to figure out what products to make, when to make them, how much to keep in stock and where to stock them, leave Supply Chain practitioners with the constant dilemma of balancing the risk of running short of stock and therefore impacting Sales, while on the other hand trying to prevent having too much capital tied up in inventory, with the risk of write-offs and obsolescence. Sales & Operations Planning (S&OP) has proven to be a popular and effective process for bringing control and a level of predictability to the product planning challenges of many companies. With the multi-site and global nature of Multi- Nationals, a process that attempts to have all the critical functions operating off the same plan is particularly valuable and is reflected by the greater deplyment of S&OP processes in this sector. With the key to planning being about anticipating the future, any good S&OP process will focus on enabling timely and effective decisions to be made, when faced with a number of potential scenarios. This paper proposes a practical Closed Loop System to enhance the performance of S&OP processes. The System uses an ex-ante (predictive) view of the critical business Key Performance Indicator (KPI) of Revenue as the catalyst to ensure that decisions that need to be made are surfaced in a timely fashion. With a complete system in place, covering process, tools and behaviours, senior managers have the opportunity to make decisions, while understanding the full potential impact across the business.
Keywords: supply chains; decisions making; S&OP processes (search for similar items in EconPapers)
JEL-codes: D78 D81 (search for similar items in EconPapers)
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