Lecture 7 - Operations Planning Flashcards
What is meant by sales and operations planning (S&OP)?
A process to develop tactical plans by integrating marketing plans for new and existing products (demand) with the management of the supply chain (supply).
- Brings together all the plans for the business into one integrated set of plans (from aggregate level to scheduling).
- Also called Aggregate planning.
What are the 4 goals of S&OP?
- To indicate how the organization will use its tactical capacity resources to meet expected customer demand.
- To strike a balance between the various needs and constraints of the supply chain partners.
- To serve as a coordinating mechanism for the various supply chain partners.
- To express the business’s plans in terms that everyone can understand.
In S&OP there are 2 major approaches, which ones and what do they mean?
- Top-down planning – An approach to S&OP in which a single, aggregated sales forecast drives the planning process.
- Bottom-up planning – An approach to S&OP that is used when the product/service mix is unstable and resource requirements vary greatly across the offerings.
Based on the 2 major approaches, which one do we choose WHEN the resource needs are similar across the various products or services offered?
Top-down planning
Based on the 2 major approaches, which ones do we choose WHEN the resource needs are NOT similar across the various products or services offered?
Bottom up
Based on the 2 major approaches, which ones do we choose WHEN the mix of products or services are from the same, from one period to the next?
Top-down planning
Based on the 2 major approaches, which ones do we choose WHEN the mix of products or services are NOT from the same, from one period to the next?
Bottom up
How do you develope a Top-Down planning?
Developing a top-down plan:
- Develop the aggregate sales forecast and planning values.
- Translate the sales forecast into resource requirements.
- Generate alternative production plans.
What are the 6 different S&OP Supply options?
- Anticipation Inventory
- Workforce Adjustment
- Workforce Utilization
- Part-Time Workers
- Subcontractors
- Vacation Schedules
What are the 3 alternative Production plans?
- Level production plan – A S&OP plan in which production is held constant and inventory is used to absorb the differences between production and the sales forecast. (“we play with inventory”)
- Chase production plan – A S&OP plan in which production is changed in each time period to match the sales forecast. (“we don’t have inventory”)
- Mixed production plan - A S&OP plan that varies both production and inventory levels in an effort to develop the most effective plan.
How do you develope a Bottom-Up planning?
- Steps are similar to top-down planning.
- Main difference is that the resource requirements for each product or service must be evaluated individually and then added up across all products or services to get a picture of overall requirements.
What is meant by a “Rolling Plan horizon”?
A planning approach in which an organization updates its sales and operations plan regularly, such as on a monthly or quarterly basis.
In terms of Making Capacity match sales, What is meant by a “Yield Management”?
An approach that services commonly use with highly perishable “products” in which prices are regularly adjusted to maximize total profit.
In terms of Making Capacity match sales, What is meant by a “Tiered workforce”?
A strategy used to vary workforce levels in which additional full-time or part-time employees are hired during peak demand periods, while a smaller permanent staff is maintained year-round.
(we have a fixed workforce for one season and then we hire new workforce for another season, which is more viable)
In terms of Making Capacity match sales, What is meant by a “Offloading”?
A strategy for reducing and smoothing out workforce requirements that involves having customers perform part of the work themselves.
(customers do some part themselves, IKEA).
