Sales and operation planning (S&OP) include capacities of manufacture sites, production characteristics and cost because a business in the global environment should precisely calculate benefits and cost before implementation. In the current intensive, competitive environment, companies are pressed to adjust their operation plans more frequently and dramatically than ever before to survive. The demand for specific computation of the cost and profit reliable, with the impression that sales and operations planning is progressively gaining reputation. One of the most critical strategies that leading companies are implementing to respond to contemporary business challenges and at the same time, maintain their growth, profitability, competitiveness and customer satisfaction (Wang, et al 2012 & Na Liu, et al 2013).
One of the most salient issues is that contemporary S&OP practices lead to company competitiveness. Taking into consideration the above presented advantages, S&OP can be one of the most powerful tools for a company operated on a competitive market, which wants to be profitable one, thanks to the ability to provide proper goods to proper clients by proper channels. confirming a clear and direct relationship between the realization of competitive advantage and modern S&OP approaches. The process integrates various plans prepared within a company: sales plans, marketing plans, research and development, production plans, purchasing plans and financial plans (Adamczak, et al 2013). It is vital to note that S&OP plays an essential role in the effective operation of any business. S&OP requires adequate integration and alignment to avoid the growth of minor disputes in business. Therefore, corporate performance primarily depends on the proper combination of S&OP. In the absence of enhanced S&OP, a lot of useful resources and time may go to waste. The S&OP requirement output of the customer is the demand input for the downstream vendor (Rangarajan, et al. 2018).
A precise upstream customer, fiber manufacturers, whole sales, factories and retails, S&OP plan can significantly help the supplier in time delivery. A precise vendor S&OP potential can also increase customer satisfaction (Na Liu, et al 2013). Therefore, many companies are in demand as advanced system figures of S&OP. Financial and time resources ought to be tailored to the most cost-effective manner since no company can do devoid of the two factors (Wang, et al 2012). Besides, the lack of a well-defined S&OP is a harmful ingredient in the provision of quality customer services. There are substantial impacts of poorly defined S&OP. For instance, reduced utilization of resources, excess inventory, short orders, unsatisfactory expedition, inadequate inter-plant transfers, reduced fulfillment of orders, and over time, are some adverse aspects that impact S&OP. These factors impede the bottom-line operating of a company entity. The basic operations of a business are wholly affected if the S&OP is not fully executed. Various bottom-line processes of a company involve sales, production, supply chain management, marketing, and value to additional sub-standard products. When S&OP is inadequately modernized, it creates a reactive and noncompliance culture coupled with an absence of discipline among employees. The concluding is illustrated by dysfunctional business processes.
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Darmawan, et al (2018), interviewed executives that discussed the significance of affiliating the goals of the sales and the operations team. Each company tailored their goal alignment to fit the specific company needs, but goals for all companies were to ensure each team was working toward the same common goal of optimizing efficiency to ensure maximum profit. The companies achieved goal alignment between the departments through common key performance indicators (KPIs) and bonus schemes. It is prudent to mention that demand and supply are two fundamental entities that influence the profitability and sustainability of a company. Therefore, proper alignment of the two aspects is instrumental. However, it is not easy to create a sustainable and feasible equilibrium between supply and demand.
Most management teams in companies often relinquish the role played by alignment in the performance of a company. The industry’s best practices and transparent processes ought to be applied to leverage the powers of demand and supply. Alignment and constructive engagement mediate the performance of implemented planning processes. Darmawan, et al (2018), case study, they identified that forecasts made by the sales force for other functions usually contained many flaws because of the lack of quality related to the shared information, the procedure used, the alignment, or the little engagement between the two functions.
S&OP position is positively associated to higher operational, market, and profitability outcomes. S&OP also assists in facilitating the joint objectives of a whole business enterprise. The modern business environment is highly constructed and competitive, therefore requires an effective S&OP system in place. Economic specialists often assert that the backbone of a business enterprise is portrayed by the nature of the S&OP that has been established and maintained by the various management teams. When the latter elements are catered for most carefully, it will be possible to align sales and marketing in the daily operations of a business. Furthermore, managers in companies are bound by the duty of balancing the processes of various departments in a company so that the net impact is beneficial to the entire business entity (Na Liu, et al 2013). Consumers often expect prompt delivery of goods and services to the market. On the same note, they assume that the producer will meet their various tastes and preferences. If these attributes are critical in the expectations of the target market, then it implies that the financial metrics of a company are directly proportional to the S&OP adopted by a company
Alternatively, it is justified to note that both the quality and quantity of products delivered to the market are determined by the stability of demand and supply. When there is a lack of proper coordination between factors that affect supply and demand, it may be cumbersome for a business enterprise to experience full marketing opportunities that are readily available. Sales and operations engagement are positively correlated to higher operational, market, and profitability outcomes. Sales and planning operations can create a competitive advantage in the management of supply chains in a company. Business processes often begin by the supply or production of goods and services. Even so, production alone cannot guarantee the profitability and sustainability of a business enterprise. The supply division in a company is critical in making sure that products reach the designated market at the right time, quality, and quantity.
A well-managed supply chain also creates varieties of distribution channels that can be used by a company to reach the broadest possible market. Therefore, it is definite that a functional competitive advantage can be created in the presence of a vibrant supply chain system. For instance, the choice of a distribution channel will determine the time taken for products to reach the desired market. If a complicated distribution channel is adopted, then it is highly likely that the substitute products from other market rivals will reach the market promptly. In a short-circuit, the sales opportunities of a competing company. Moreover, it will eventually hamper the overall operations of a business enterprise due to low sales and tough competition.
Hybrid forecasting methods can apply the same S&OP techniques in strengthening its market presence and sales options which can form now models of forecasting. By aligning the supply and demand forces, it would be possible for hybrid methods to come up with viable options for accelerating production and overhauling the current supply chain system the rich demand model adopted allows us to decompose the total increase in demand due to a promotion into true incremental demand and forward buying (Na Liu, et al 2013). The findings of promotions impact a major influential factor that determines the split between these two types of incremental demand. Information on the percentages of forward buying and true incremental demand enhances the understanding of the effect of promotions. It is also found that the non-coordinated approach tends to generate plans with more promotions than the coordinated approach. Another interesting finding is that the coordinated approach tends to plan promotions during the low-demand season, while the non-coordinated approach tends to schedule them during the high demand season. All the above main findings contribute to advancing the literature on the development of decision support for an integrated S&OP. All retail sales are coming from sales during price promotion campaigns there is a huge business potential in improving promotion planning (Na Liu, et al 2013).
The conclusions provide useful information for production and marketing planners on the importance of developing an integrated S&OP considering joint production and promotion decisions. As many companies rely on reconciliation meetings to adjust their joint sales and operations plans the use of an integrated model like ours will help planners reduce the time required for resolving possible disagreements resulting from the sequential approach. The modelling framework that facilitates a comprehensive examination of various factors and their effects will help production and marketing planners in better understanding the main driving forces of the profitability resulting from a joint production and promotion plan. Production and marketing planners can learn to recognize the characteristics of in relation to their production and marketing, and thereby identify products for which an integrated production and promotion plan is particularly desirable.
