You have a great product and want to sell it in volume. You also know that when you scale up, your business will need to meet supply demand. With so many unknowns in the future of any startup, supply-demand is one of the most crucial areas for companies to adapt and grow. We want to help you set the foundation for that growth.
S&OP is the process of reviewing and aligning key business functions to determine how much product is needed, when it needs to be delivered, where it should come from, who will make it, and how much money all that will cost. Sounds simple? It isn’t. There are a lot of moving pieces that must work together for a S&OP function to be successful.
The processes involved with S&OP can also get complex quickly, but here’s a simple overview of how it works:
- First up is product planning, which gathers demand signals from the market and customer base.
- Sales then draft their initial forecast based on that data.
- Then production planning makes a forecast of their own, based on customer orders they have in hand and any current backlog they are working through. At the same time, marketing creates early demand & pipelines to predict how they can influence future demand for your product.
- Sales provides feedback on the production forecast, and production revises their forecast based on that input.
- Once sales are satisfied with the revised forecast, they can provide it to finance for review before presenting it to senior management.
- After finance approves the demand plan, it goes back to sales, who sends out any necessary information to distribution channels and customers once production begins.
- Finally, the demand plan is updated as actual sales data becomes available through the month or quarter.
Many small businesses don’t need or want to pay for a full-fledged enterprise system in order to do effective supply planning. And that’s where our cloud-based solution will come in handy for you!
The Sales & Customer Management System (SCMS) is designed around the process of aligning sales with production and marketing and provides tools for forecasting, demand planning, pipeline management, and CRM. You can use SCMS to create volume forecasts that include both external (customer-based) and internal (sales forecast based on projections) input.
To better understand what is an MRP system, it’s critical to know that this includes three basic processes:
- Inventorying the resources and components on hand.
- Determining which new ones are required.
- Scheduling their manufacture or acquisition.
It’s a system meant to assist inventory management tasks by comparing current stock levels and upcoming supplies with current and upcoming demands to ensure demands are met on time.
In summary, supply-demand management is a complex task with a lot of moving parts. S&OP is the process of planning and executing these tasks while utilizing technology to reduce some of the complexity. All data points must work together to ensure success.
S&OP process is not the same as MRP, but both are crucial for maintaining business growth. S&OP helps manage your production, while MRP helps with organizing the inventory of supplies and components required in manufacturing or acquiring to meet demands.