Cross-functional Capabilities: Sales & Operations Planning (II).

The One-Plan objective.

The Sales and Operations Planning (S&OP) more than looking for one-plan, is aiming to have several consistents plans, or, in other words, one plan with different views. The secret is that the same numbers and decisions are managed by all functions involved.

How do you get this result? The answer is not easy. First of all, you have to have clear what is the Business Plan for the year. This Business Plan should have clear the monthly (or any other period) requirements in terms of sales and profitability. The Business Plan, after one year of exercise, should be mainly obtained from the S&OP created before the year ends. The Business Plan will be the "north Star" for the whole S&OP process.

Starting with the left side: the Demand Planning process.

Your S&OP planning must start always with the client (customer, consumer, user, etc.) in mind. So, the first step is to create a Demand Plan. We can summarize the Demand Planning components as shown in the following figure:

This diagram does not pretend to be exhaustive, however we can illustrate several aspects of the demand planning process:

- The outcome IS NOT the forecast. The forecast is an input for the whole process. It is located outside the boxes of Sales and Marketing, because it can be generated by them (or not), even it can be generated in another function or organization.
- Both Sales and Marketing should contribute to the Demand Plan. We have to consider at least the building blocks shown in the figure.
- The sales force should collaborate in the final Demand Plan. They should add any local or regional initiative, their own knowledge of the local market, any localized promotion, market sensibility, etc.

At the end of the process, we should have a Demand Plan agreed by both Sales and Marketing, as an input for the Supply Planning process. We should discuss the elements of this process in the next blog...

Map the Business Model, then the Business Process Model (II).

Someone can think "it is very difficult to understand the Business Model, let´s do the work and let´s start mapping processes...". The reality is that if you gather the  required audience (leaders and decision takers of the organization), you can have a good understanding of the Business Model, before starting to map a Business Process Model.

I recommend to take a look to the book of Alexander Oster and Yves Pigneur, "Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers", or review presentations that explain quite well the concept and the methodology, like http://www.slideshare.net/Alex.Osterwalder/what-is-a-business-model


Let´s try, for example, to map the business model for a non-alcoholic beverage company. For this company, we start with the Customer Segments, and then move to the left in the canvas. It is desirable to create a first draft model, and complete the model with the leadership of the company during a workshop.

Then, we can analize the model in terms of required capabilities to deliver the value to the clients, and start to list them. Such capabilities will be part of the Business Process Model of the company. In this case, we find that some of the capabilities are:

- Client and consumer sales capabilities
- Supply chain management capabilities (procurement, manufacturing, distribution, warehousing, transportation)
- Product lifecycle management capabilities
- Marketing and Trade Marketing capabilities
- Support capabilities (HR, finance, TI)

As a first draft and as simplified example, we can create a Business Process Model that will contain the capabilities mapped in the following way:

You should refine this model (and its representation) with leadership. Macro-process, processes, subprocesses and so forth will be linked to these capabilities and will form the process inventory for the company.