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If you’re like most companies, unpredictable demand is a big challenge. It affects nearly everything you do: promotions, pricing, inventory management, supplier management, production/distribution management, and profitability analysis. The problem is getting everyone on the same page, especially if that page is constantly changing.
To keep operations working in lockstep, your company needs sales and operations planning (S&OP) based on accurate demand data. The key is to connect three main planning pillars, which are all equally important but must be tightly integrated: supply, demand, and resource.
Since sales drive production and supply chain planning, you need to integrate demand planning into your overall business plan. Connecting customer demand with operations ensures that you’re prepared for future commitments and any changes can be communicated to suppliers early enough to meet them. By measuring how sales interacts with material and operational costs, you can more effectively manage product pricing and optimize profitability.
Working closely with your suppliers ensures that you can meet production needs and future commitments. You’ll need to ensure that suppliers can access and share data with your company to improve visibility into materials, both upstream and downstream. A master procurement and production schedule can give you the foundation for supply chain planning to standardize procurement and delivery.
Sales and supply information also impact inventory, production, and distribution. To maximize profits, you need to effectively manage safety stock levels as well as production and distribution resources—and any variances between the two. Being proactive is the best way, provided that your projections are accurate.
By having real-time inventory control, you can quickly alter production and distribution plans to ensure that enough product is available. Cloud-based demand, S&OP software connects these three pillars into a holistic overall plan that can help your company reduce inventory costs, purchase/make materials at favorable prices, and deliver on customer demand. Make sure you know the truth.