Continuing on our discussion of Demand Consensus, I want to contrast Demand Consensus and Demand-Supply resolution. Here is our model of the monthly S&OP Cycle.
S&OP Planning Cycle from week 1 thru Week 5 starts with KPIs and Statistical Demand Baseline in the first week and ends with the Executive S&OP Meeting in Week 5. In week 1, Demand Planners review the KPIs and the actualization of demand from the prior month to produce a Baseline Demand Forecast.
The Sales function should use this as a starting point along with the last cycle forecast and the Budget along with Key customer intelligence to make adjustments to the forecast. So Week 2 is spent on collaboration amongst the demand stakeholders – Sales, Marketing and Finance. What emerges out of this process is the consense”d” demand forecast that is unconstrained.
Any supply risks cannot be identified in the meeting even if supply participates in it until they run the MPS/RCCP. Supply risks to Demand and Demand risks to the AOP or the Budget result in the agenda and proposals for S&OP Forum to resolve.
Unless there are demand gaps/opportunities or Supply risks to demand, the S&OP Forum has no conflicts to solve. S&OP is really conflict resolution or put more nicely “a balancing act” to ensure that the demand-supply imbalances are resolved. Risks to Demand should be part of the S&OP process after consideration by supply planning through the supply collaboration process. This should be the discussion agenda for the final executive S&OP where each demand supply imbalance will have resolutions.
In our next webinar on November 15, 2023, we will cover the analytics that drives the Demand Consensus and the integrated planning process.
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