How does it impact capital expenditure?

In the S&OP process, plans ranging from 6 months to 18 months are viewed critically. Their resource requirements is checked through the Bill of Resources. Eventually we have a Loading Chart for each time period comparing the Resources Available and Resource required.

Issues relating to Capital Investments become eminent through these Loading Charts and decisions on these critical issues are hence addressed well in advance.

What is the size of insustry which can afford running a good S&OP program?

Typically any organization with sales in excess of Rs 150 crores or so would require a good S&OP program to foster growth and reduce cost of goods sold.

What what type industries generally will have this kind of program?

S&OP is irrespective of industry type. Any industry where there is a purchase-to-pay and an order-to-cash cycle would warrant an S&OP program

Is the promotional products which come along with the main product?

Promotional products could be the main product itself like in the case of trade offers where a product is given free on purchase of a certain number of the product.

It could be gift items or sample items manufactured or purchased separately. Either way planning for these should be a part of the forecasting and S&OP process

Stock avaliability, is it the finished product you are referring which customer can see?

It could be Finished Product or stocks at an intermittent stage in a Assemble to Order environment. More important than the customer actually seeing the product, it is the ability that Customer Service gets of promising the product to the customer by a particular date or the Available to Promise

Specific example were in S&OP interaction can impact a working capital

In a major Indian Pharmaceutical Company, just because of S&OP roll-out, the inventory levels of finished goods reduced from 55 days to 35 days, thereby reducing the extent investment blocked from INR 200 crores to around 127 Crores. Hence the inventory investment was reduced by INR 73 crores where as the order fill rates went up from 73% to above 94%.

Is Supply chain in complete control at top management to effect financial decisions?

Supply Chain decisions have major financial impacts. It is hence important for Top Management and Finance to work in coordination with Supply Chain on all operational aspects. This is achieved through the S&OP process.

Whether we have some KPI NORMs based on Industry for all the S&OP parameters (Wrt Slide 26)?

Yes, we  do have metrics as well as industry benchmarks, industry wise for all major S&OP parameters. Our research team is constantly gathering and maintaining a repository of such information which we put to use in various projects.

As asked earlier for the promotional product what will be the ideal inventory one should maintain along with the main product

The promotional product will have a forecast and will need to be planned in the same way as planning is done for the main product. The amount of time to be spent for planning will offcourse depend on the value of the product. Larger the value – more the time.

Can we implement S&OP to newspaper industry

Yes. It is possible to implement S&OP for any industry.

In a down turn is top line importtant or the bottom line?

Bottom line of a company is always important in any circumstance. After all the goal of any company is to make money.

When the going is good, due to economies of scale, the bottom line is taken care of. In a down turn, the fixed costs remain the same although the business goes down. Hence, the bottom line becomes thin. Increasing the Top Line does have a better effect on the bottom line, but this is not easy when there is a recession and the market demand is low. So other means need to be used….like efficiency improvements to ensure a healthy bottom line. Hope I have answered your question.

Question-  any application on service industry?

S&OP process is equally valid and required in the service industry. It is a means of professionally and systematically planning your sales and the resources to meet the sales targets. In this case, the unit of sales would be in terms of a service for which also one needs to prepare for resources. Many banks, logistics companies, Engineering services, call centers etc are successfully employing S&OP.

Whether Industry vertical like Electronics / Hardware where life cylce is very small and whether S&OP meeting frequency need to changed to say just 15 days?

The MD who chairs the S&OP meeting may not be able to spare 2 days in a month for the S&OP process. The S&OP process is more for long term decisions such as Overall Sales, Capacity and Overall Production Levels and not for taking day to day operational calls.

There are other planning processes (including meetings) such as DRP and MRP which can run at a much higher frequency within the overall S&OP process to take care of responding to such fast market demand or short life cycles. Here, decisions can be taken at a lower level also. The high level decisions are typically carried over to the S&OP meeting.

How much time in terms of man days is needed per month cor a typeical S&OP program

S&OP is a set of processes and meetings, ultimately culminating in the executive S&OP. The executive meeting would take only around 2 hours of top management time. However a lot of ground work needs to be done previously to analyse sales, forecast accuracies, fill rates, production performance etc. For this, the no of man days would depend upon the maturity of processes and IT systems existing within the organization.

Time in post go live

External help in terms of consultancy services could be for roughly 2 to 5 man-days per month post go live. This is provided the other systems such as the Organizational Structure, Performance Management and IT systems are all in place to support the S&OP process. Without the support framework, the S&OP process implementation would be very difficult and unlikely to take off.

Question: Is target inventory level an input or output of the S&OP process

Target Inventory Level is an output. The target inventory level is signed off at various levels even before the S&OP process. The final target inventory levels are signed-off in the S&OP process and is an output of the S&OP process.