Scenario Planning in Sales and Operations Planning

Scenario Planning in Sales and Operations Planning

Brian Kalish 27/04/2018 7
Advertising

In recent years, supply chains have become global, more complex and vulnerable to disruptions due to the fact that the world is changing. Furthermore, we see trends such as global changes in supply and demand, higher volatility in demand patterns and more focus on customer centricity. Because the world is changing and we are moving towards a “new normal” state, we need new perspectives on planning, supply chain management and risk.

Sales & Operations Planning (S&OP) processes and supply chain risk management (SCRM) have become increasingly important when developing a shared view on how to run a company. S&OP processes and SCRM provide companies with the opportunity to be proactive and in better control of the future.

In uncertain business environments where planning cannot be performed in a steady state, scenario planning can help improve the dialogue and decision making process and ideally work as a competitive advantage to the company. The different objectives, higher efficiency and lower costs versus a resilient and agile supply chain can be supported by a well-implemented global S&OP process with scenario planning as a vital part.

The increasing uncertainty and volatility in supply and demand make forecasting challenging. Decision-making becomes harder when planning is not in a steady state. A high level of uncertainty is created by new products, tenders and high growth rates combined with traditional long-term planning that makes the forecasting process even more challenging. Therefore, a different approach, which is based on qualified assumptions rather than historical data, is required, and a structured process for scenario planning is needed.

We need to understand what drives uncertainty and the root causes of risk. Then we will be able to define the relevant scenarios and options to solve the issues in those scenarios. The overall goal is to create the best possible decision proposal to support the S&OP process and, more importantly, the business strategy. An S&OP process with scenario planning will contribute to decisions about new opportunities, growth or gap closures. It will also provide reliable and high-quality decision proposals for contributing to and supporting the management’s focus on the strategic goals.

Advertising

Share this article

Leave your comments

Post comment as a guest

0
terms and condition.
  • Kathy Wu

    This is the perfect combination to meet strategic objectives

  • Brian Mills

    Informative

  • Ilan Miguel

    Good read

  • Amanda Howes

    Well said !!!!!

  • Ruben Duarte

    Highly informative

  • Maureen Brook

    Volatilty and uncertainty make it seem impossible to predict certain outcomes and scenarios that's why qualified assumptions are more suitable than historical data.

  • Pete Oliver

    Enlightening!

Share this article

Brian Kalish

Finance Guru

Brian is Founder and Principal at Kalish Consulting. He is Former Executive Director – Global FP&A Practice at AFP. He has over 20 years of experience in Finance, FP&A, Treasury and Investor Relations. He previously held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third and Fannie Mae. He has spoken all over the world to audiences both large and small hosting FP&A Roundtable meetings in North America, Europe, Asia and soon South America. Brian attended Georgia Tech, in Atlanta, GA for his undergraduate studies in Business and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.

   

Latest Articles

View all
  • Science
  • Technology
  • Companies
  • Environment
  • Global Economy
  • Finance
  • Politics
  • Society