Knowledge Center

Sales and Operation Planning

Sales & Operations planning (SOP) is a planning tool that takes the sales forecast and creates a plan for production and purchasing to meet the sales requirements.

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Folder descriptions

Process options

This folder contains all information regarding the planning process.

General options:

  1. Name: A new process could be named like “August 2019 Requirements”.

  2. Description: Description of the S&OP process

  3. Granularity: Granularity used to present the different plans in the S&OP process, either by Week or month.

Options related to demand forecast:

  1. Updated at: Date and time the demand forecast was calculated

  2. Location: Location to retrieve the sales forecast and sales backlog from.

  3. Sales forecast source: The source to use from the sales forecast

  4. Include sales backlog: If sales backlog is included, everything from the backlog is added to the demand forecast. Note that backlog from products sales forecasted by customers (through the sales forecast source), will not be included.

  5. Min- and max probability percent: Minimum- and maximum probability in percentage to include from the sales forecast

  6. Include re-order point for purchase: If products which are purchased have specified re-order point quantity for the location used in the S&OP process, the re-order point quantity will be added as a demand. This will then be included in the gross quantity of the purchase requirements. Note that this also includes products with product structures manufactured externally.

  7. Include re-order point for purchase: If products which are manufactured have specified re-order point quantity for the location used in the S&OP process, the re-order point quantity will be added as a demand. This will then be included in the gross quantity of the production requirements. Note that this does not includes products with product structures manufactured externally.

Production requirements

This folder shows all production requirements which follows the sales forecast. Each production requirement represents a product and a requested delivery date.

Key fields are:

  1. Updated at: Date and time production requirements were updated.

  2. Requested delivery date: The delivery date as requested.

  3. Product: The required product.

  4. Available quantity: Total quantity available to be subtracted from the demand quantity (gross quantity). This is the sum of all goods receptions and production work orders ready to be consumed at requested delivery date.

  5. Gross quantity: Gross quantity of the production requirement. This is the total demand before any subtractions or adjustments is considered. Initially set as the sales forecasted quantity, but will be changed if the net quantity of parent product structures changes.

  6. Adjusted quantity: Quantity adjusted by the users. Can be both negative and positive. The sum of gross quantity and adjusted quantity can never be less than zero.

  7. Subtracted quantity: Quantity of stock and production work orders subtracted from the gross quantity.

  8. Production adjusted quantity: Some products are only produced in multiple of a specified quantity. In that case, the net quantity might need an adjustment.

  9. Net quantity: Net production requirement quantity. This is calculated by subtracting production work orders, stock and adjusted quantity from the gross quantity.

Options related to production requirements

  • Treat production work orders as stock: By enabling this, existing, but not completed, production work orders will be treated as stock. Any production work orders can be used to net off production requirements. By not enabling this, you might end up with creating new production work orders instead off re-planning already existing production work orders

Purchase requirements

This folder shows all the purchases required to fill the orders. Each purchase requirement represents a product and a requested delivery date.

Options related to purchase requirements:

  1. Treat supplier backlog as stock: By enabling this all purchase orders and purchase order responses will be treated as stock. Any purchase orders and purchase order responses confirmed in the future (ex. in two months) is available from today and can be used to net off purchase requirements. By not enabling this, you might end up with purchasing products that could instead be acquired by requesting change of delivery date on existing supplier backlog.

  2. Require materials from all production work orders: By enabling this option, materials from ALL ongoing- and planned production work orders are included as gross purchase requirements. This means that you might get purchase requirements for materials belonging to production work orders not related to the production requirement plan. If this option is disabled, only materials needed to fulfill the production requirements are included as gross purchase requirements. Note that even if this option disabled you will still get purchase requirements for materials in ongoing- and planned production work orders consumed by (net off) the production requirements.

Key fields are:

  1. Updated at: Date and time purchase requirements were updated

  2. Requested delivery date: The delivery date as requested by the customer.

  3. Product: The required product.

  4. Available quantity: Total quantity available to be subtracted from the gross quantity. This is the sum of all goods receptions, purchase orders and purchase order responses ready to be consumed at requested delivery date.

  5. Gross quantity: Gross quantity is initially the same as the sales forecasted quantity but might have changed during the production requirement planning. The gross quantity is the final required quantity for given product at requested delivery date.

  6. Subtracted quantity: Quantity of stock, purchase orders and purchase order responses subtracted from the gross quantity

  7. Net quantity: Net purchase requirement. This is the quantity needed to be ordered for this product at this requested delivery date. The net quantity is calculated by subtracting stock, purchase orders and purchase order responses from the gross quantity.

Purchase order suggestions

This folder creates purchase orders for all the purchase requirements, based on the information from the SOP. Each purchase order suggestion represents a product and a requested delivery date.

Options related to purchase order suggestions:

  • Requested delivery day: Preferred day of delivery. Used to consolidate purchase order suggestions. Default is all days.

Each purchase order suggestion represents a product and a requested delivery date.

Key fields are:

  1. Updated at: Date and time purchase order suggestions were updated.

  2. Requested delivery date: The delivery date as requested.

  3. Product: The required product.

  4. Supplier: The suggested supplier.

  5. Suppliers product name: Suppliers product name.

  6. Lead time: Lead time for product and suggested supplier.

  7. Deadline date: Deadline for purchasing product from supplier. Calculated by subtracting lead time from requested delivery date.

  8. Quantity: Quantity suggested to purchase.

  9. Gross purchase price: Gross price of the purchase order suggestion.

  10. Gross requirement quantity: The gross demand for supplier, product and requested delivery date.

  11. Subtracted requirement quantity: Quantity from open purchase orders and purchase order responses subtracted from the gross demand quantity to get the net demand quantity.

  12. Net requirement quantity: Net demand quantity for this product, supplier and requested delivery date. The net quantity is the current demand, and will be the base for creating the quantity of the purchase order suggestion.

Creating a new SOP
  1. Click the New Process button in the Sales and operation planning (SOP) window.

  2. Enter the necessary details in the popup window and finish by clicking the Create button.

    • Name: Create a name for the SOP.

    • Description: Enter a description of the SOP.

    • Location: Location to retrieve the sales forecast and backlog from.

    • Use the same process options as current process.

  3. Choose the desired granularity in the Granularity dropdown menu. You have two choices:

    • Week: Presents the plan by week.

    • Month: Presents the plan by month.

  4. Choose Preferred day of delivery in the Requested delivery day when purchasing dropdown menu. This is used to consolidate purchase order suggestions. The default is all days.

  5. Check the desired choices below:

    • Create purchase requirements for materials from all production work orders: By enabling this option, materials from ALL ongoing- and planned production work orders are included as gross purchase requirements. This means that you might get purchase requirements for materials belonging to production work orders not related to the production requirement plan. If this option is disabled, only materials needed to fulfill the production requirements are included as gross purchase requirements. Note that even if this option is disabled you will still get purchase requirements for materials in ongoing- and planned production work orders consumed by (net off) the production requirements.

    • Treat supplier backlog as stock for purchase requirements: By enabling this all purchase orders and purchase order responses will be treated as stock. Any purchase orders and purchase order responses confirmed in the future (ex. in two months) is available from today and can be used to net off purchase requirements. By not enabling this, you might end up with purchasing products that could instead be aquired by requesting change of delivery date on existing supplier backlog.

  6. Find the desired forecast source in the Sales forecast source dropdown menu. You have two choices here:

    • From customers: This is the forecast from one or several customers prepared in the Sales Forecast (FCC) application.

    • No sales forecast: This option is used if you have no forecast. You can either use the sales backlog (make sure you select the Include sales backlog option) or create your own.

  7. Add or edit the probability percent:

    • Minimum probability percent: Minimum probability in percentage to include from the sales forecast.

    • Maximum probability percent: Maximum probability in percentage to include from the sales forecast.

  8. Check the desired choices below:

    • Include sales backlog: If sales backlog is included, everything from the backlog is added to the demand forecast. Note that backlog from products sales forecasted by customers (through the sales forecast source), will not be included.

    • Include re-order point for purchase: If products which are purchased have specified reorder point quantity for the location used in the SOP process, the reorder point quantity will be added as a demand. This will then be included in the gross quantity of the purchase requirements. Note that this also includes products with product structures manufactured externally.

    • Include re-order point for production: If products which are manufactured have specified reorder point quantity for the location used in the SOP process, the reorder point quantity will be added as a demand. This will then be included in the gross quantity of the production requirements. Note that this does not includes products with product structures manufactured externally.

  9. Click the action menu option Calculate production requirements. This may take a few minutes and will set the SOP to Status 2: Pending calculations of production requirements, and then Status 3: Pending production requirement planning when the calculation has been performed.

  10. The Production Requirements is now done, unless you have changes. It is possible to edit the information supplied and re-click the action menu option Calculate production requirements.

  11. For the next step, click the Calculate purchase requirements and the SOP will be set to Status 4: Pending calculation of purchase requirements. When the batch job has finished, the SOP will be set to Status 5: Pending purchase requirement planning.

  12. The purchase requirements are now done, unless you have changes. It is possible to edit the information supplied and re-click the action menu option Calculate purchase requirements.

  13. For the next step, click the Calculate purchase order suggestions, which will set the SOP to Status 6: Pending calculation of order suggestions. When the batch job has finished, the SOP will be set to Status 8: Pending actions on purchase order suggestions.

  14. The purchase order suggestions are now done and the process has been completed.

It is suggested that the SOP is archived after completion to save resources. This is done using the Archive process action menu option. This will set the SOP to Status 9: Archived.