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hi folks so in this video i have compiled some sections of the sales and operations planning course i have created recently so what you will see in this video is why snop is important how to run the supply review and what could be the barriers and challenges in running a successful snop process after watching the video if you like the content and i want to know more about the course i have provided the link in the comment sections and also in the descriptions so hopefully you enjoy the content and if you have any questions uh please let me know in the comment box and i will get back to you thank you so why snop i think you should get the get the story so far by now it's it's simply what it does is give you the balance of the supply and demand it is a cross-functional process so it involves cross-functional team members your marketing team your sales team your production team your financial controllers sometimes your hr colleagues and especially your senior leaders right and most importantly there's no surprise so if you if if i cannot go ahead myself and just order inventory of two months of component to china myself if i do that i'll be in serious trouble right but if i present a plan to my controller and say this is what i'm going to do or i'm going to increase the inventory of half a million and that's my business case sign it off if you're not going to do it then this is implication so if i if he or she doesn't do it for whatever reason then the implications was clear it was documented in the snop process it documented in the nose or told you so or agree with me see the results so one set of numbers no surprises and and and my personal experience and i i feel very good about it by saying it that it's possible you can achieve it and you can achieve one set of numbers so i've also seen in some businesses that our for some bizarre reason the inventory controllers do their own inventory forecasting i don't know how they do it but they have done it and inventory owned by us as a supply chain people we own inventory right because we own inventory so it's our inventory forecast so it cannot be possible that the these inventory controller or supply or financial controller having a separate inventory forecast and i have it has to be one number right so it gives you one uh one set of numbers it's a good communication this is a business communication process and i recently actually share a tweet on on linkedin which i've got like with 10 000 views and i don't know maybe hundreds of uh comment and likes and whatever what i try to say to people is a supply chain as a us as a professional is i think 55 technical skills which is you know our knowledge of demand forecasting supply forecasting master scheduling whatever and 50 and 45 communication don't ask me how and why i come up with the ratio it's a definite it's a different session but the point i'm trying to say is our job as a supply chain professional we have to be very good in communication it doesn't mean you are you know selling and you're talking a lot what i mean by communication is your key number your key decisions your your uh your key issues your key successes at the same time you need to communicate and snop helps you communicate that because you have a regular meeting with some senior folks that you don't see them often with some colleagues like sales guys which you don't see them often because they're out there selling stuff it it helps you talk to them on a regular basis it helps in you know it helps you talk to them to communicate better your challenges your successes your issues and most importantly it gives them it gives as a team an alignment to the supplier so basically when you sit down with your production guys and manufacturing guys and procurement guys at the same time you present them the unconstrained demand plan right so it's very important we present them the unconstrained demand plan so they need to understand what's actually happening in the market supply requirements plan presented to key suppliers so you take this uncustom demand plan constrain you convert into this let's call it a demand focus for your customers and present them in the region supply agreement so if you are having an inter company supply chain which i used to have you you present we present them that as well site and supply capacity plans maintained and compared to unconstrained demand so if you if you ask me what is the core of this review i would say this point is the core of this so this is essentially the core of this review right that what's actually happening at the at the uh with the supplies and capacity and have you and compare that with the with the plan of uh with the so you compare your own custom demand with your available capacity okay so come back to my node and clear everything okay so let me give you an example so we could assume that finding our manufacturing capacity is easy task right and it could be sometimes a is a is is a right assumption but i've also seen so if you know how many people you have how many machine capacity you have how can units you can produce that's fine most people companies know that but then what happens is you do not understand two or three very important aspects of capacity planning one people almost forgot that you can have available capacity as much as you like but if you supply doughnut supply on time and they do not have the capacity to react to any promotions you are launching any new product you are launching if they don't have this you are screwed so make sure you take your uncustom demand you also pass on to your your suppliers and understand do they have enough enough capacity available to react to not this the the the third one which again people forget is your distribution capacity what i mean by distribution capacity is and i have seen time and time again that when it comes to shipping products at the peak time at the peak seasonality at the month end etc there is not enough people in the warehouse and it can nothing annoys me more when i have being a supply chain manager or a director i have a product sitting on the shelf and the warehouse guys tell me oh sorry boss we cannot ship this because i don't have enough people this is something which i uh i just cannot understand or i don't like so and when i really started digging down the simple matter of the fact was we never really done any capacity planning when it's come to our distribution warehouse right so what i start doing is i start getting my warehouse guys involved as well and i used to give him my my demand plan at the same time and i used to say you know what this is a you know summer time is my christmas is the is the highest period of shipping and what i want you to do to make sure the most people are available but guess what so as i show you the demand plan before so june july august is the highest period of my demand but at the same time in europe most people goes on holiday in the same time so the problem he used to have was he has the peak demand where the most people 30 percent or 20 of his people wants to go on a holiday because their kids are on break and everybody wants to go to nice fancy or american holidays so we now we used to do it in the supply review we present do uh analysis saying i need in the normal circumstances i might need five people in the warehouse to ship but in the summer i need 10 people and half of them or most of them will come from the agencies for example so the point i'm trying to make is when you're trying to do your analysis in terms of your capacity plannings don't just focus on your manufacturing focus across the supply chain do your suppliers have the issue yes or no do your manufacturing making stuff have issue or not do your distribution have issue or not even you outsource to 3pl do they have a show not so whatever that is think about all the possible high level constraints and close that okay constraint supply passed down to the next step which we discussed so what do you discuss in this supply review inventory forecast and follow-up owned by snob facilitation team rough cut inventory plans as i discussed uh total inventory by side is created so capacity plans are available i want to focus on the inventory side so i'm actually working on a course right now which i think i'll be contacting you guys is a specific course on inventory forecasting it's i think is one of the most underrated topics in the supply chain that we should be able to forecast our inventory based on our demand plan based on our supply constraint based on our seasonality because if you do not have the right inventory at the right time the famous words that means you are not going to supply the right product to a customer right so the inventory forecasting is goes almost hand in hand with any demand planning and any any supply planning let me throw one more uh one more topic into this so let's assume you have a very good sales team and you have a very good demand plan right and so they give you all the nice unconstrained demand you know what's happening with the market you know what's understanding with your territories your key accounts really good right but then it comes to us as a supply chain guys and start doing maths then we actually realize we have uh three main let's call it supply supply seasonality so what i mean by supply seasonality what i mean by supply sessionality is the key events where the supply disruption happens for example i already mentioned you the summer time where people go on holiday and supplies go to the holiday and there is not enough capacity available to meet the demand the second example i can give you is the chinese new year right i think i gave example in the last session as well that the when chinese new year comes in in february march time but whenever it comes there is a serious issue of the parts coming from the west coast countries because there is not enough there was nobody in china who are producing stuff right enzo they're always late because the people from south go to north and they don't come back on time things like that again maybe the the christmas period when most of the plants or people on on holiday and you know people take more holiday than they should have and there's a their supply constraint the point i'm making is so those all elements which affects the supply seasonality um which affects your availability of inventory it needs to be incorporated in your inventory forecasting so so inventory forecasting important point make sure we focus on this and when you're doing a supply review present your inventory forecast to the leaders so they know the inventory at the right time or not so capacity planning owned by snobby facilities facilitation team no doubt about it concept of a world documented constraint plan right so what i mean by well documented constraint plans we focus on the unconstrained demand now i'm using the word on constrained demand so the constrained demand is the one where you take your unconstrained demand from your customers which without any limitations and you tell them based on the constraint i have which i cannot solve what would be the demand right so let me i think our example of that so let's discuss this so this is a very very simple example of to to present how the demand and supply would work right so my uh predicted demand which is let's call it unconstrained demand during the months which is you know january very much april is is is that so my total capacity available which includes a 20 over time is 5000 because you know i'm just trying to make this simple it's never going to be as level as you see in this example but i'm just easy in terms of to understand the concept so as you can see in the summer month uh where the the blue which is the predicted demand august is 7.8 because it's the highest peak period and the total capacity after that is in fact in is lower right so peak demand period but my even though i did manage to keep all my people didn't give them any holiday i have a gap so so that is the is that is the issue so 2.8 k i have an issue that means i do not have the excess capacity available so what are my options my options here is either i can produce more inventory in june and july right or i can bring more people in or outsource stuff or find contact manufacturing right because i cannot run more shift because i'm already both one over time anyway or there is a third option so first option is either my build inventory so if i build my inventory in the summer period that means i have to put that inventory into the inventory forecast right the second option is is to find more capacity chase capacity work overtime bring more people in ask supplies to build so on and so forth i can do that or i can go back to the sales team and say guys you know what i've tried everything i simply can simply cannot find this solution is this possible that some of this demand which is 5.8 k at the peak time can i move to the future month right that could be one of the options the option the point of this supply review is is to take this information go to the consensus review which coming into next and ask the question what we do on the other hand if you move to the later part of this year you can see in the month so if i take this this these months in these months i actually have a lot more access capacity so i have more people than i should have which is this region so what i'm going to do here right so because i want more people and then available so the question would be do i really need to run with the 20 overnight not really do i need as many people if i work with 20 temporary workforce which i used to i'm going to let this go and actually this demand of red line should effectively should be around this number you know i'll bring it down to the 4000 number if i want to still keep some buffer to manage any demand okay so this kind of simple analysis when you look into your predictive unconstrained demand look into your available capacity you can start making some good decisions on how to your make your available capacity into a good use make some good decisions for example in terms of inventory if you want to build some some inventory in this part you should do that and if you want to get rid of people temporary workforce because you don't need at this end of the year you could do this yeah so supply review agenda so what do we do with the agenda based on discussions uh whoever the operations where the supply manager should lead that discussion uh ten attendees would be the operations guys the supply chain guys purchasing guys and finance guys and as you can see i do not have here the the sales guys because if you're gonna bring the sales guys in this they will start asking again very very specific uh customer owned customer related market related specific questions and they will dilute the focus from the supply planning agenda so you do not want sales guys in your supply review finance is always there because there is as i said there is implication on inventory build or getting getting rid of your 20 of your you know overtime or your temporary people if you have it so finance are there to basically do some financial calculations either for the saving or increase of inventory if you want to work overtime or if you want to bring more people so they are there to help you with doing some analysis in terms of return of investment or does it make sense still to do the uh the overtime because it are you gonna make money or not otherwise it's not worth it one keep one person which i used to block brought into this review sometimes was my hr director yes because hr director generally are close to people and they can have some time good insight to give the input but that's a more reality depends on our business to business and hr director to hr direct okay so agenda in terms of review the performance have you met the numbers you said you will plans a supply plan to balance demand which is the key purpose of this review resource simplification again people gonna go up down machine will be idle or it will be shut down another important aspect i would like to give while talking about machines is you need to if you are doing any lean event so for example my lean team which was a separate team used to work uh which my you know lean manufacturing team they used to work and they somehow one what they've done once they have designed a very nice lean event and you know converting uh i will talk about what are the key challenges and the barriers you're going to face in snop deployment the first one is a lack of executive sponsorship so when there is a lack of executive sponsorship snlp never takes off and that is true and i've seen it a good example and a bad example where executives are not backing it up they don't see a value and no matter what you do it's not going to fly so exactly important sponsorship and backing is super critical i'm not going to say any particular characters but there are some people who may be coming from a different background or supplies and do not see a value so you need to make sure they see the value so best in class smg process have full executive support and active engagement it is not easy to get time out of the senior executives as i mentioned you make sure they see the benefit in the snlp process to make it worth their time the issue is the time if you get if you make sure you can show them it's worth their time they will give support the second one i've seen is is lack of snop process knowledge and not aware of the benefits of the snop process so which leads to the lack of engagement and lack of engagement leads to the failure the biggest question you want to answer to your stakeholders it's versatility for in it for them so let me give you an example for that if you are helping your product line manager to launch the new product and you're making the key decisions during the snop process in terms of what stock you are supposed to carry right and explaining him the production capacity the time when the stock will be available he or she will be more engaged similarly you talk about the new product introduction in the snlp process and what is the additional sales the sales that are accountable for drive it will be written in the snop nodes and they will feel more engaged and the decisions you have made in the srp will result into the business target that means is a benefit for everybody and everybody will achieve their goals so it's important you explain to people what's in for them and one more important thing in this reviews are people should understand the kpis so as i said radical simplicity make it simple so if you're putting a graph of focus accuracy or inventory time inventory terms or under on time delivery on screen and presenting to people so if may it be a sales guy or the financial person or your vp for that matter they should understand what we're actually talking about so there's sometimes i've seen there's a huge confusion around what is actually focus error means or are we amazing focus accuracy so the definition needs to be clear amongst all the stakeholders the third challenge is there's no shortcut for snop process you have to spend time it's not a quick win it's generally a monthly process so by the time you learn and you deploy your learning in the next cycle and next month and next month it takes time patience is virtue right so you have to be patient you have to be consistent and you have to be committed as i talked about the you know the four uh pillars of credibility be consistent be committed show concern of people and show competence right you have to be committed to the task to make it happen it will happen but it's going to take time the research generally shows that it takes three to five years to get to the the maturity level that snop is embedded in the organization and you are taking the benefit i have seen to achieve the you know the level three of maturity it takes 18 months with the committed effort the fourth one i've seen is the over reliance of the a excel spreadsheet as i said before excel spreadsheets are fine for 12 to 18 months but once you have too much data you know when you're talking about your previous budget previous year sales number compare with your this air budget with your this year forecast with the different product line and you do scenario building that excel is is not dynamic enough it has its limitations no matter how good you are in using excel formulas and basically creating databases it is prone to errors it will cause mistakes and it's not going to be as agile right so what i would recommend is do not rely on excel far too much try to use some technology there's some nice tools available uh i'm not going to promote any but you can do research you can find one and i think right now there's a lot of nice tools available which actually using some machine learning algorithms some artificial intelligence and they might be expensive but it's worth exploring that if you have reached the stage you are near you know high level maturity level three and four then maybe it's worth investing the money on those tools the fifth thing i've seen is a lack of preparation and that is very very important for my supply chain folks right as the saying goes by failing to prepare you are preparing to fail snob team needs to be very crisp and very tight in their preparation so they should send the meeting in relation well ahead of time they define the agenda they define the input they chase sales guys if this they have sent us for example statistical forecast for the sales guys and nobody have responded they should chase them make sure get their feedback what you do not want to do is to appear in the demand review or your supply review and you are not prepared that for me that is just not acceptable and we as a supply chain professionals are good enough to do that so for me i would strongly recommend the agenda actions are aligned listed clearly presentation artist and shop and meeting invitation are sent well ahead of ahead of time the sixth challenge is people do not focus on execution which is linked with the other points i mentioned when it comes to lack of preparation and being impatient so i have a recommendation in the success factors which you can see in the course later the seventh challenge i've seen is people are trying to deploy snop without having a basic of supply chain process so what i mean by that is so you're not if you do not have a right for example abc analysis in place the clarity and we are made to stock made to order the right basically inventory management policies inventory forecasting maybe you have increased inconsistency in measuring your own time delivery you're not going to deploy sop right you need to make sure the basic process of supply chain are in place you have all the right kpis in place before you actually invest time and money in deploying a snlp process so abc analysis made to stock made to order inventory management strategies so if you like this video don't forget to like share subscribe and leave your comments below