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Welcome to our snop ask the expert series Doug today's question is how does snop provides sales The Forum to communicate Market strategy to operations so for today's session I'm going to put my sales leader hat on often when we think about snop from a sales perspective we get caught into the Trap of thinking about it as an operations exercise and then we're dragged kicking and screaming into the process forced to provide a forecast to help operations and supply chain it's a necessary evil but we can never do it well enough or at the level of accuracy or detail that's required in order for operations to be happy with that forecast and drive their plans and then we kind of wonder why we don't get anything out of it but what if we think about this differently what if we think about the demand planning process instead of getting to a more detailed forecast we think about a more strategic demand plan that links better to what we want to achieve in the marketplace what would this look like well let me start by saying that snop isn't demand planning the snop process takes the input from your forecasting or demand planning process in order to arrive at the holistic demand plan that includes bookings backlog and an unconstrained shipping plan this is then used as input to the supply plan and then as part of the snop process is constrained to develop the final constrained shipment and backlog plan one of the main challenges addressed by snop is managing situations where the market or the customer expected lead time the kelt is shorter than what it takes us to make or Supply our products we establish buffers to manage this disconnect and also the demand variability and Supply capability these typical buffers will be finished goods inventory Flex capacity or lead time setting these buffers aligning and agreeing on them and then monitoring and adjusting these are at the core of the snop process if it's done right snop is at the family level it's defined by constraint so you understand what your capability is but then also what your supply lead time is this provides a clear understanding of what we can do and what our flexibil is and helps provide the input to set these buffers let me give you an exaggerated example to describe this if production could respond to any demand immediately with no capacity limit and ship the next day we wouldn't need any inventory buffer and the lead time would only be one day you wouldn't need snop and you would simply take the orders and ship them unfortunately I don't know many businesses like this so that leaves most if not almost all businesses in need of some sort of buffer and buffers especially inventory or upside production capability cost money and the bigger the buffer the more money that's required this brings us to lead time so how do we become more strategic about managing this rub between demand and supply and how can we do this in a way that we can better service our customers this is where the snop process comes in specifically how do we communicate our demand requirements and especially around this concept of using lead time as a buffer so how do we do it first start by segmenting your demand within a family into different demand streams I usually start with project or lumpy abnormal demand and flow demand often this segmentation will even align with customer types it might be the oems and large customers and then it might be the smaller retail customers and and Distributors it most likely makes sense that you will set different expectations with these different customers or grouping of customers in terms of lead times and even service levels by segmenting the customers or creating these demand streams so that we have different lead times we're effectively setting different customer expected lead times as part of this you can determine if some customers can be shipped from stock versus make to order for example if you have a large customer with frequent orders for a limited number of Parts this might be an oem that buys your components you might set a shorter lead time and deliver some of this out of inventory but for the Distributors who might be placing infrequent large orders you might publish a longer lead time for these customers this would give operations more time to schedule these orders into production as part of the snop process you want to document the expected lead times for each of these demand streams or demand types the snop should also provide the measurement of that backlog for these demand streams against this lead time what would this look like well let me use another example if lead time is two weeks I'd expect to start each month with approximately 50% of my month's expected shipment for that demand stream already in backlog as 50% is like roughly half a month or approximately two weeks in a 4we month if it's much more than that the lead times may be pushing out if it's much less either demand is decreasing or this set of customers is not providing enough lead time on the orders now because snop is done monthly each month you should measure the accuracy by demand buckets at the ly level hold yourself accountable for the accuracy of the forecast I recommend setting a tolerance level and measuring bookings and shipments compared to this tolerance level if the actuals are out of Tolerance this should be driving root cause analysis to improve the forecast the tolerance level should also be aligned to that leadtime buffer size for example a short lead time part will have a tighter tolerance for bookings than a long lead time part because the time between booking and shipping is much less and therefore the forecast needs to be more accurate so hopefully you can see that by thinking strategically about your different types of customers setting the market expectations specifically around lead times can help you use your least expensive buffer lead time and then use the snop process to hold yourself accountable and adjust your plans ingly this way you'll be able to use the process to achieve your objectives and improve alignment across the organization hopefully you found this helpful and we'll see you in the next video thanks for watching today's video subscribe to our channel for more on implementing snop you can learn more about how dbm can take your process to the next level by visiting our website . dbm cis.com thank you and take care