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dear friends now we will talk about one of the major and interesting topics in a supply chain so this topic is sales and operations planning and it is also referred as snop now before we start to this topic let's get back to the history of supply chain so usually in 1960s or 1970s many manufacturers were constantly struggling to balance supply and demand and this is because of multiple factors like each function in the company was working in a silo and there was lack of involvement of leadership team in the planning process and because of all these factors manufacturers were constantly struggling to balance supply and demand so to better meet demand and Supply balance businesses found a better way in the form of process which is called as snop or sales and operations planning this process was originally invented by Oliver white somewhere in 1981. now we will talk about evolution of s and op so as far as evolution of Snopes concerned it is also linked with the evolution of supply chain we have seen evolution of supply chain in our previous topics and we've seen that in 1970s there was invention of MRP systems so it was more of manufacturing resource planning which was helping to plan for the Productions to understand the capacity requirements in the production or operations so that was basically a baseline for evolution of snop now in early 80s so there was understanding that it was more about planning for the production but there was no balance between demand and Supply so in those period demand planning was not done in a structured way there was no integration with sales and marketing team or there was no integration with the end customers and that's why in Arlene and that's why in early 80s the sales and operations planning process was invented by Oliver white which was majorly focusing on demand and Supply balance by creating a proper demand planning process now in 80s we have seen that there was Major focus on balancing supply and demand with the structured process now in late 80s it was also understood that there is a need to involve Finance in this process and that's why financial integration has been one of the key development in snop in late 1980s in late 1990s there was again key understanding that there is a need to involve new product integration in the snop process so in 1990s or in late 1990s so in late 1990s further development in snop process has been done with new product Integrations now after 2000 there are further development happened in this snop process in the form of supply chain collaboration with multiple partners and also creating scenario plans and their execution through a different ID based systems so that was more development in the form of supply chain collaboration and in 2015 or Beyond 2015 the major focus is also given on development of people development of technology and also development of s and op process further now let's see what is the sales and operations planning process so we'll talk about what is sndop so snop is a senior Management's decision making process that ensures integration and collaboration to align tactical plans with the business plans so this is a simple definition of snop in other words sales and operation planning is about aligning your daily or weekly Supply operations with your monthly demand plans to reach to a long term business goals now sales and operations planning is all about getting everyone headed in the organization in same direction including your contract manufacturers or suppliers or distribution Partners or even your customers now very important point to note here is sales and operation planning process is a cross-functional in nature and it is a collaborative effort made within an organization which uses intelligence and related processes to synchronize demand and Supply plans after this integration all possible efforts are made to align supply and demand through different functions within an organization sales and operation planning is always preferred as an integrated business process because that helps to form a collaboration and alignment and collaborated efforts across multiple functions or departments within the company the word integrated plays very important role in the sales and operations planning function any organization making a sanop process which is disconnected or Silo is facing more challenges than it is integrated with multiple functions like inventory planning production finance and sales team the snop implementation has given best results to many companies who are getting benefits as a long-term Market success in a nutshell snop is a business management process to balance demand and supply and it is also integrating Financial Planning and operational planning to have a strategic plans executed now in snop demand is usually referred as forecast which is made for the future period And also the actual customer orders while supplies referred as available capacity for production available labors available products or inventory on hand and it also considers open Supply orders like open production plans or incoming orders from the suppliers in the supply bucket now typical snop process consists of five different steps in their end-to-end cycle these five steps in snop process are very important to be interlinked with each other now let's talk about each process in detail the first process or the first step in s and op is data collection and new product planning this is very first step in Snoop and this process allows for a coordinated plan for launching new products and phasing out old products so if company wants to launch new products in a future or phasing out or obsoleting old products in a future then these plans are collected in this process usually from product management team in this process the data collection is also important step so data collection refers to collection of historical sales and usage data to derive a statistical forecast now data collection is also a process of collecting demand data from end customers directly now second step of Snoop is called as demand planning demand planning process is the process that is done after collection of historical data and having plans for new products available from the step one demand planning process includes statistical forecasting that is done based on the historical data and then also a consensus on that statistical forecast in a short term or medium term or in a long term period now this process creates aggregate demand by product family and also considers changes due to marketing events price increases or promotions or change in customers Behavior or changing customers pattern once there are demand plans in the place those are approved by leadership team and which is considered as an core input for the third step which is known as Supply planning so Supply planning is a process done to understand required aggregate capacity and resources to meet the demands that are defined in the second step and that is why we can say that Supply plan provides a basis for consensus on resources inventory plant production planned purchases for the future period now we have demand and Supply numbers clear from first three steps but there are hardly few businesses where demand Supply balancing has been a easy task because it takes long efforts and long coordination multiple team members are involved in this coordination processes hence it is important to have a consensus on identified demand and Supply numbers and that is why the fourth stage of essendop is referred as consensus plan or sometime it is also referred as Prius NOP or pre-sales and operations planning few authors also call this step as financial integration now this step helps to create a consensus on the actions needed to resolve any gaps that are identified in demand planning and Supply planning process and hence in this process or in this step financial integration is playing a major role with financial integration it is easy to understand allocation of funds to different departments and required cash flow in the future can be forecasted easily the last step of sn2p process is called as Executive review the name itself talks about the review of executive team members so this is basically a meeting which is done with the senior Executives of the business in this meeting Executive review provide any additional feedback into the demand or Supply plans in Executive review process performance metrics against the plan are well discussed and Senior leaders are also requested to provide support on root cause analysis and corrective actions wherever it is required in this detailed discussion and planning with senior leaders it helps to make quick decision on medium or long term Supply Plans by keeping cross-functional teams on the same platform so it is very important to have everyone on the same number that means one number for demand plan and one number for Supply plan across the stakeholders which are involved in this process so that is all about basics of s and op process and what we have seen in this is basically an evolution of s and op which started with demand and Supply alignment at initial stage then there was integration of financial team then there was integration of new product introduction and further the integration or the further development happened in the form of collaboration in the form of scenario planning and in the form of involvement of leadership team then we have seen multiple processes or multiple steps in s and op so there are five major steps this is first is new product introduction and data collection so in this process all new product introduction plans or phasing out or obsoleting old product plan is coming out from product management and in this step demand planners also do statistical forecast based on historical data the second step is a demand planning which is basically a consensus on a statistical forecast that is coming out from the step one and once this consensus is done there is one number of demand plan which is fixed which is approved by leadership team then third is a supply planning process so this process is done to understand required capacity in the form of resources in the form of machineries to meet the demand plan now once demand and Supply planning process is done there are certain actions there are certain gaps which needs to be fulfilled and that's why the fourth step comes into a picture which is consensus review or financial integration or pre-snop process and in this process these gaps are worked upon with multiple options to fulfill these gaps in demand and supply and finally the process is Executive review where leadership team of the business is involved to make certain decisions to take some actions out of the demand Supply and consensus planning [Music] foreign