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Krajewski IN Chapter 14 - Chapter 14 1 Definitions Sales...

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Chapter 14 Sales and Operations Planning A. Sales and Operations Planning Across the Organization 1. Definitions a. Sales and operations plan (S&OP) – The process of planning future aggregate resource levels so that supply is in balance with demand b. Staffing plan – A sales and operations plan of a service firm, which enters on staffing and other human resource-related factors. c. Production plan – A sales and operations plan of a manufacturing firm, which enters on production rates and inventory holdings. 2. Requires managerial inputs from all of the firm’s functions a. Marketing provides inputs demand and customer requirements. b. Accounting provides cost data and the firm’s financial condition. 3. Each function is affected by the plan. a. Plan calls for expanding or reducing the workforce has a direct impact on hiring and training requirements for the human resources function. b. As the plan is implemented, it creates revenue and cost streams that finance must deal with as it manages the firm’s cash flow. c. Each department and group in a firm has its own workforce. Managers of these departments must make choices on hiring, overtime, and vacations. Sales and operations planning is an activity for the whole organization, involves senior management, and must often achieve consensus among conflicting objectives of different functional areas. 4. How S&OP relates with processes and value chains. Perhaps show the PowerPoint of the book’s “central figure.” B. The Purpose of Sales and Operations Plans 1. Balancing demand and supply plans 2. Aggregation a. Product families A group of customers, services, or products that have similar demand requirements and common process, labor, and materials requirements. Sometimes, product families relate to market groupings or to specific processes. 14-1
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14-2 Chapter 14: Sales and Operations Planning A firm can aggregate its services or products into a set of relatively broad families, avoiding too much detail at this stage of the planning process.
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Chapter 14: Sales and Operations Planning 14- 3 b. Labor A company can aggregate its workforce in various ways as well, depending on flexibility. Management can aggregate employees along product family lines by splitting the workforce into subgroups and assigning a different group to the production of each product family. In service operations, such as a city government, workers are aggregated by the type of service they provide: firefighters, police officers, sanitation workers, and administration. c. Time Planning horizon typically one year. Adjustments usually are made monthly or quarterly. Planning periods reflect a balance between the needs for: A limited number of decision points to reduce planning complexity.
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