Sales and Operations Planning

Achieving Results Through
a Team-Based Process

After a business has created a long-range strategic plan, another challenge remains: developing an ongoing process for measuring progress and adjusting the plan. Many well-crafted strategic plans fail during the implementation phase—often because of a lack of attention and the necessary controls on the part of senior management.

To help its clients to successfully monitor their results—and to reach the goals defined in their strategic plans—GMT has created a comprehensive capability in sales and operations planning.

Through an ongoing monthly process, GMT helps the sales and operations "stakeholders" within client organizations—including general managers, as well as finance, customer service, marketing, engineering, and IT professionals—to focus on key performance measurement and control.

GMT's sales and operations planning process consists of a series of management meetings, held in sequence. During these meetings, past performance and current challenges key to the success of the strategic plan are reviewed, considered, and compared to expectations. In addition, future plans are updated, agreed upon, and broadly communicated.

Assessing Past Performance: The First Step
Demand Planning: An Ongoing Effort
Manufacturing and Sourcing: Creating a Plan
Managing the Order-to-Delivery Process
Wrapping It Up: The Financial Plan
A High-Level, High-Impact Forum

Assessing Past Performance: The First Step

GMT's process first focuses attention on the previous month's performance. Managers meet to review key data on customer service, sales, operations, and profitability performance. This critical information forms the basis for the focused planning meetings that follow.

Concurrently, the marketing function provides the status of new product development—enabling the entire organization to anticipate the impact of new products on overall business planning and resource allocation.

Demand Planning: An Ongoing Effort

While many businesses develop sales forecasts on a quarterly or semi-annual basis, GMT includes monthly demand planning sessions in its disciplined sales and operations planning process.

In these meetings—led by the sales and forecasting functions—managers develop a 12-month rolling forecast of customer demand.

Since demand is always subject to variation—and no sales forecast will ever be accurate enough—this monthly meeting provides a meaningful forum in which to measure past accuracy and make corrections at both the detailed and aggregate product levels. This ongoing process ensures a broad commitment to continuous improvement—and a rolling forecast that is ever-increasing in its accuracy.

Manufacturing and Sourcing: Creating a Plan

In response to the sales forecast, the operations planning function leads an effort to create a master production schedule and a sourcing plan that answer market demand—without creating excess inventory.

On a monthly basis, managers measure past performance, prepare reports, and adjust their upcoming plans based on current demand, as well as the new updates to the rolling forecast.

Managing the Order-to-Delivery Process

The customer service function also leads a key effort in the sales and operations planning process: ensuring that order entry, shipping, and delivery processes are aligned with sales forecasts and manufacturing plans.

Like other teams, this function measures past performance—and ensures that the business has the resources to meet customer service and distribution needs, including warehousing and transportation, that are projected by future sales and operations plans.

Wrapping It Up: The Financial Plan

Based on these prior meetings and resulting plans, the finance function leads the development of a 12-month rolling financial plan that aggregates the sales, engineering, manufacturing, and order-to-delivery plans.

Finance managers also measure past results, reporting to senior executives any significant deviation from the business plan.

A High-Level, High-Impact Forum

The culmination of GMT's sales and operations planning process is a monthly upper management forum that helps top executives to review the historic performance of the business across all sales and operations functions—and to approve future plans created during functional meetings.

Attended by senior managers from across the organization, this monthly meeting provides GMT clients with a unique level of understanding of the day-to-day and month-to-month issues confronting the business—and impeding its progress toward strategic objectives.

Few businesses have this kind of ongoing forum, during which top managers can measure performance and make course-correction decisions consistent with the strategy and the uncertainties of the marketplace—creating a new level of control for top executives.

Just as important, the crossfunctional, highly participative nature of this forum—and the process that precedes it—creates a new level of teamwork and collaboration across the enterprise. By involving so many managers, there is an improved collective understanding of the business' current situation and future direction—and a significantly higher probability of reaching strategic goals.