{"id":7841,"date":"2019-07-10T12:47:12","date_gmt":"2019-07-10T16:47:12","guid":{"rendered":"https:\/\/demand-planning.com\/?p=7841"},"modified":"2019-07-10T13:10:57","modified_gmt":"2019-07-10T17:10:57","slug":"how-do-product-reviews-fit-into-the-sop-process","status":"publish","type":"post","link":"https:\/\/demand-planning.com\/2019\/07\/10\/how-do-product-reviews-fit-into-the-sop-process\/","title":{"rendered":"How Do Product Reviews\u00a0Fit Into The S&OP Process?"},"content":{"rendered":"

Last year I attended IBF\u2019s conference in Orlando on demand planning, forecasting and S&OP with many peers and industry leaders. During the leadership forum, we had an opportunity to break into groups to discuss the key steps of S&OP \u2013 product review, demand review, supply review and executive review. I was surprised that that the product review step was the part of S&OP that most attendees found challenging, or were unfamiliar with.<\/span><\/strong><\/p>\n

S&OP<\/span> has been around <\/span>since the late 1980\u2019s<\/span>. The process has been <\/span>traditionally <\/span>about balancing supply and demand to support the strategy <\/span>needed<\/span> to meet company goals. Many books and articles<\/span> have been written<\/span> over the years <\/span>about <\/span>the <\/span>S&OP process<\/span>, how to implement it, and how to make it better. <\/span><\/p>\n

Generally,<\/span> it <\/span>has been<\/span> <\/span>a <\/span>5-step<\/span> process that centered around\u00a0<\/span>tactical<\/span> activities:<\/span>\u00a0data gathering, demand <\/span>planning<\/span>, supply <\/span>planning<\/span>, pre-S&OP and an executive review. <\/span>Over the years, the process has evolved and even been called new names like SIOP (Sales, Inventory & Operations Planning) and IBP (Integrated Business Planning)<\/span> among others<\/span> with the addition of other business functions (<\/span>such as <\/span>inventory and finance). <\/span><\/p>\n

In t<\/span>he last few years those steps have <\/span>become<\/span> <\/span>process activity<\/span> oriented:\u00a0<\/span>product review, demand review, supply review, pre-S&OP and an executive review. <\/span>In the change from tactical to process oriented steps,<\/span> it appears that<\/span> a new review has appeared \u2013 the product review.<\/span><\/p>\n

Why You Need A Product Review In Your S&OP<\/h2>\n

While demand and supply balanc<\/span>ing<\/span> address<\/span>es<\/span> the economic factors facing the business, the product review<\/span> and lifecycle review processes<\/span> address the strategy and product portfolio we want to offer<\/span> the market<\/span>.<\/span> Product review<\/span> and lifecycle <\/span>processes <\/span>are not new and <\/span>exist in most organizations<\/span> but they are\u00a0<\/span>frequently independent of the S&OP process. <\/span>I<\/span>f the product review cycle is not a part of your existing S&OP process, it should be.<\/span> <\/span> <\/span>Let\u2019s look at some compelling reasons to <\/span>integrate<\/span> the<\/span> product review into your S&OP process.<\/span> <\/span> <\/span><\/p>\n

I<\/span>f the product review cycle is not a part of your existing S&OP process, it should be.<\/span><\/p><\/blockquote>\n

1. You Get A Single Corporate Product Strategy<\/span><\/h3>\n

A product review should be exactly as it <\/span>sounds<\/span>, an analysis of the lifecycle of each item in our product portfolio<\/span> to determine the future <\/span>sales strategy of each item<\/span>. <\/span>Development and launch of new items<\/span> are managed with project timelines<\/span>, market<\/span> analysis<\/span> and launch forecast<\/span>,<\/span> while items slated to be discontinued due to declining sales<\/span>\u00a0are managed <\/span>separately<\/span> in item lifecycle reviews<\/span>. The<\/span>\u00a0product review, therefore, is the strategy for each item into the future.<\/span><\/p>\n

The<\/span>\u00a0product review is the strategy for each item into the future.<\/span><\/p><\/blockquote>\n

Including the product review as part of the S&OP <\/span>process and integrating with demand and supply allows us to control our destiny as a company and provide the best opportunity for success. Our demand and supply plans e<\/span>ncompass not only our current business but allow for improved visibility into changes<\/span> in the business going forward<\/span>.\u00a0<\/span>All aspects of the supply chain can anticipate changes to the p<\/span>ortfolio<\/span> enabling <\/span>a single cohesive conversation<\/span> <\/span>that<\/span> prevents overlooked challenges and opportunities.<\/span> <\/span>A<\/span>nticipation of consumer demand improves<\/span> <\/span>when we know<\/span>\u00a0what sales is selling to our customers<\/span>.<\/span> <\/span>A single<\/span> corporate<\/span> product strategy reduces competing priorities between departments<\/span> and <\/span>reduces disruptions to our customers. <\/span><\/p>\n

2. Product Review Means An Improved Demand Plan<\/span><\/h3>\n

Integrating the product review into the demand review process improves the <\/span>forecast. Demand planners really are experts at managing assumptions. A m<\/span>ost common assumption, which is also used for all time-series forecast models, is that sales history <\/span>can be used to predict the future. That’s true but\u00a0<\/span>demand managers can enhance this by applying other assumptions into their demand <\/span>plans <\/span>and make improvements to the forecast. <\/span>Other assumptions might include <\/span>changes in customer mix, market intelligence<\/span> or the impact of inventory<\/span> stock out<\/span>s<\/span> <\/span>on past sales<\/span>. When they include the results from the product review, <\/span>demand managers<\/span> can also look at how<\/span> changes to mix of items sold\u00a0impacts the forecast.<\/span><\/p>\n

Demand\u00a0<\/span>managers\u00a0<\/span>can focus on improving the timing and magnitude of\u00a0<\/span>anticipated product\u00a0<\/span>chang<\/span>es instead of<\/span>\u00a0just<\/span>\u00a0reacting to changes in sales.<\/span><\/p><\/blockquote>\n

Now the demand manager can also consider cannibalization impacts between items when a new item launches, and also the impact when an item <\/span>is discontinued. Each managed assumption has the potential to improve or hurt the business and can be easily captured in the KPIs you use in your S&OP process. Including the results of the assumptions from the product review tend<\/span>s<\/span> to improve the quality of the resulting forecast and allows for capture of mix changes before they happen. Demand <\/span>managers <\/span>can instead focus on improving the timing and magnitude of the <\/span>anticipated product <\/span>chang<\/span>e instead of<\/span> just<\/span> reacting to the change in sales. Demand becomes more predictive and less diagnostic and descriptive in <\/span>the <\/span>process!<\/span><\/p>\n

3. You Get Improved Supply Performance and Inventory Plans<\/span><\/h3>\n

<\/span>S<\/span>upply planning is usually the last department to know about any changes to items including new product launches, distribution changes or even item discontinuations. <\/span>By including the product review in S&OP and as part of the supply review process, supply and inventory plans can be tied to the product strategy. <\/span>As a result, replenishment plans <\/span>that were<\/span> <\/span>created<\/span> on the historical product mix <\/span>can be corrected to cover the current <\/span>or future mix<\/span> of items<\/span> being sold to customers. <\/span>Th<\/span>e supply review<\/span> can<\/span> <\/span>properly plan<\/span> and replenish the right inventory<\/span> volumes at the right time on the right items<\/span> for future sales<\/span>.<\/span><\/p>\n

Planners can set safety stocks and replenishment strategies that support the overall <\/span>future <\/span>corporate strategy. <\/span><\/p><\/blockquote>\n

Planners can set safety stocks and replenishment strategies that support the overall <\/span>future <\/span>corporate strategy. Manufacturing, purchasing and logistics <\/span>have<\/span> improved opportunities to identify bottlenecks and communicate those risks back into the S&OP process. As a result, overall inventory levels are managed across all items. New item inventory is available on time while inventory for discontinued items can be reduced before customers stop ordering. <\/span><\/p>\n

Ultimately, the goal of any S&OP process is to enable better decision making and support business decisions. To do this, the\u00a0<\/span>S&OP <\/span>process <\/span>has three key parts:<\/span>\u00a0strategy<\/span>, demand and supply<\/span>. <\/span>The product review should be a key part of <\/span>any<\/span> S&OP strategy and plays a defining role in the results of the demand and supply review<\/span> steps<\/span>.<\/span><\/p>\n

<\/span> <\/span>For S&OP to be successful, <\/span>defining the product<\/span> portfolio <\/span>and managing item lifecycles <\/span>are crucial.\u00a0<\/span>Communicating the results of the product review as part of the S&OP process<\/span> adds clarity<\/span> and improved opportunity for success<\/span>.<\/span> Making the product review process an integral part of the S&OP process keeps all parts of the organization focused on <\/span>a single<\/span> product strategy and the critical items needed to support the long-term corporate goals.<\/span><\/p>\n

Misty will be speaking on this topic at IBF’s Business Planning, Forecasting & S&OP Conference<\/a> in Orlando from October 20-23, 2019. Join her and a host of other planning, forecasting and analytics leaders at the biggest event of it’s kind for learning, networking and more.<\/p>\n<\/span>","protected":false},"excerpt":{"rendered":"

Last year I attended IBF\u2019s conference in Orlando on demand planning, forecasting and S&OP with many peers and industry leaders. During the leadership forum, we had an opportunity to break into groups to discuss the key steps of S&OP \u2013 product review, demand review, supply review and executive review. I was surprised that that the […]<\/p>\n","protected":false},"author":14664,"featured_media":7847,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[379,378,385,381],"tags":[480,479],"class_list":{"0":"post-7841","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-collaboration","8":"category-process","9":"category-producr-lifecycle-management","10":"category-sop-process","11":"tag-product-lifecycle","12":"tag-product-reviews"},"_links":{"self":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/7841"}],"collection":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/users\/14664"}],"replies":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/comments?post=7841"}],"version-history":[{"count":0,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/7841\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media\/7847"}],"wp:attachment":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media?parent=7841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/categories?post=7841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/tags?post=7841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}