In this blog would cover how Annual Operating Planning/Budgets can be integrated with Sales & Operations Planning using SAP’s purpose built planning applications for these processes.
Before getting into the crux of the post, i would like to quote an excellent blog on Right Brain challenge that was posted in Supply chain trends. Loved the paragraph in there that i would like to pick up here, i thought it was brilliant:
"The biggest opportunity is to find ways to build a business culture with critical mass of people who show cooperative behaviours, want to understand the other silo and are open to be influenced by the other silo’s, be it function or business unit, customer or supplier. Actively create groups that cross the silo’s and think holistic in ‘we’ and ‘us’, rather than in ‘I’ and ‘me’. Thinking holistic is a right brain activity. If we want to cross a silo effectively, we have to understand the other silo’s motivations, goals and feelings. We need to have empathy for the other silo. Feelings and empathy are right brain activities as well."
Planning processes companies follow:
Annual Operating Planning/Quarterly/Monthly Financial Forecasts:
Finance centered, the annual operating planning is an exercise most companies follow to detail out company targets, allocate resources to achieve the target and represent these in financial terms to ascertain top line and bottom line numbers. This exercise is revisited usually quarterly and sometimes even monthly with adjusted forecasts to reflect the real business scenario as the year progresses.
Sales & Operations Planning:
Supply chain centered, the Sales & Operations Planning is a very periodic (usually monthly) exercise that manufacturing companies engage in to align cross functional team to arrive at a consensus demand and match with supply plans ( rough cut capacity plans) and present the same to the management. This process is very collaborative in nature and often sets the course of the driving the execution. Its analytical (also known as Executive S&OP) in nature, providing visibility to management on what is required to meet the forecasted sales.
SAP’s solutions to cover the above process:
SAP Business Planning and Consolidations (BPC) – BPC is a very effective solution to meet the annual operating planning , monthly financial forecast process as laid out above. With its familiar Microsoft Excel interface, built in financial intelligence through comprehensive financial accounting model, and great business process flow, its served a very large number of customers to standardize their planning /budgeting process and gain significant benefits for reliable financial forecasts. In addition it also supports financial consolidations and reporting, which will help companies review their performance and do comprehensive variance analysis with comments. Watch videos of the SAP BPC solution:
http://www.youtube.com/watch?v=rhH3g5l5rIw&list=PL9B9C14EE5D663B2E
Sales & Operations Planning (S &Op) on HANA – S&OP on HANA has been purpose built to support the often open ended S&OP process laid out above. This solution supports out of box functionality to support consensus demand, rough cut capacity planning, supply review and Executive S&OP review. Built natively on HANA, it supports handled large volumes of data and providing instant insights for review. S&Op also supports collaborative planning features that take away the burden of unstructured interaction that happens over emails in a manual process. With Microsoft Excel interface and purpose built analytics, the business users get a solution which very intuitive and familiar, while has the richness of the structure and power of an integrated solution. One of the most appreciated feature is the What if scenario planning that is very helpful when evaluating multiple demand/supply scenarios. The solution has also financial KPIs built in relevant for the S&OP process. Watch videos of S&OP on HANA solution.
http://www.youtube.com/watch?v=PdY_pfWpTzY
You can also try the solution for a 3 day free trial in the HANA Market place
http://www.saphana.com/docs/DOC-3545
Integrate these silo planning processes with SAP’s solutions:
As you can see the above solutions are purpose built for meeting different specific process in the organization. But most of the companies that we talk to would like to integrate these process together, so that operational drivers drive financial forecasts. Its two way, where in the Annual Operating plan becomes the target for the S&OP plan and similarly the S&OP plans feedback to financial forecasts to keep the business plan adjusted for the latest operational plan. Many companies are engaging in very strategic initiatives to drive this cross functional alignment and drive towards what is called as “Integrated Business Planning”.
When customers adopt SAP’s solutions BPC and S&OP on HANA for the above process, the integration is seamless with integrations available between these two solutions. “How to guide” that explains how these solutions are integrated will be published in near future in SCN.
Explore the above solutions and drive “Integrated Business Planning” in your/your customer’s organization.
