OVERVIEW

The demand plan is probably the most talked about element of the S&OP process. In fact, probably no single process within the ERP business model, including the S&OP process itself, gets more attention than demand planning or the forecast. People everywhere enjoy blaming the forecast for their planning woes. The facts support that, while easy to attract blame, the forecast itself is not usually the problem. The popularity of this source of blame comes from the frequently observed wide band of process variation introduced into almost every business by its customers. The truth almost all customers are ill behaved. Businesses without unpredictable customers are an exception.

Believe it or not, in many businesses the demand plan or forecast is actually-done by the operations people because the demand-side team members have not willingly acknowledged the required work behind the business planning process and are not knowledgeable enough to give forecasting a decent chance. In these businesses the demand-side team often only supplies an annual dollar amount for sales. This is not very useful, creating survival mode requirements in the operations team and forecasting efforts.

The S&OP process in a Class A, or high-performance, ERP environment creates a solid handshake between the demand process and the operations side of the business. This ERP handshake actually culminates in the S&OP process. Not only is this partnership attitude important for minimizing risk, but it also creates an environment where everybody has shared goals and understands how variation from his or her part of the...