What is the Operations Leader’s Role in the S&OP Process? First of all, the Operations Leader is part of the Roles and Responsibilities of S&OP. He/she needs to develop comprehensive plans to ensure adequate inventory is available. In order to meet all customer needs in the most efficient and cost-effective method possible. A strong S&OP process makes it much easier for Operations Leaders to do their jobs.
Managing Manufacturing Capacity -Both Internally and Externally
Depending on your industry, there may be economies of scale for large production runs. However, not every customer requires, or can absorb, large inventory shipments. Sometimes it is necessary to repackage inventory to meet the needs of smaller customers. One example; your average production run is 180,000 pounds of polymer, but some of your customers can only accept 600 pound boxes. In that case, subcontractors might be needed to repackage inventory to meet the needs of smaller clients. The S&OP plan provides details of demand down to the Individual Stockkeeping Unit (SKU) level. Thus, it gives the Operations Leaders the opportunity to secure the necessary manufacturing resources to meet customer demand.
Product Portfolio Management
The S&OP plan can help to proactively inform Operations Leaders of changes to the product portfolio. The S&OP plan also includes new product introductions and the phasing out of poorly performing products. With this knowledge, the Operations Leader can make sure to balance raw material supply relative to these changes in product specific demand.
Raw Material Qualification
Many high-tech industries require pre-qualified raw materials in a product to meet exacting specifications. Each raw material product has its own lead time cycle for pre-qualification. It is often necessary to pre-qualify multiple vendors for the same raw material. It will help avoiding the vulnerabilities that come with single sourcing of raw materials. An S&OP plan provides clear insights into ongoing raw material needs. One of the Operations Leader’s role is to allow adequate time for the qualification of new raw material vendors.
Contract Manufacturer Qualification
It is also important to pre-qualify contract manufacturers. The Operations Leader needs to allocate an adequate time into the schedule so that any new contract manufacturers can be pre- qualified to help with production.
Finally, knowing forecasted product demand is important. However, it is also important to know the geographical location of the demand. An Operations Leader needs to plan for product distribution. It might include warehousing and any international shipping requirements that may occur for global products.
In short, the Operations Leader’s role in the S&OP process is at the very heart of it.
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