The challenges that companies faced during the first coronavirus lockdown are well known. Sales forecasts had to be revised downwards by 30% or more at short notice, plants were closed, employees were put on short-time working, supply networks had considerable synchronization problems and some companies had to launch contingency plans. In April of this year, the days-long traffic jam in the Suez Canal meant that automotive manufacturers were not the only ones to struggle with parts bottlenecks. An integrated solution consisting of Sales & Operation Planning (S&OP) and Supply Chain Management would have allowed affected companies to react quickly to these influences and reschedule both the internal and external network. In addition, such a solution would have provided valuable insights into which parts would be missing or delayed and would have shown alternatives for production planning depending on the supply of parts.

Integration instead of a stand-alone solution

The key to smooth production logistics lies in linking planning and execution in order to keep an eye on the operational processing of production as well as medium and long-term planning. In this approach, the current status of stocks, sales and planned logistics is always the starting point for future planning. If, for example, changed stock information is available at the end of the month following new sales, the solution immediately updates the overall system so that this status can form the basis for further production planning.

In this integrated approach, not only production or logistics are considered, but the entire process, in which one cog must mesh with the other: Sales plans sales quantities and orders for an ideal market supply from production. The production planner creates the plan for the production of primary products and then hands it over to logistics, purchasing and scheduling to plan the supply network. At this point, logistics needs to know, for example, what degree of flexibility the system requires in order to plan the supply network, including transportation, optimally.

Finally, collaborative decision-making rounds off this process. The departments or trades involved decide where to invest - in capacity or sales. If inventories are too high, a marketing campaign can boost sales. The goal of this process is a harmonized S&OP plan. The plan, which is approved by all departments involved, is accompanied by strict controlling, including monetary evaluations. Plan alternatives can be selected so that the most profitable plans are displayed in the system and, for example, investments are secured. The S&OP system identifies and visualizes mismatches: where are requirements and capacities not synchronized, where do they not match, where is there too much stock, where is a bottleneck to be expected if requirements increase?

Planning in scenarios

If you want to set up such a solution in a company, you first have to map every product structure in it, from primary products in all variants to the parts lists broken down into parts requirements, which are manufactured in the company's own factories or supplied by third-party providers. Different networks must then be modeled, such as the sales structure or the supply network. This starts at the lowest level, at the retail point, which can be a car dealer, a distributor or an importer, for example, or an entire country organization. Local planning steps take place at all nodes of the hierarchies in the distribution network. While the dealer only plans his own sales, the country organization of a company ensures that complementary product mixes are available at the dealers and that the entire country is profitable as a market. The information stored here forms the basis for planning and the planning objects. The software automatically provides interfaces for these objects in order to read in and export data. Time characteristics can be configured as required - up to 15 years into the future and up to five years into the past. The planning itself can be carried out in daily, weekly, monthly or even annual time slices.