How do you align purchasing with S&OP goals and forecasts?

Last but not least a potential exit strategy if Sales don't align with all the planning. Can you design a cost structure contingency to deal with slower than planned product designed to influence sell through by vendor backed promotional pricing

By closely integrating purchasing objectives with S&OP goals, organizations can ensure that procurement activities are aligned with anticipated demand and production schedules. This alignment enables purchasing dept to proactively plan for material requirements, negotiate favorable terms with suppliers, and optimize inventory levels to meet fluctuating demand effectively. Also leveraging accurate sales forecasts and production plans allows procurement to mitigate supply chain risks, minimize excess inventory, and improve overall operational efficiency. Effective communication and coordination among crossfunctional teams are essential as well.

These forecasts allow us to anticipate future demand with a reasonable degree of accuracy, which in turn helps us to make informed decisions about sourcing, contracting, ordering, and expediting. By using an S&OP forecast, we can ensure that we have the right quantity and quality of materials and services available at the right time to fulfill our demand plan. Additionally, these forecasts allow us to monitor the actual demand and supply situation in real-time, enabling us to adjust our plans accordingly to avoid any shortages, excesses, or disruptions in the supply chain. This flexibility is especially useful in a volatile market where demand and supply conditions can change rapidly.

I have found that active participation in the Sales and Operations Planning (S&OP) meetings is crucial for facilitating communication and ensuring alignment between departments. In the pre-S&OP meeting, where demand and supply plans are reviewed and reconciled, purchasing can provide valuable input concerning the availability, cost, and quality of materials and services. This is where we can highlight any potential risks or opportunities, feeding into a more realistic plan. Additionally, the executive S&OP meeting is an opportunity for purchasing to present our plans and budget. It allows us to align these with the broader S&OP plan and priorities, ensuring that every aspect of the organization is working towards the same goals.

What are you hoping to improve? Quality, terms of AP and AR (receive payments quicker, pay for product later, and invest the spread), speed of delivery for better just in time inventory controls?

I completely agree with this approach. It's vital to continuously monitor and improve our performance based on S&OP plans. KPIs are crucial for assessing our effectiveness and identifying areas of improvement. Enhanced relationships with suppliers and leveraging technology can greatly improve efficiency and cost savings, ultimately contributing to the overall success of the organization.