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February 20, 2006 -- Departmental specialization has led analysts to create multiple plans that offer differing assumptions and perspectives and, because they are found in various spreadsheets, are difficult to integrate and reconcile. Companies looking to align strategic initiatives and to coordinate plans can use sales and operations planning (S&OP) to enable operational performance planning at both enterprise and departmental levels.
Most organizations use spreadsheets to create operational plans. When individual departments create them, each uses its own set of business assumptions and market perspectives. For example, sales may develop its revenue forecast based on the current pipeline; finance creates an operating plan based on current-year budgets; marketing creates product forecasts based on its demand-shaping activities; and manufacturing’s basis is its supply outlook. Additionally, each offers a different perspective of the forecast. Sales revenue forecasts are by regions and customer. Marketing forecasts are in unit sales by product lines. Financial forecasts are in currency by internal organization. Manufacturing forecasts are in units by SKU and part number. Thus, it’s hardly a surprise that corporate management and those who report to it have trouble in reconciling these different plans, assumptions and perspectives to produce a single view of the enterprise.
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