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Effective S&OP: Planning Horizon

Updated: Dec 2, 2022

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Our last article identified the key characteristics required to have an effective Executive S&OP process, particularly around the design of the Executive S&OP presentation. In this article, we will outline how to establish and maintain a clear planning horizon.

Executive S&OP is a future-focussed planning process. The goal of the process is to link strategy and execution and ensure that you have the capability and supply right-sized to achieve both strategic and execution goals.

The process should cover a minimum rolling 12-month horizon. For any business that has seasonality, this horizon will give a full view of seasonal fluctuation to support inventory and capability planning. A 12-month rolling horizon is also typically long enough to identify where volume shifts are going to require increase in staffing and capital to adjust capability to meet volume shifts. Most importantly it extends the planning beyond a fiscal year, which gives visibility to the impact of planned end-of-year decisions such as an inventory reduction or shipping pull-ahead.

It is recommended to extend the planning horizon out to the end of the next fiscal year as you enter your budgeting cycle. Typically, this is in month 7 or 8 of the current year. This allows you to use the established Executive S&OP discipline as a primary input into the budgeting process.

For some businesses the horizon should be longer than 12 months. Some examples of this are:

  • The horizon should cover your cumulative supply chain lead-time (CSCLT). The CSCLT is the longest lead-time components in your bill of material offset by the sum of the manufacturing lead-times that use that item.

  • Project businesses or business with significant customer lead-times. These businesses typically will have significant future customer orders or backlog. The S&OP horizon should cover all (or the majority) of your aged customer backlog.

  • Businesses with significant strategic changes (growth, new products). Projecting the S&OP horizon out further may be required to gain confidence in the plans for future expansion. This can be done as needed in the process and may require less granularity.

The primary focus should be beyond month one. Month one (or the current month) is already in process when you are going through the S&OP cycle. You are executing the plans that you have already put in place. For most businesses, your supply chain and/or manufacturing lead-times are such that volume changes in the first month are difficult and potentially costly. While there may be some adjustments to the first month plan, for the most part this should be considered as set.

Both Sales and Operations should understand the family planning horizons. These are sometimes called frozen and firm zones. These zones are where volume changes can or cannot be made. The frozen zone is where a volume change is nearly impossible or extremely difficult (costly). Changes in this zone should be avoided, due to negative impact on efficiency and material costs. Setting the appropriate buffers (inventory, upside flex) as part of the S&OP process will support reacting to volatility in this zone.

Establishing clear planning horizons will support your forwarding looking S&OP plans. This is one of the key elements that can make your S&OP a more effective process. See the Executive S&OP: Best Practices to get a full picture of what an ideal process should be like.

You also can watch our related video, Good S&OP Part 5: Planning Horizons which expands on implementing these points into your S&OP process.

Effective S&OP- Planning Horizon
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DBM Systems provides organizations with the coaching and tools to quickly start and sustainably run an effective S&OP process. Through the Virtual Accelerator process, you can implement a Executive S&OP process in just six months.

Not quite sure how to incorporate these best practices into your S&OP process? We can help! Reach out to us. We can help you unlock the power of S&OP in your organization.


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At DBM Systems, our consultants have over 20 years of experience providing S&OP leadership to businesses worldwide. We equip teams with coaching and the tools needed to run an effective S&OP process. Learn about our process and unlock the power of S&OP in your organization.



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