Integrating sales and operation describes the process engineered to obtain information about demand in the commercial context and matching it up against supply and financial objectivity. This then informs the cautious decision making about the future production. Integration occurs when different departments such as sales, marketing, supply chain and finance...
Integrating sales and operation describes the process engineered to obtain information about demand in the commercial context and matching it up against supply and financial objectivity. This then informs the cautious decision making about the future production. Integration occurs when different departments such as sales, marketing, supply chain and finance are integrated in pursuit of a singled out goal. Organizations have ways of achieving this with the simplest way being influencing the organizational culture. Numerous benefits also come with this exercise.
Sales and operations planning enhance alignment of several departments to form coherent chain of operation. It harmonizes the functions of the sales, marketing, manufacturing and finance in terms of the goals to be achieved and how to achieve them. In this manner, whenever the marketing department acquires information that a particular product is in high demand, it provides this information to manufacturing which would be ready for it, and in turn have reflected it in the plan. In the same manner, the finance department would also have had anticipation spending in this increased production. When all these operations are ironed out in a smooth manner, it represents agreement between the department heads on the plan.
Another significant benefit of sales and operations integration is that it enhances maximum decision making resources because several departments are involved. There is a lot of engagement of the human resource of the company to make decision. This is done through meetings where issues can be raised, tackled and resolved. The presence of each departmental head provides an opportunity for the entire company to be easily aligned behind an operational decision or organizational vision.
Further, risk management is a very critical aspect of the business environment. Risks are continually changing and become dynamic each day in line with the new engagements that the organization delves into and the global trends. Each department could have its own unique risks bit some risks have ripple effects that go beyond a single department and this can be very futile if only assessed by a single department. Synchronized activities can prove very effective in risk mitigation.
There are various ways through which sales and operations planning can be integrated since sales and operations planning are two components of commercial transactions that need to be integrated to offer commercially viable end results. A number of ways exist to achieve this integration and these include:
Horizontal sales and operations planning integration; in the horizontal sales and operation planning, three categories exist which can be further disintegrated to: supply planning, supply and demand balancing, and demand planning (Ambrose, 2015). This spectrum is relevant to all levels of the hierarchy of plans. In the demand management, consideration is put on how supply of the products and the likely event that the said goods may be taken off the market or even introducing a new product. These are the plans in sales plan and portfolio plans. In the priority management, planning is done within the priority categories focusing on balancing the demand and supply of the products, synchronizing resource usage and buffering for uncertainty (Ambrose, 2015). There is existence of the production plan which aims at producing products based on the sales plan while the inventory plan checks to see that the inventions done will be of benefit to the company. In the capacity management level, focus is on factors that affect the resources available to support production and supply plan and also the sales plan. Better production is hinged on keeping a resource plan which allocates on all the resources that are used in the production process and marketing of the product (Thomé, 2012).
Vertical sales and operations planning integration ; the vertical sales and operations planning integration gives an apparent connection to be made between high-level, long-term planning processes and detailed short-term planning processes. The vertical integration may be primary or secondary flow. In primary flow, the process operates to fulfill the goals, targets and strategic measures that have been passed down through the strategic planning processes. The secondary flow gives feedback on the results obtained in the planning process for easier decision making (Robertson T., 2017).
Enhanced supply chain is achievable through strategic planning bringing in the need of research of the whole process to help make a concise decision. Planning runs from the point of the production up to the point the final product reaches the consumer. Management then handles around the suppliers, the middlemen and the consumers who have the advantage of information asymmetry, which form the basis of any decision within the organizational operations planning. To have a good outcome the number of middlemen should be greatly reduced with the aim of reducing the cost of production minimizing the chances of customers purchasing the product. Most middlemen also have divergent interest and a multiplicity of them create unnecessary cost. The demand management as it enables determination of what medium to use to reach consumers and the cost of which to offer the products (Andrews J., 2014).
Secondary flow includes acting on the information received from external sources about the product. The information can be either compliments or complains. This can also be achieved through consultancy which provides minimum standards which the products should meet.
The success of business depends on how it responds to market needs. This can be realized through proper integration of the company as a whole to ensure pursuit of clear goals. A combination of effort of different departments of the company increases the chances of success in the business environment
References
Andrews J., (2014). Importance of Supply Chain Collaboration. Retrieved 26 August, 2017 from http://www.supplytechnologies.com/blog/the-importance-of-supply-chain-collaboration
Robertson T., (2017). What Are “Verticals In Business? Retrieved 26 August, 2017 from http://smallbusiness.chron.com/verticals-business-26157.html
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