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The Best Performance Requires Both S&OP and Lean Execution


Sales and Operations Planning and Lean Manufacturing go hand in hand.  They do different – and very necessary – things, and you need them both.


Sales and Operations Planning is a set of forward planning tools to help people balance future demand and supply, to predict capacity problems with enough time to do something about them, to establish a “budget” for a load-leveled master schedule, and to project inventory and backlogs well in advance. The sales planning, supply planning and rough cut capacity planning tools that are part of S&OP can do this better than any alternative. 


Lean manufacturing's objective is to create the physical environment that will allow material to flow - from raw material to finished product to the customer. In doing this, Lean eliminates waste and wasteful practices, reduces costs and cuts lead times - while synchronizing all production and purchasing activities. Its primary components are standard work, visual management, heijunka (leveling), takt time, one-piece flow, EPE I, and the pull (kanban) system. 


Lean is strong on workplace management; S&OP and related processes are strong on decision-making for the future. Lean requires workplace and value-stream transformation; S&OP can deal with the status quo. Lean scheduling and pull systems cannot work unless certain important prerequisites are met; S&OP can help you deal with nearly any kind of manufacturing environment - one of a kind handcrafted production, traditional mass or batch production, or one-piece lean flow - as you make the physical transformation necessary to achieve maximum flow and maximum results.  


If you create a manufacturing environment where material flows with minimum waste (Lean), but you can’t predict capacity and product availability problems in enough time to avoid them (S&OP), you will inevitably revert to firefighting and finger-pointing and poor results.  Similarly, if you do an excellent job of future planning but have poor flows, you can almost count on high inventory levels, long lead times, and poor profitability. 


Traditionally Lean Manufacturing has been stronger on workplace management; S&OP on decision-making for the future.  The tools and methods of Lean Manufacturing have tended to look most closely at the plant, and its immediate customers and suppliers, mostly over a short horizon. This leads to improvements like: “shorter, quicker, fewer, lower cost, more flexible, and better aligned”.


S&OP provides distance vision - a focus to predict capacity and product availability problems before they become crises, to identify market issues while they are still opportunities, and for prioritizing improvements in a way that will create the most favorable results. 


What company wouldn't want both?  Hundreds of companies have proven that you can have both, and that each approach amplifies the benefits of the other.   In other words – they work best when they work together.