HomeCase StudiesCase Study – Forecast and Sales & Operations Planning (S&OP) Business Process Optimization

Case Study – Forecast and Sales & Operations Planning (S&OP) Business Process Optimization

Forecasting is both art and science and integral many business processes across an organization. The art – science interface is hard, and integrating it with Sales and operations Planning (S&OP) can be extremely challenging for a product portfolio.

In this business case, an organizational restructuring had recently occurred and there was a need to develop an integrated forecast and S&OP business planning process. There was a business need to provide high quality transparent forecasts to support major corporate, brand and financial planning processes. There was also a need to align Sales & Marketing with Technical Operations to get much needed supply chain efficiencies.

You’ve got to be very careful if you don’t know where you’re going, because you might not get there.
-Yogi Bera

Business Situation

The forecasts were done like many organizations by brand. This created an inherent issue that all forecasts were done individually and not necessarily following a process or structure to impart consistency. Though different types of forecasts are required based on the type of product and/or stage in the life cycle, there still needs to be a common core across all forecasts to facilitate consistency and revenue portfolio management.

The Market Analytics area which had responsibility for the forecast was many times utilized as a training area for the brand teams and for developmental assignments. This created a higher than average turnover rate in that area and potential voids in knowledge transfers acorss brand analysts.

Market Analytics

There was a loose S&OP planning structure in place and it was not consistently attended. As a result, Sales & Marketing and Technical Operations were not as aligned as they needed to be. Subsequently multiple forecasts emerged like a marketing forecast, financial forecast and a production forecast. The multiple forecasts created multiple inefficiencies and undermined multiple work processes.

Action Plan

A cross-functional team consisting of key internal stakeholders and external experts were assembled and a comprehensive Project Charter established. The charter was needed to objectively align interests around the project goals and objectives, deliverables, timeline and team agreed to success factors.

The project was structured into two phases:

  • Analysis & Design (Baseline/Optimization Identification and Process Design)
  • Implementation & Assessment (Operational Excellence and Organizational Integration)

The team leveraged structured analyses utilizing external views (benchmark study & industry experts) and internal scans (analyses and interviews). The baseline analyses were used for assessing the organization, process (develop, review & operationalize forecasting), system and defining metrics.

Extensive cross functional mapping sessions with internal and external resources were utilized to define the various forecasting processes and form the basis for establishing forecasting process consistencies.

Business Results

The implementations were done both functionally and cross-functionally. The benefits followed a similar path. Market Analytics developed and implemented enhanced forecast documentation firmly ground the forecasts in key assumptions. This change helped create an institutional knowledge base for the information to be documented and easily transferred across analysts.

Operating PrinciplesThe S&OP process was established with strict operating principles. A more robust well attended and committed to S&OP process was implemented along with a forecasting system that provided the tools needed to manage the process, create the operational discussions and document the forecast changes each month over a 1-2 year horizon. These were then implemented and incorporated into the other financial and production systems.

The formally structured S&OP forum was able to drive the organization to a well aligned financial and production forecasts. This resulted in improvements to the Gross to Net process and also increased forecast accuracy 10% and reduced inventory by $350 MM.

Altometrixs Case Studies

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Next Steps

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