Sales & Operations Planning at COMPANY X
A theoretical framework and practical implementation of S&OP in the PRODUCT Y supply chain
Michiel Aarts, August, 2009
Student number: 1333259
PUBLIC VERSION
Please note that confidential information has been deleted and lay-out and product names have been altered in this thesis
This thesis officially forms the final step of my career as a student. By finishing this last project, I am able to obtain my master’s degree in Business Administration with a specialization in Operations & Supply Chains at the University of Groningen. I have had some good years during my period as a student, but am also very eager to take the next step into a new career.
I would like to thank my colleagues at COMPANY X for their help and enthusiasm regarding this research. Especially my supervisor Jacqueline van der Kooij. Without her help, numerous coffee breaks and talks, this thesis would never have been possible. Furthermore, I would like to thank Joost Wijermars for his feedback, friendship, and getting me on board in the first place.
From the University of Groningen I would like to thank Gera Welker, my supervisor, for her patience, flexibility and time, while reading my pieces, and our discussions on issues over the phone. Furthermore, I would like to thank Dirk Pieter Van Donk, my second supervisor, for taking the time to step in early and review my work.
Finally, this thesis would not have been possible without support from my parents, friends and, of course, my girlfriend Vera, who was patiently enough to read and correct my thesis on numerous occasions.
For me, this thesis has been a valuable lesson in many perspectives. I hope that you, as a reader, will learn something from this as well. Enjoy reading.
Introduction
This master thesis focuses on Sales and Operations Planning (S&OP) and the implementation of S&OP in the supply chain of PRODUCT Y, which is a new internet and telephony service of COMPANY X, to be introduced for SME and SOHO customers. The objective of this research is: ‘To provide COMPANY X with theoretical and practical information on the benefits and implementation of S&OP in the case of PRODUCT Y.’ This research provides a theoretical overview of S&OP, the adoption of S&OP within COMPANY X, and most importantly, a practical overview of the most important capacity groups and issues within the PRODUCT Y supply chain. This with respect to the planned S&OP implementation in this supply chain.
The twofold nature of the research objective has resulted in the following research questions: RQ1: ‘How can COMPANY X benefit from Sales & Operations Planning?’
RQ2: ‘What capacity groups and issues can be identified within the PRODUCT Y supply chain with respect to its planned market introduction and the implementation of S&OP?’
In order to answer the research questions, a literature and case study have been performed on S&OP in general and the PRODUCT Y supply chain at COMPANY X in particular. Sources of data are: Interviews, archival records, documentation, and direct observations.
Sales & Operations Planning
S&OP is a planning methodology in which sales and operations plans are aligned through regular meetings. In these meetings, all relevant parties within the organization are involved, ranging from sales and marketing to operations and finance. The output of the S&OP meetings is a single approved sales and production plan in which all relevant organizational aspects have been taken into account. The implementation process consists of 1) analysis of the supply chain and identification and analysis of capacity groups, 2) making formal arrangements, 3) providing IT support.
The theoretical benefits of S&OP are higher customer service, lower finished goods inventories, shorter customer lead times, more stable production rates, higher productivity, enhanced teamwork, better decisions, and greater accountability and control. This in addition to increased efficiency and capacity utilization, solving of delivery service problems, and improvement of profit optimization. The degree of S&OP implementation within an organization can vary. Five stages can be identified in the S&OP maturity model that starts with no S&OP in stage one, and moves up to an ideal state of S&OP in stage five. Keywords in moving up the maturity model are increase of formal processes, higher degree of integration (even with suppliers) and increase of IT support. The main turning point in this model is the transition from a reactive to a proactive S&OP process. The concept is that a higher position in the model, leads to a higher degree of S&OP benefits. Companies can move up the maturity model, which is advised, but can also operate with less advanced S&OP if that suits their organization better.
scenarios, IT support is needed in order to automate the S&OP process and support what-if scenarios. The current use of spreadsheets is insufficient.
This provides an answer to the first research question. The second part of this research is focused on the implementation of S&OP in the PRODUCT Y supply chain. Therefore, the PRODUCT Y supply chain has been discussed and the most important capacity groups that need to be involved in the S&OP process have been identified and analyzed.
Capacity groups PRODUCT Y supply chain
The PRODUCT Y supply chain consists of an initial delivery process and the actual service PRODUCT Y. The standard lead-time of PRODUCT Y is 36 days, and the production type is characterized as MTO. The service PRODUCT Y consists of continuous delivery and the supporting services assurance and billing, which require the largest amount of manual labor.
The supply chain is very complex, which appears from the discussion of production complexity and capacity complexity. The production complexity is high with around seventy information systems. In addition, the capacity complexity is high as well. This originates from the fact that workload mainly is based on errors in the production or service process. The hiring of extra manual capacity is challenging as training is required with lead-times of up to four months. Errors in each part of the supply chain can increase workload elsewhere.
Being the most important step in the implementation of S&OP, the capacity groups within the PRODUCT Y supply chain have been identified and analyzed. This has been done based on interviews with the PRODUCT Y project group, the PRODUCT Z S&OP planner, PRODUCT Y supply chain managers and the studying of the supply chain documentation. The capacity groups form key aspects of the PRODUCT Y supply chain and need to be controlled through regular S&OP meetings in order to manage them adequately. It is critical to the performance of PRODUCT Y that no capacity group will form a bottleneck.
The following groups have been identified:
• Business sales: Managing of sales channels
• Production: Primary processes in initial delivery phase • Logistics: Delivery of hardware
• Installation: Home installation by mechanics
• Customer service & complaints: Process customer complaints • Service & support desk: Provide service assurance
• Billing: Managing the billing processes
• COMPANY X contact: Managing helpdesk activities • Connectivity: IT backbone of COMPANY X
• ITNL: Information systems management
The capacity groups all have some capacity issues that need to be taken into account for the short-term introduction of PRODUCT Y, as well as the long-short-term large up scaling of sales. The issues and criticality of groups deviate.
scaling of sales is impossible.
• Lack of ‘customer service and complaints’ department: No arrangements whatsoever have been made concerning this issue. Without this department, customer service will be extremely poor because no facilities exist.
• Automation within ‘installation’ of PRODUCT Y: Current installation capacity of mechanics is up to 200 orders a week. This needs to be solved by automation of the installation process by mechanics at customer’s location and is the responsibility of ITNL.
• Lack of capacity in ‘connectivity’- voice: Current capacity of information systems is not suited for large up scaling of number of customers.
The current capacity analysis is based on a normal operational scenario. Because of the dynamic nature of the services offered by COMPANY X, this can only provide an initial basis for the bottlenecks and issues. The dynamic aspect of the service should therefore be reflected in a dynamic capacity planning. S&OP can provide the right methodology and tools in order to do so.
Conclusion & recommendations
In this research, an answer has been provided to both research questions and therewith the research objective has been achieved. The benefits of S&OP have been discussed, COMPANY X has been placed in the S&OP maturity model, and the capacity groups have been determined and analyzed for the PRODUCT Y supply chain.
S&OP is highly recommended for COMPANY X in general. A great number of benefits can be achieved and even better results can be obtained when moving up the S&OP maturity model.
On short-term, the following recommendations can be made. To begin with, formal S&OP arrangements need to be made. It is advised that the Supply Chain Expertise Center (SCEC) within COMPANY X will lead the S&OP implementation project. An S&OP planner needs to be appointed and key employees within the capacity groups identified to take position in the planning cycle meetings.
Furthermore, two capacity issues need to be addressed immediately: ‘The lack of customer service and complaints department’, and ‘the lack of automation between Xilion and Siebel’.
On the long-term, it is recommended to take measures to move up in the S&OP maturity model in order to maximally benefit from the S&OP process. This can be achieved by overcoming the limitations mentioned at the beginning of this summary. A number of actions need to be taken. Firstly, the introduction of a companywide S&OP process, together with adequate IT support. This way, S&OP decisions can be made optimally companywide, and a proactive S&OP process can be achieved. Secondly, financial influence of S&OP needs to be taken seriously in order to overcome the year vs. S&OP plan conflicts. Thirdly, S&OP key performance indicators need to be introduced, applying to the different capacity groups.
Abbreviation Definitions
ADSL Asynchronic Digital Subscriber Line APS Advanced Planning Systems CDR Call Detail Record
CM Consumer Market COC Clean Order Check DIY Do It Yourself
DSLAM Digital Subscriber Line Access Multiplexer
EBIDTA Earnings Before Interest Depreciation Taxes and Amortization EDLP Every Day Low Pricing
EVPN Ethernet Virtual Private Network FG Finished Goods
FTE Full Time Equivalent FttO Fiber to the Office GIP Generic Internet Protocol IP Internet Protocol
PRODUCT Z Internet Plus Telephony
ITNL Information Technology NetherLands KPI Key Performance Indicator
MPC Manufacturing Planning and Control OPM CI Operations Management Calling & Internet PABX Private Automatic Branch eXchange PSTN Public Switched Telephone Network PtMP Point to Multi Point
S&OP Sales & Operations Planning SME Small and Medium Enterprises SOHO Small Offices and Home Offices VAS Value Added Service
VPN Virtual Private Network
W&O BO Wholesale & Operations Business Operations W&O NO Wholesale & Operations Network Operations WIP Work In Progress
WMP Wholesale Multi Play
I Preface ... I II Management summary ... III III Definitions ... VI IV Table of contents ... VII
1 Introduction ... 1
1.1 Introduction ... 1
1.1.1 Company profile ... 1
1.1.2 Roles and organization... 1
1.2 Introduction to the problem situation ... 2
1.2.1 Context ... 2
1.2.2 Problem situation ... 2
1.3 Report structure ... 5
2 Problem statement & theoretical framework ... 6
2.1 Introduction ... 6 2.2 Problem statement ... 6 2.2.1 Problem definition ... 6 2.2.2 Relevance ... 6 2.2.3 Research objective ... 6 2.2.4 Research questions ... 6
2.3 Theoretical framework – S&OP ... 8
2.3.1 Introduction ... 8
2.3.2 Definition & implementation process ... 8
2.3.3 Performance measurement ... 13
2.3.4 Theoretical benefits S&OP ... 13
2.3.5 S&OP maturity model ... 15
2.4 Theoretical framework – Production characteristics ... 17
2.5 Conclusion ... 18
3 Research design & methodology ... 20
3.1 Introduction ... 20
3.2 Research design ... 20
3.3 Data collection ... 21
3.4 Data processing and validity ... 22
4: S&OP benefits COMPANY X ... 23
4.1 Introduction ... 23
4.2 COMPANY X in the S&OP maturity model ... 23
4.3 Current benefits ... 24
4.3.1 Qualitative benefits ... 24
4.3.2 Quantitative benefits ... 25
4.4 Future benefits ... 25
4.4.1 Current Limitations ... 25
5.1 Introduction ... 28
5.2 PRODUCT Y supply chain ... 28
5.2.1 Initial delivery ... 28
5.2.2 Service PRODUCT Y ... 30
5.2.3 Production characterization ... 32
5.3 Capacity groups ... 33
5.4 Conclusion ... 34
6: Issues capacity groups PRODUCT Y ... 36
6.1 Introduction ... 36
6.2 Capacity group analysis ... 36
6.2.1 Business sales ... 36
6.2.2 Production ... 37
6.2.3 Logistics... 38
6.2.4 Installation ... 38
6.2.5 Customer service & complaints ... 39
6.2.6 Service and support desk ... 39
6.2.7 Billing ... 40 6.2.8 COMPANY X Contact ... 40 6.2.9 Connectivity ... 41 6.2.10 ITNL ... 42 6.3 Discussion ... 43 6.4 Conclusion ... 44
7: Conclusion & Recommendations ... 45
7.1 Introduction ... 45 7.2 Conclusion ... 45 7.3 Recommendations ... 47 7.3.1 Short-term ... 47 7.3.2 Long-term ... 47 8 Discussion ... 49
8.1 Reflection & limitations... 49
8.1.1 Strengths ... 49
8.1.2 Weaknesses ... 49
8.2 Future research recommendations ... 49
9 References ... 51
9.1 Literature ... 51
9.2 Other ... 52
1 Introduction
1.1 Introduction
The research presented in this paper has been conducted at Royal COMPANY X. In this chapter, firstly, an overview of the organization will be given, accompanied by the context in which this research is situated. Furthermore the management question will be presented, followed by a problem exploration and the structure of this thesis.
This master thesis is useful for the management and employees of COMPANY X who are interested in Sales & Operations Planning and would like to know how this planning method can improve their operations. Furthermore, scientists and students that are interested in Sales & Operations Planning, specifically in the telecom industry, might find this research paper interesting as well.
1.1.1 Company profile
Royal COMPANY X (COMPANY X) is the leading telecommunications and ICT service provider in The Netherlands, offering wire line and wireless telephony, internet and TV to consumers and end-to-end telecommunications, and ICT services to business customers. COMPANY X's subsidiary Getronics operates a global ICT services company with a market leading position in the Benelux, offering end-to-end solutions in infrastructure and network-related IT. COMPANY X provides wholesale network services to third parties and operates an efficient IP-based infrastructure with global scale in international wholesale through iBasis. The annual turnover of 2008 was 14,6 billion euro. (Annual Report COMPANY X, 2008)
COMPANY X originated as a government owned company in 1852, the year in which the first public telegraph lines were installed. From here, in 1928, the postal, telegraph and telephony services were integrated into one company called the PTT. In 1989, PTT was privatized and continued under its current name, COMPANY X. In 1994, COMPANY X went public on the Amsterdam exchange stock market and in 1998 the postal services (nowadays TNT) were separated from the telephony services, leading to the current state of the company.
1.1.2 Roles and organization
Figure 1.1: Organization chart COMPANY X
1.2 Introduction to the problem situation
1.2.1 Context
Currently, COMPANY X is upgrading its technologies from analogue PSTN to a digital IP standard. As part of this ‘All IP’ transition, COMPANY X is introducing a new internet connection plus telephony product which is targeted at the SME market. This product is called PRODUCT Y, which stands for ‘business internet plus telephony’ and will enable business customers to communicate over the ‘All IP’ network with a maximum internet connection of 20 Mbit/s downstream, 1 Mbit/s upstream, and four simultaneous phone lines. Additionally, a number of value added services will be available, such as domain name registration, online storage, multiple IP addresses, and extra mailboxes. The differentiating functionality of PRODUCT Y is the use of IP telephones and an online switchboard, enabling a number of options like easy switching of connections, reconnecting and telephone handset extension. This way, users can easily manage their telephone connection at lower purchasing costs, while achieving higher efficiency and flexibility.
Alongside the introduction of PRODUCT Y, COMPANY X is gradually implementing the planning methodology Sales & Operations Planning (S&OP) throughout its organization. The goal is to improve the balance between sales and production in order to increase product and service performance. Currently S&OP has been implemented within two product families, running for over a year, and will be implemented within PRODUCT Y as well.
1.2.2 Problem situation
PRODUCT Z Case
In 2005, COMPANY X started with ‘Internet Plus Bellen’ (internet plus telephony) (from now ‘PRODUCT Z’) which is similar to PRODUCT Y. PRODUCT Z was intended as the answer to the exodus of landline connected telephony customers. The strategy was to replace all consumer internet and telephone connections with PRODUCT Z by the end of 2010 and was characterized by a high degree of marketing and sales activities. Within a period of approximately one year, orders grew rapidly from 4,000 to over 25,000 a week, resulting in 600,000 PRODUCT Z customers in Q2 in 2007. See figure 1.1 for a customer growth overview.
Figure 1.1: Customer growth PRODUCT Z (source: COMPANY X)
PRODUCT Z started out as a great success, but at the end of 2006, the PRODUCT Z supply chain got out of control. A large number of customers were unsatisfied with the delivery lead time, the product itself and supporting services such as billing. This led to a bad reputation of COMPANY X, thousands of complaints and appearance in different consumer rights television programs such as ‘Kassa’. This phenomenon was accompanied by extremely high service and production costs due to the additional labor required to resolve issues.
Causes
Two major causes can be identified concerning the performance of PRODUCT Z. These are two of the three complexity reduction measures identified by Bertrand et al. (1998), namely production process improvement and an adequate manufacturing planning and control (MPC) concept. These causes affected the five performance objectives quality, speed, dependability, flexibility and cost of Slack et al. (2007).
To begin with, the production processes within COMPANY X were inadequate at the time of introduction. The technology on which PRODUCT Z is based was new and not fully developed. This led to an unusual amount of interruptions and outages which were sometimes difficult to repair. The billing functionality only supported basic functions. For instance, migrations of customers or contract termination were not included. Collection and recovery processes were not functioning well, bills were sent to customer’s e-mail addresses that did not exist and telephone tariff costs were not completely monitored. Also the credit system, which was mainly used to compensate for damage or make concessions towards customers, was inadequate.
labor which is very costly. All this is characterized as a process design issue and negatively influences the speed and dependability of the production process.
The circumstances led to thousands of calls a week to the COMPANY X contact centers, which were flooded. This resulted in waiting times of over 30 minutes or no connection with a service desk employee at all. Service quality was therefore low as well, coinciding with very high service costs. The second aspect was the lack of an adequate MPC concept. The rapid growth strategy, characterized by strong marketing efforts, led to enormous amounts of orders, which the back office was completely unable to fulfill. Capacity checks played no role in sales planning and management realized their fault when it was too late. The issues described were amplified by the huge number of orders which were flowing in weekly, leading to the eventual low performance levels. The sudden increase in demand, as shown in figure 1.1, therefore is one of the main contributors to the problems in the PRODUCT Z case.
Countermeasures
Countermeasures taken by COMPANY X involved a number of actions in the fields of production process improvements and MPC concept.
A special team was installed which had full control of the production process and all aspects within reach of the PRODUCT Z supply chain. The most important countermeasures enacted are discussed in each cause category.
To begin with, errors in the production process were reduced by the introduction of clean order checks (COCs). COCs comprehend a check at the beginning of the production process whether the input data for a customer order is complete and correct. Furthermore, capacity management was introduced in the form of S&OP and a strict focus on key performance indicators was set in order to stay in control. On the product and service aspects, mainly improvements in the billing process were realized. A so called ‘revenue assurance’ program was enacted to generate complete and correct bills. This reduced the number of calls drastically. Finally, on a planning level, a crisis management team was formed to take control of planning and production. In congruence with the S&OP activities, order intake was vigorously reduced. These measures led to a regain of control and correct functioning of the PRODUCT Z supply chain, which today is a successful product within the consumer market portfolio of COMPANY X.
S&OP
Based on the management information, causes, and countermeasures discussed in the case of PRODUCT Z, it appears that new product introduction at COMPANY X is an important problem. Furthermore, S&OP appears to be able to play a large role in the mitigation of possible consequences.
Because the implementation of S&OP has been executed in the past by external consultants, management is not completely familiar with the tool and has asked for this master thesis research. They would like to know, from a scientific as well as practical point of view, what type of benefits and limitations can be expected from S&OP. Furthermore, they would like to have a practical proposal for the implementation of S&OP in the PRODUCT Y supply chain.
Management question
The twofold perspective of the management problem consists of the lack of a clear overview of the benefits of S&OP, including its implementation process, and the practical realization of S&OP in the case of PRODUCT Y with its upcoming market introduction.
The management question has been postulated as:
The management question will be translated into research questions in chapter two.
1.3 Report structure
This report has started with the introduction of COMPANY X and the problem situation. From here, in chapter two, the problem statement and research questions will be presented, followed by the theoretical framework. In chapter three, the research methodology is discussed, explaining the type of research, the type of data collection and analysis used in order to answer the research questions. The main research question consists of two questions which will be discussed separately. The first question consists of sub questions 1.1 to 1.4. The first three sub questions focus on the theory of S&OP and will be answered in the theoretical framework in chapter two. Sub question 1.4 focuses on S&OP in the case of COMPANY X and will be answered in chapter four. This forms the mainly theoretical part of the research.
The second sub question is divided into the sub questions 2.1 to 2.3 which will be discussed in chapter five and six. Here, the PRODUCT Y supply chain is analyzed and specific S&OP implementation discussed. This will form the practical part of this research.
2 Problem statement & theoretical framework
2.1 Introduction
In this chapter, the problem statement is presented and the research questions are postulated. Furthermore, the theoretical framework is discussed which is applicable to this research.
2.2 Problem statement
2.2.1 Problem definition
The problem has been addressed by the management of COMPANY X with the following management question: ‘What benefits can be expected from S&OP and what should the implementation of S&OP look like in the case of PRODUCT Y and its upcoming market introduction?’ The problem consists of lack of knowledge of S&OP in combination with the upcoming PRODUCT Y introduction. In terms of De Leeuw (2002), this can be characterized as a current reality problem of an expected unwanted situation in which the management and all parties within the supply chain of PRODUCT Y are stakeholder.
2.2.2 Relevance
The relevance of the management question is based on the management problem at hand. The PRODUCT Z case has created a precedent of how an entire product supply chain can disrupt with all the performance consequences involved. This makes the question how a similar product supply chain, namely PRODUCT Y, can be managed correctly in order to prevent such behavior valid. Assuming that the product and processes are adequate, S&OP can play an important role in this supply chain.
The choice of the management of COMPANY X to make use of S&OP has been made prior to this research and appears to be a plausible instrument to solve the problem at hand. Literature has shown a gap in the application of S&OP in a service oriented organizations. The appliance of S&OP at COMPANY X therefore provides an interesting field of study.
2.2.3 Research objective
Given the relevance of the management problem, the following research objective has been formed. ‘To provide COMPANY X with theoretical and practical information on the benefits and implementation of S&OP in the case of PRODUCT Y.’
2.2.4 Research questions
The research objective stated above can be divided into two segments. The first segment focuses on the benefits of S&OP and forms a mainly theoretical perspective for S&OP in the case of COMPANY X. The second segment is a practical approach on the implementation of S&OP in the case of PRODUCT Y. In order to achieve the research objective and maintain a clear scope, two separate research questions have been stated.
The first research question focuses on the benefits of S&OP in the case of COMPANY X and is stated as follows:
Research question 1
RQ1: ‘How can COMPANY X benefit from Sales & Operations Planning?’
SQ1.1: What is S&OP and what does the implementation process look like? The second sub question focuses on the benefits of S&OP:
SQ1.2: What are the theoretical benefits of S&OP?
The degree of adoption of S&OP in an organization is an important driver for the benefits that can be achieved. Therefore an S&OP maturity model will be discussed in SQ3:
SQ1.3: What does the S&OP maturity model look like?
From here, the currently active S&OP processes at COMPANY X can be classified within this maturity model and the benefits of S&OP in the case of COMPANY X identified. SQ1.4 addresses this issue as follows:
SQ1.4: What are the current and future benefits of S&OP in the case of COMPANY X?
Sub questions 1.1 to 1.3 are purely theoretical sub questions that will be addressed in the theoretical framework section in this chapter. Sub question 1.4 will be discussed in chapter four and forms the first part of the practical perspective in this master thesis.
Research question 2
If S&OP can indeed provide significant benefits to COMPANY X, the next step in this research can be taken. This is the practical perspective of the research which focuses on S&OP implementation in the PRODUCT Y supply chain.
In answering the first research question, the implementation process of S&OP has become clear and the most important step in this process is the identification of the S&OP capacity groups. These groups form key positions in the PRODUCT Y supply chain and will be addressed in the eventual S&OP planning cycles.
With a focus on the introduction of PRODUCT Y and the lack of a clear overview of the bottlenecks within this supply chain, the following research question has been postulated:
RQ2: ‘What capacity groups and issues can be identified within the PRODUCT Y supply chain with respect to its planned market introduction and the implementation of S&OP?’
In order to answer this research question the following sub questions have been formed: SQ2.1: What does the PRODUCT Y supply chain look like and how can it be characterized?
In answering this sub question, the supply chain of PRODUCT Y will be presented, forming the first step to the identification of the capacity groups. From the information presented, the most important capacity groups can be determined with respect to the S&OP, and the bottlenecks within the supply chain discussed. This will be done in SQ 2.1 and 2.2.
SQ2.2: What are the most important capacity groups within the PRODUCT Y supply chain?
By answering the sub questions, the main research questions will be answered as well. In paragraph 2.3 and 2.4, the theoretical framework will be discussed, beginning with an answer to the first sub questions.
2.3 Theoretical framework – S&OP
2.3.1 Introduction
In this paragraph the theoretical concepts with respect to S&OP in this research will be discussed. The first part of this paragraph focuses on S&OP and answers sub questions 1.1 to 1.3. The theoretical concepts used in the supply chain analysis which are used to answer the second research question will be discussed in paragraph 2.4.
2.3.2 Definition & implementation process
Here, SQ1.1 :’What is S&OP and what does the implementation process look like’ will be answered. Definition
Sales and Operations Planning is a tactical planning process that has been around for over 25 years and recently has regained territory in the manufacturing industry. (Smith, 2004; Wallace & Stahl, 2005) A number of definitions can be found in the literature, which address the topic from marginal different perspectives.
Wallace & Stahl (2005) begin with defining S&OP as a set of decision-making processes that balances demand and supply, links a company’s day to day operations with its strategic business plans and integrates operational planning with financial planning. Smith (2004) states that S&OP is a process for building consensus among sales, marketing, financial and operations to determine the best plan for meeting annual aggregate demand forecasts and achieving corporate business goals. Gartner (2007) states that S&OP is a performance-based, cross-functional business process that reconciles operational plans across sales, marketing, manufacturing, distribution, product development and finance. Grimson and Pyke (2007) define S&OP on a higher aggregation level as a business process that links the corporate strategic plan to daily operations plans, enabling companies to balance demand and supply for their products.
In general, the definition of S&OP includes the following aspects. Firstly, sales and operations plans are aligned through regular meetings. In these meetings, all relevant parties need to be involved, ranging from sales, marketing to operations and finance. Finally, the output of the S&OP meetings will be a single approved sales and production plan in which all relevant organizational aspects have been taken into account.
Fundamentals and linkages with MPC
Four fundamentals can be found at the basis of S&OP which interact with each other. These are demand, supply, volume and mix. (Wallace & Stahl, 2005; Vollmann et al., 2005)
Figure 2.2 shows the relation between the fundamentals. Demand and supply have to be kept in balance with volume and mix level in order to accomplish an effective sales and operations strategy. Firstly, the balance between demand and supply will be discussed. Simply put, when supply is exceeded by demand, customer service is negatively affected as ordered quantities cannot be met, products are being rushed through production, leading to less quality and rising costs because of overtime. On the other hand, when supply exceeds demand, for instance inventories increase and profit margins drop. With S&OP, balance between demand and supply can be managed.
The fundamental ‘volume’ concerns sales rates, production rates, aggregate inventories and order backlogs, while mix focuses on individual products and orders. With S&OP, volume is being managed in order to simplify mix decisions. These decisions are being made during the master production scheduling. In other words, S&OP focuses on the volume of orders within a supply chain by use of capacity checks. By creating the right level of volume (WIP) in your supply chain, more adequate mix decisions can be made in which certain products will be produced instead of others. S&OP therefore can make mix decisions more comprehensible. A more detailed model of S&OP and its linkages within a firm is presented in figure 2.3.
Figure 2.3: Key linkages in S&OP (Vollmann et al., 2005)
To begin with, the centre of figure 2.3 shows the S&OP process, which leads to a sales plan and operations plan that are based on the same set of data. The S&OP process is linked to various functional business areas. The dotted line indicates the boundary between the fundamentals volume and mix. As you can see, most linkages of S&OP are above this line, meaning they are outside the field of MPC. This way the S&OP process can be held consistent with all relevant basic functional business areas as non manufacturing personnel can understand the plans discussed. (Vollmann et al., 2005) Now, the linkages with the different functional business areas will be discussed.
Resource planning: This concerns long range planning of facilities and is directly linked to the operations plan. An important aspect of resource planning is the translation of the operations plan into capacity requirements, which is used to evaluate current capacity levels and the possible need for capacity mutations.
Demand management: Demand management reflects the functions of forecasting, physical distribution coordination, order entry, and order promising. Also the discrepancy between actual and forecasted demand has to be monitored.
Marketing planning: Marketing is an important factor concerning volume balancing. Marketing campaigns can generate extra sales in a very short time period and can therefore be very effective for utilizing excess capacity. On the other hand, if capacity has reached its limits, an additional marketing campaign can destroy the balance between demand and supply abruptly.
additional employees, or production facilities. Input from the finance department is important to determine what production options are possible in terms of costs.
Strategic planning: The S&OP process generally covers a planning horizon from one to eighteen months. This horizon is smaller than strategic planning, which emphasizes the need for linkage. Executive management is included in the planning process and thus the strategic perspective is incorporated into the final sales and operations plan.
The S&OP planning cycle
The sales and operations planning process consists of monthly cycles in which five steps are taken, as can be seen in figure 2.4. These cycles are standard for any S&OP process and are used at COMPANY X as well.
Figure 2.4: Five steps in the monthly S&OP process (adapted from Vollmann et al., 2005)
During these steps, all relevant aspects in balancing demand and supply are being reviewed in order to make an appropriate production plan for the next month to come. Because the S&OP team has to be cross functional, people from various disciplines will need to join the meetings. To begin with, these are representatives from marketing and sales to perform tasks like demand planning and forecasting. Also representatives from operations are necessary, performing tasks like inventory management, supply chain management, purchasing and master production scheduling. Finally, finance has to join the S&OP team as well. The steps will now be discussed:
1) Sales forecasting reports:
During the first week of the S&OP process cycle, sales forecasting reports are being made. This concerns amongst others sales data from the past month, production and inventory levels. These data are presented to the sales and marketing department in order for them to take step two.
2) Demand planning:
The data generated in step one are analyzed by the sales and marketing departments. The goal in this step is to discuss the sales forecasts with a planning horizon of 1 to 18 months in mind. Topics of discussion are for instance price mutations, competitor activities, economic aspects and input from customers. This is also the point where senior sales and marketing personnel are being consulted. After reviewing inventory levels, production and actual sales from the past month, a new forecast is generated. This new forecast is then compared with the production plan from last month in order to identify necessary changes to be incorporated in the new operations plan.
During step three, the new operations plan is compared with available resources. This step can also be described as resource planning. Within the production process, a number of production units or groups are influenced by change in production plans. These individual units are called capacity groups. Capacity has to be reviewed by each group in comparison with the new operations plan. If production is going to be up scaled, meaning an increase in volume, each group has to indicate if they can deliver enough capacity to comply with this operations plan. If a single group cannot deliver, the new plan is jeopardized. This is similar to the Theory of Constraints, in which attention is focused on the bottleneck within the supply chain that determines the pace of production. (Goldratt, 2004) All capacity groups have to be able to keep the same pace of production. If a capacity group does not have sufficient resources, a decision has to be made whether to invest in new production units or not. The same holds for a decrease in volume. This could mean that a number of people are out of work for a month or perhaps more. These types of decisions are made in step four and five.
4) Pre-S&OP:
During the pre-S&OP meeting, a number of decisions are being made by sales and operations managers, leading to recommendations and an agenda for the executive S&OP meeting. Topics discussed include decisions on balance between demand and supply, different points of view on recommendations, and the establishment of alternative operations plans. Topics that cannot be resolved within this meeting will be transferred to the master-sop meeting.
5) Master-S&OP:
The master-S&OP meeting is the final step within the S&OP cycle. Here, senior executives join the table and final decisions are being made. To begin with, the sales and operations plans are finalized for each product family. Furthermore, lack of consensus in the pre-S&OP meeting is dissolved. Budget authorization decisions on increase or decrease of production volume are being made, and customer service and business performance is reviewed. (Vollmann, et al., 2005)
At the end of this cycle, an agreed upon production plan has been made, which is used as direct input for all corresponding capacity groups. From here, the cycle starts over again at step one.
Usually, individual capacity groups make use of an individual weekly planning cycle in order to be able to monitor realization. This makes timely intervention possible and could lead to an escalation on S&OP level.
S&OP Implementation
The process of S&OP is in itself quite simple, however implementation is the phase where real benefits are achieved. This explains why over the years, companies have implemented S&OP and abandoned it just as easily after disappointing results. The challenge however is to understand the supply chain and make sure the correct parties within the chain are incorporated into the S&OP planning cycle.
Muzumdar and Fontanella (2006) discuss a number of success factors concerning S&OP implementation. They state that executive support is critical in order to succeed and that technology is important in creating a proactive S&OP process. If there is no supporting system to generate what-if analysis, the process will remain reactive. However, technology alone is not a solution. The implementation of S&OP has to focus on people and processes as well as technology.
Because there is no literature available on the actual S&OP implementation process, the methodology of Cap Gemini, used in previous S&OP implementations within COMPANY X, is described.
From here, step two is taken in which large workshops are organized where all parties within the supply chain are invited to provide their input on the supply chain aspects.
In step three, the capacity groups are determined and in step four, throughout the course of six to eight weeks, an inventory is made of the available data. This includes sales plans, year plans, demand, production plans, anything that can provide an input to the S&OP process.
After step four, the S&OP cycle is started and closely monitored by the implementation team for about four to nine months. The implementation steps are presented in the implementation plan in figure 2.5. The dotted area is executed in this research for PRODUCT Y.
Figure 2.5: S&OP implementation plan (source: COMPANY X / Cap Gemini)
The S&OP implementation plan consists of three tracks. The first track presents the initial steps in which the supply chain is analyzed and capacity groups identified, eventually leading to a successful lift-off. The second track takes place parallel to the first and focuses on the formal arrangements. Decisions have to be made by the implementation team about who is going to lead the S&OP meetings, which persons will have to take place in the pre- and master-S&OP meetings, and the planning cycle has to be planned. The third track entails the adoption of the PRODUCT Y supply chain in the system dynamic model in order to be able to support the decision process.
An important aspect of the S&OP implementation process is that it needs to be considered as a continuous improving process. It is unrealistic to expect a perfect implemented S&OP process after the steps in figure 2.5 have been taken. The meetings, participants, aligning of sales and operations process will improve gradually each planning cycle.
dynamics. Within this model, the interaction of workload and quality has been incorporated and simulations can be executed to provide what-if scenarios.
2.3.3 Performance measurement
In order to monitor the success of the sales and operations processes, performance measurements are required. Specific S&OP performance measurement documentation is not widely available. Tata Consultancy Services has presented an overview of KPI’s in their S&OP whitepaper (2009), see table 2.1 for an overview.
Function Level 1 KPI's Level 2 KPI's Sales team Delivery compliance Forecast accuracy
Planning cycle time Forecasting process cycle time
EBITDA% Planned mix versus actual (as per orders booked) Days of inventory Days of inventory – FG
S&OP sales Delivery compliance % of orders booked within order booking window Planning cycle time S&OP process cycle time
EBIDTA% Quality of plan as per accepted criteria for plan goodness Order fulfillment lead time Order entry complete to starting manufacturing lead time Days of inventory Days of inventory – FG
S&OP production EBIDTA% Quality of plan as per accepted criteria for plan goodness Delivery compliance Manufacturing compliance at order – line item-week level Order fulfillment lead time Manufacturing cycle time at PI level (averaged over the month) Days of inventory Days of inventory – WIP
Operations EBIDTA% Critical resource availability
Table 2.1 S&OP KPI’s (source: TCS whitepaper, 2009)
Level 2 KPI’s are on process owners’ level which contribute to the level 1 KPI’s which are on management level. These KPI’s are purely an indication of what generally applies to S&OP, they do not form an absolute list.
2.3.4 Theoretical benefits S&OP
In order to discuss the theoretical benefits of S&OP it is interesting to refer to the PRODUCT Z case as discussed in the introduction of this thesis. The main causes for low performance of the PRODUCT Z supply chain were production process improvement and lack of adequate MPC, with a main focus on the very large increase in demand.
In order to be able to understand the benefits of S&OP, first a look at the causes of issues within service supply chains, and telecom services in particular, will be taken. When the specific problems can be understood, the benefits of S&OP as an instrument to overcome these problems become clear.
Amplification effect
Anderson and Morrice (2000) were the first to discuss the amplification effect in a service environment. Their study was based on the Mortgage Service Game in which inventory was replaced by order backlogs and capacity could only be increased by hiring additional personnel. They concluded that the amplification effect was clearly visible in this service supply chain and that with respect to capacity increase, time to interview, hire and train new personnel has to be taken into account. They state that information sharing is an adequate countermeasure to limit the bullwhip effect.
chain, price fluctuations and demand forecast updating (demand signaling) are the two main causes for the amplification effect in service environments.
Demand signaling:
The problem of functional silos is very common in service supply chains. Because different departments are not communicating well, functional silos remain and lack of consensus on sales and operations plans exists. They form the root cause of low performance in supply chains, due to lack of goal congruence. (Akkermans et. al, 1999)
Price fluctuations:
Marketing activities such as campaigns and price reductions cause an increase in demand, the same as with product supply chains, and the amplification effect occurs. The high sudden demand can be disastrous for a company’s service level as capacity is put under enormous pressure.
Apart from the previously identified contributors to the amplification effect in service supply chains, Akkermans & Vos (2003) identified another interesting cause.
They concluded that the variables workload and quality are highly interacting causes in the supply chain amplification effect.
Interactions of workload and quality: To address this amplification cause, system dynamics have been used to model the effects of sudden urges in demand. See figure 2.2 for an example. In short, the example shows that additional work orders create order backlogs, which create extra workload which negatively influences quality. This low quality generates additional rework, which creates extra workload on top of the additional orders.
Figure 2.2: Interactions of order backlogs, workload and quality. (Akkermans & Vos, 2003)
Amplification effects are visible in service supply chains in the appearance of high workloads and back orders. The fundamental causes as described in the Bullwhip effect cannot be applied automatically because of the intangible nature of services.
Countermeasures amplification effect
The following countermeasures against the amplification effect in service supply chains have been discussed by Akkermans and Vos (2003). Firstly, capacity reservations would solve the capacity and workload problems, but are difficult to realize due to hiring and training time restrictions. Secondly, lead time reduction could be an effective way of lowering workloads. This should be realized with process redesign. Furthermore, everyday low pricing (EDLP) would mitigate the price fluctuations cause. However, this appears to be a vital sales strategy and telecom companies typically cannot deviate from this. Finally they state that a sustainable mitigation of the amplification effect can be achieved by continuous quality improvement throughout all stages in the supply chain. (Akkermans & Vos, 2003)
Benefits S&OP
This results in long lead times, excess inventories, low customer service, over or under capacity, panic operations, and less agility to respond to changing market circumstances. (Vollmann et al., 2005)
Wallace and Stahl (2005) state a number of hard and soft benefits of S&OP. To begin with, the hard benefits of S&OP result in:
Higher customer service: by on time delivery of products.
Lower finished goods inventories: caused by the increased complete and in time delivery of products to customers.
Shorter customer lead times: through the increased ability of managing the customer order backlog. More stable production rates: because production is better adapted to future shifts in customer demand.
Higher productivity: because of the avoidance of extreme swings in layoffs and hiring of personnel. Soft benefits concern:
Enhanced teamwork: because of the multi disciplinary nature of meeting attendants. This results in a holistic view throughout departments in the supply chain.
Better decisions: because of the holistic view of supply chain, better decisions can be taken. This is in congruence with profit optimization.
Greater accountability and control: This because of the reflective and forward nature of the S&OP planning methods.
Jonsson et al. (2007) state that benefits of Advanced Planning Systems, such as S&OP, enable cross functional integration in supply chains and results in commitment to a common plan, leading to increased efficiency, capacity utilization, and solving of delivery service problems. Another important effect of S&OP is profit optimization. The amplification effect discussed above results in unhealthy capacity utilization and defers a supply chain as a whole from optimally producing and generating maximum profit. S&OP can play an important role in overcoming these issues. (Grimson & Pyke, 2007)
2.3.5 S&OP maturity model
In this paragraph sub question 1.3 ‘What does the S&OP maturity model look like?’ will be answered. With the implementation of S&OP, a number of variables need to be addressed. Decisions, for instance, on the use of information systems, meeting frequency, planning horizon and capacity groups have to be taken. Evidently, the implementation process is not something which happens overnight, additionally, the level of maturity can be improved over the years.
To address the level of S&OP integration in a company, several maturity models have been described in the literature. The most comprehensive models are the ‘S&OP integration framework’ of Grimson and Pyke (2007) and the ‘S&OP process maturity model’ of Lapide (2005).
The maturity of S&OP integration can be best described covering five stages and is based on empirical studies throughout a large number of companies using S&OP. See figure 2.9 for an overview. The integration framework of Grimson and Pyke (2007) will be used as the main source for discussion as it is more recent and comprehensive.
The main difference between both models is that Grimson & Pyke use five instead of four stages and start with a lack of S&OP. The stages are non exclusive, companies can find themselves between different stages and can move up in the maturity model skipping a stage.
Stage 1: In stage one, no S&OP processes are in place and functional silos exist. There are no S&OP meetings, collaboration, meetings, formal planning, consolidation of information and no measurement systems. This stage is characterized by Vollmann et al. (2005) as organizational slack. Slack in production processes is generally referred to as an extra buffer at a workstation, meaning a positive safety measure. However in this case organizational slack is viewed as a waste of resources, consequently a negative aspect of a supply chain.
Stage 2: When a company’s S&OP maturity level is in stage two, reactive measures are taken. This is characterized by informal meetings with sporadic scheduling, lack of alignment between supply and demand plans, and the use of multiple spreadsheets. Formal S&OP functions lack, and the sales plan drives the operations plan. During this stage the planning process is also characterized by a top down approach. Measurements largely consist of the responsiveness of operations with respect to the sales plan. Meetings are mainly focused on financial goals.
Stage 3: Stage three is the turning point in the maturity model. Here, S&OP processes and meetings are formally arranged with a 100% attendance rate. Demand and supply plans are aligned and to some extent major outside suppliers are integrated into the process. Official pre-S&OP and master-S&OP meetings are into place, but specific S&OP functions are still part of other positions. In this stage, operations planning software is used and forecast accuracy is measured in addition to the measurements in stage two. Performance is measurement on operations responsiveness and the forecast accuracy of the sales department.
Stage 4: Stage four is an advanced stage of S&OP integration, covering the most important aspects of the previous stages with additional improvements. For instance, supplier and customer data are incorporated into the planning process. Suppliers and customers even attend some S&OP meetings in order to provide their input. A formal S&OP team has been established and executive management is participating as well. Performance measurement is extended with new product introduction success and S&OP effectiveness. The S&OP plan is highly integrated into the organization and its processes. Both demand (marketing and sales) as supply (operations) planning is constraint oriented. Also operations and revenue optimization software is consulted and linked with ERP software.
Stage 5: This is the final stage in the S&OP integration maturity model. The adoption of S&OP is characterized as an idealized state and companies are not to be expected to completely achieve this maturity level. To begin with, the S&OP meetings and collaborations are event driven. This means that plans could be adjusted based on daily consultation if necessary. Furthermore, data from external sources would be real-time accessible next to the internal data. Performance measurement is done on all indicators mentioned above, with company profitability in addition. Next to the formal S&OP team and executive participation, the entire organization is conscious of the fact that S&OP is employed to optimize profit. Advanced software is in place to integrate all S&OP activities with the companies’ ERP system, forecasting and accounting packages. Operation plan alternatives can be evaluated real time in order to select the best option at any certain point in time.
individual organization. Not all companies necessarily have to move to the final stage, when this simply is not suitable or within reach of that organization. The goal however is to continuously improve the S&OP process in order to increase benefits.
In order to be able to determine the position of COMPANY X in the S&OP maturity model, the characteristics presented in table 2.1 will be used. These are the same characteristics used by Grimson in Pyke in the S&OP maturity model.
Characteristic Description
Meetings & collaboration Type of management level meetings Organization Dedicated/formal S&OP positions or not Measurements Type of performance measurement Information technology Type of IT support
S&OP plan integration S&OP adoption/integration
Table 2.1: Specific S&OP maturity characteristics (Grimson & Pyke, 2007)
Grimson and Pyke (2007) have described in their empirical research which characteristic values relate to each stage. This way the position of COMPANY X in the model can be determined.
2.4 Theoretical framework – Production characteristics
In order to determine and analyze the capacity groups, an understanding of the PRODUCT Y supply chain is necessary. This is achieved by a description and characterization of this supply chain. PRODUCT Y is a service that is enabled through an initial delivery phase. Therefore the supply chain can be described from a production as well as a service perspective.
Van der Vaart (2006) discusses the typology of services as well as production processes. He states that when looking at both, a general typology of elementary management planning & control situations can be made by essentially looking at two aspects. These are capacity complexity and complexity of composure/production. These complexities will be discussed in chapter five.
In the literature, numerous of other characteristics are described, such as the production characteristics of Schönsleben (2007). However, in order to keep the production characterization comprehensible, these are disregarded. The main goal of the production characterization is to understand it in order to be able to determine the capacity groups with respect to S&OP. This can be accomplished by discussing the above mentioned complexities.
Capacity complexity refers to the quantitative and qualitative flexibility of capacity. (Schönsleben, 2007) In other words, to what extent capacity can be implemented for various processes within the production process and the volume of this capacity.
Complexity of composure/production refers to the number of materials or services is required to produce a product or service and the insecurity that is involved in this process. (Van der Vaart, 2006) The service aspect of PRODUCT Y and the complexity aspects described above lead to a number of implications for the supply chain.
Sampson and Froehle (2006) discuss in their unified service theory the following set of operational implications. These are ‘capacity and demand management’ and ‘quality management’. Fitzsimmons & Fitzsimmons (2001) discuss largely similar implications based on early research of Schmenner (1986).
Capacity planning is a challenging aspect in a service supply chain because capacity needs to be scheduled based on forecasted instead of actual demand. In addition, the time perishable aspect of this capacity forces managers to pay their employees even when there was no workload at all. The interaction between the two aspects is referred to as the operating leverage, in which costs could go down if capacity utilization was higher. The hiring and training of employees is crucial in a service process.
Finally quality management. With an internet service, service quality with respect to the network cannot easily be corrected within the process. If an error occurs, a cable in the ground gets cut off, or anything else, the service cannot be repaired in advance. The customer will have low service quality at that point. Quality correction cannot take place within the process without the customer knowing, as it is a reactive process.
These managerial and operational implications are important in order to comprehend the dynamics of the PRODUCT Y supply chain which will be discussed in chapter five.
2.5 Conclusion
In this chapter, the problem statement and theoretical framework have been discussed. To begin with, the research questions and corresponding sub questions have been postulated. From here, the theoretic framework of S&OP and literature used in the supply chain description and analysis have been discussed.
An answer has been given to sub question 1.1 to 1.3 which form a basis for the final answer of the first research question ‘How can COMPANY X benefit from Sales & Operations Planning?’. The answers to these sub questions will be discussed briefly.
SQ1.1: What is S&OP and what does the implementation process look like?
S&OP is a planning methodology in which sales and operations plans are aligned through regular meetings. In these meetings, all relevant parties within the organization are involved, ranging from sales, marketing to operations and finance. The output of the S&OP meetings is a single approved sales and production plan in which all relevant organizational aspects have been taken into account. The implementation process consists of 1) analysis of the supply chain and identification and analysis of capacity groups, 2) making formal arrangements, 3) providing IT support.
SQ1.2: What are the theoretical benefits of S&OP?
The theoretical benefits of S&OP according to Wallace and Stahl (2005) are higher customer service, lower finished goods inventories, shorter customer lead times, more stable production rates, higher productivity, enhanced teamwork, better decisions, and greater accountability and control. Jonsson et al. (2007) summarized the benefits in increased efficiency and capacity utilization, solving of delivery service problems and improvement of profit optimization.
SQ1.3: What does the S&OP maturity model look like?
The S&OP maturity model is divided in five stages that starts with no S&OP processes in stage one and moves up to an ideal state of S&OP in stage five. Keywords in moving up the maturity model are increase of formal processes, higher degree of integration (even with suppliers) and increase of IT support. The main turning point in this model is the transition from reactive to a proactive S&OP process.
Furthermore, the amplification effect in service supply chains has been discussed in which Akkermans and Vos (2003) address the interaction of workload and quality within these supply chains.
3 Research design & methodology
3.1 Introduction
In the previous chapter, the theoretical concepts with respect to the case of PRODUCT Y, the problem statement and research questions have been discussed. This chapter presents the research design of this thesis. Firstly, the type of research and line of reasoning will be presented. Furthermore, the various data sources used to answer the research questions will be discussed, including the data collection and analysis methods.
3.2 Research design
As the research question conforms to the ‘how’ or ‘why’ condition stated by Yin (2003) and the degree of behavioral event control is low, this research has been executed as a case study. The main benefits of a case study research are the ability to examine contemporary events without control of these events and the ability to deal with a full variety of evidence, creating an integral perspective of the research case. (Yin, 2003)
Disadvantages of a case study research are researcher bias and low external validity. Because this research is mainly performed for COMPANY X, the lack of external validity is not an issue. Researcher bias has been kept to a minimum by following the case study research framework of Yin, as presented in table 3.1.
Phase Components Chapter
1 - Designing Management problem 1 - Problem statement & exploration 2 - Research questions, framework & methodology 2
2 - Conducting Data collection 3
3 - Analyzing Data analysis 4,5,6
4 - Reporting Writing the report -
Table 3.1: Case study research framework (Yin, 2003)
The line of reasoning in this research is presented in figure 3.1. Both research questions rely on the theoretical concept of S&OP. The benefits of S&OP in the case of COMPANY X are determined by determining position of COMPANY X in the S&OP maturity model. The implementation of S&OP in the case of PRODUCT Y is discussed by identifying and analyzing the specific capacity groups.
3.3 Data collection
From the six distinguished data sources by Yin (2003), the following have been used.
Direct observations: Within the research period, some processes within the supply chain have been observed directly. By being operational at the supply chain management department, escalations and assurance issues have been witnessed. Furthermore a visit to the COMPANY X contact center has provided insight into the customer service processes. The information obtained has been useful in a broader context of this research, rather than specific causal or behavioral observations.
Documentation: A number of internal documents such as PowerPoint presentations, spreadsheets and Visio documents have been used as a source of information. This information has mainly been used to describe the service PRODUCT Y, the supply chain and internal processes.
Archival records: The following scientific journal databases have been consulted: Business Source Premier, Science Direct, JSTOR, Scirus, Scopus and Google Scholar. They have been selected on the vast amount of available articles. In table 3.2, the search queries that were used to gather data are presented.
Search query
Sales Operations Planning Advanced Planning Systems S&OP
Aggregate Production Planning Operations Planning
Production planning Telecom industry Service characteristics
Table 3.2: Search keywords
Articles have been found in recommended journals such as ‘International journal of production economics’ and ‘The international journal of logistics management’. Interesting articles have been checked for quoted citations in order to look for forward relevant articles. In addition, backward search has been performed by looking up references listed in the specific article.
The university libraries of Groningen, Leiden, Utrecht and Amsterdam have been used to find books on relevant topics. The same search queries have been performed as in the article search. Furthermore, consultancy reports about S&OP and the telecom industry have been used where appropriate. The archival records, in the form of published articles and books, have mainly been used to construct the theoretical framework, and to provide a guideline for the description and analysis of the PRODUCT Y supply chain.
