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 Keep Your Eye on the Ball!

Thanks to a smoothly-functioning SOP process, Maxfli now has the right product
in the right quantity at the right time.

by Michael Bane

When Gary Roulston looks out his window and sees rain, he's no longer quite so worried.

As Vice President of Operations for South Carolina's Maxfli Golf Division, Roulston knows that weather can create havoc with the market for golf balls, one of Maxfli's primary products. "Even in a recessionary period, when golf club sales might suffer, golf ball sales are still good, " he says. "But when the weather goes bad, so do golf ball sales."

In such a volatile market, with demand fluctuating, resources can take a beating. Inventory can pile up, backorders can increase and quality of service to the customer can suffer.

While that might have once been the case at Maxfli, it is no longer. Thanks to a smoothly-functioning Sales and Operations Planning (SOP) process, Maxfli now has the right product in the right quantity at the right time, regardless of the whims of Mother Nature or the marketplace.

"It used to be the information we received in Manufacturing wasn't necessarily tied to our actual sales projections," he says. "It wasn't a unified effort. Sometimes a best-case effort, sometimes a worst-case effort, and there wasn't any clue to which case we had."

The first indication that something was wrong was increased inventory. "It just developed," Roulston wryly says. At the same time, customer backorders kept increasing. "We were making product," he adds. "We just weren't making the product the customer wanted to buy."

The breakthrough for Maxfli came when a group of managers participated in an R. D. Garwood seminar on the SOP process. This group of managers used the "patented" Garwood SOP Starter Kit and its five-step process to change the relationship and communications between manufacturing and sales. Basically, the SOP process provides a way to balance demand and capacity.

It's a way of making sure everyone is singing from the same hymnal. Typically, we see that Manufacturing's plans are not necessarily connected to Sales & Marketing's projections, or Sales & Marketing's projections are not necessarily connected to manufacturing plans. The results are backorders, increased inventory and an adversarial relationship between Manufacturing and Sales & Marketing.

"The sales forecasts weren't developed in a team-type atmosphere," says Roulston. "They were more or less just done, and the information filtered down. You could never really tell which forecast was the current forecast. It was very loose and very informal."

The R. D. Garwood SOP process is based on the idea that sales and operations planning can be a competitive weapon. The process itself is a series of preplanned sessions that promote teamwork, involvement and communications among executive and middle management. The result of these sessions is a single company game plan for running the business.

The process is comprised of five steps:

1. Gathering historical data, creating a "snapshot" of where the company has been and its current status.

2. Reviewing all the future planned demands, with the objective of creating a preliminary demand plan.

3. Comparing the demand plan to the production capabilities.

4. Holding a Partnership Meeting among the managers in all departments affected by the plan, with the objective to create a realistic list of alternatives for executive management.

5. Finalizing a set of plans, the company game plan.

Central to the process is the series of planning conferences that bring together, sometimes for the first time, people from all the departments in the company. The result of these conferences is that the plan has a cross-departmental "buy-in." The executors of the plan are the people who created it.

The first meeting is the Demand Meeting, where we review historical data on our past performance, determine what our future customer needs are going to be and create the new 12-month forecast. The second meeting focuses on production planning, comparing the demand forecast to manufacturing capabilities. The third meeting, the Partnership Meeting, brings together all the departments to evaluate the new plan and eventually arrive at a consensus plan to be presented to executive management at the final SOP meeting.

"When we started, the sales side didn't want to go along with it," Roulston says, "because they felt it was going to tie them down or quantify them. Now they think it's the greatest thing ever invented."

The results? "A huge reduction in backorders," says Roulston. "I don't know if I want to give you the figures, because they were so bad. But there's been an enormous reduction in backorders from last year to this year. Now, hopefully, we're making the things that are going to be sold, and in the right quantities."

The SOP process is one of those basic things many companies overlook. No company, though, who's looking for real quality can overlook the SOP process and succeed!

All Contents Copyright � 2002 R. D. Garwood, Inc. All Rights Reserved.