Sales & Operations Planning applied to an Engineer-to-order environment – A case study at Tetra Pak

University essay from Lunds universitet/Teknisk logistik

Abstract: Sales and Operations Planning (S&OP) has been around for many years but has recently become part of a formal way of balancing supply and demand at Tetra Pak. A pilot project was started in 2017 in the operation unit Packaging Capital Equipment (CE) for the product Tetra Top 3 (TT/3) which is produced according to an Assemble-to-Order (ATO) practice. The company aims to learn what it would take to implement a similar S&OP process at the department PSE which produce their equipment according to an Engineer-to-order (ETO) practice. To guide the research project, two research questions were formulated: “Which issues did the ATO environment at CE encounter when implementing S&OP and which issues are still occurring today?” and “What enablers could be used to avoid these issues when implementing S&OP in the ETO environment at PSE?”. To answer these questions, the authors conducted an inductive case study where a theoretical framework was constructed based on previous literature and compared to the data collected from interviews with different stakeholders at Tetra Pak. The theoretical framework focused on describing the S&OP process, different production strategies, identifying different frameworks of a S&OP process and performance measurements to evaluate the S&OP process. Additionally, most prominent implementation issues and barriers are discussed along with enablers for implementing an S&OP process. The data collected from the interviews were consolidated and returned to the interviewees to rate the most severe issues Tetra Pak has and importance of different enablers for verification and to strengthen the conclusions. The result of the project was nine obstacles that Tetra Pak could avoid when they implement S&OP in the ETO environment. These were: • Lack of top management support • Silo-thinking • Lack of discipline • Lack of S&OP training for stakeholders • Inadequate performance measurement/metrics • Failure to create a good S&OP vision for the audience • Failure to create short-term success • Not reaching consensus in meetings. • Unclear ownership The obstacles were then classified in a matrix based on two dimensions, effort and effect. The “low-hanging fruit” which are the issues that are easier to solve with greater benefit were: • Lack of top management support • Lack of S&OP training for stakeholders • Inadequate performance measurement/metrics Not only issues were found, there were also enablers for implementing S&OP in the ETO environment. Some of these enablers found were: • Involvement of more functions/relevant actors • Engagement should be sponsored from all stakeholders' organizations/functions and not one alone • Set clearly outlined roles, responsibilities and tasks for each involved actor This thesis has been conducted at Tetra Pak’s production facility in Lund which is a limitation due to the many production facilities around the world. The thesis was also conducted in a qualitative manner which does not cover any quantitative measurements; hence, details about effectiveness and efficiency of the S&OP process could be researched to find bottlenecks and further improve the process. This thesis has been a complete elaboration between the two authors. Each author has been involved in every part of the process and contributed equally.

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