Question

. Discuss the potential pros and cos of the aggregation process that must be done prior to developing the S&OP. For example, what are the trade-offs when deciding to aggregate the data into quarters instead of by month? What are the trade-offs when deciding how many product definition to include in a “product family”

Answer 1

Potential Pros:

1. Lower opportunity cost
2. Higher product segementation and analysis
3. Operational efficiency

Potential Cons :

1. Focus is on cost effectiveness but leads to lack of quality focus based approach
2. Industrial benchmarking takes hit if sales and operations costs are the only KPIs.
3. Measurements done quarterly hence feedback and review of sales and revenues are not done on monthly or weekly basis.

Higher product definition leads to confusion amongst consumers and top of mind recall index decrease substantially. This can often lead to misestimation and misrepresentation of product by consumers and may blanket the sales of high performance products.

However the tradeoff is that higher product definition helps in segregation of sales and helps in forecast of demand as well as strategic planning.