A well managed company requires a continuous balance between market demand (demand) and production plan (supply) .

 

This can be implemented through the structured process of Sales & Operations Planning (S&OP); it allows for continuous adaptation to changing market demand avoiding finding ourselves in two distinct unpleasant situations:

1. market falls, creating an excess of production capacity, workforce, stocks of finished products, materials in the production process, raw materials, etc.

2. market demand rises creating a low production capacity, long lead times, excess of overtime, quality problems due to urgencies, stock outages of finished products, scarcity of raw materials, stress in the organization, etc.

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This continuous adaptation is called balancing. In most companies this balancing work is done reactively when problems, of the situations described above, has already occurred. This delay in acting always involves a series of greater urgencies, greater costs, greater stress, greater tension with customers. In other words, difficulties and dissatisfaction in the organization.