Sales and Operations Planning (S&OP) is a business management process that helps organizations effectively balance their supply and demand. It is a process that brings together representatives from different departments within a company such as sales, marketing, finance, and operations to create a consensus forecast for demand and supply.
Main Benefits of Sales and Operations Planning
Sales and Operations Planning helps the organizations with a higher level of forecasting, better utilization of resources, more efficient operations and improved customer satisfaction.
Sales and Operations Planning helps you:
- To develop a consensus forecast and plan for the coming period,
- To guide decision making process across the organization,
- To increase revenue and market share,
- To enable effective supply chain management,
- To allow continuous monitoring and improvement of corporate performance.
Explanation of Sales and Operations Planning
S&OP is a systematic planning cycle that repeats every month. It is a more comprehensive and long-term planning process for the company’s financial performance and strategy.
S&OP process can vary depending on the organization, but generally includes the following stages:
Step 1: Demand planning
Step 2: Production planning
Step 3: Pre- S&OP Meeting
Step 4: Executive meeting—finalize S&OP
Step 5: Monitoring and controlling
Step 1: Demand planning: This step involves gathering data on previous sales and generate revenue projections and forecast statistics. The company’s customer input and market conditions are also examined.
Step 2: Production planning: This step involves generating material requirements and supply chain plan. It includes the process of sharing the medium and long-term demand.
Step 3: Pre- S&OP Meeting: Depending business’s size and process, this step includes multiple meetings with different departments such as finance, product, customer service, and marketing. The goal is to connect supply and demand plans with all other departments.
Step 4: Executive meeting-finalize S&OP: This step includes reviewing recommendations and make decisions with senior management and other key stakeholders.
Step 5: Monitoring and controlling: This final step involves regularly monitoring the performance of the plans and making adjustments as necessary.
Primary components of S&OP are people, process, and technology. The support and approval of department stakeholders is needed in order to execute S&OP plan well. So, it should involve people in the process. A well-structured process is necessary to keep S&OP cycle flowing smoothly. And with using technology, S&OP teams collect and process data, create forecasts and implement their plans.
How to Apply Sales and Operations Planning
To apply Sales and Operations Planning to your business, FITMINDS is providing an adoption of the model that fits your company and your company’s needs. S&OP can increase revenue and market share by improving the effectiveness of new products and marketing initiatives.
Contact us to get more information or discover your probable personalized roadmap for Sales and Operations Planning.
Additional Tips and Readings
- To read how companies identify their strategy for all parts of the company, you can check Pyramid of Purpose Model.
- You can read Break-Even Analysis to expect profit or loss at any sales level.
- To read more about management tools and business models, you can check Business Model Canvas.
Contact us to develop effective supply chain management via SALES AND OPERATIONS PLANNING.
