Sales & Operations Planning (S&OP)

Sales & Operations Planning (S&OP) is a cross-functional process that synchronizes sales, finance, and operations to ensure business goals are met efficiently. It balances demand and supply, enhances decision-making, and optimizes supply chain performance.

The S&OP Process

1. Demand Review

• Objective: Assess market trends, customer demand, and sales forecasts.
• Key Activities:
  • Analyze historical sales data and market intelligence.
  • Identify seasonal trends and external demand factors.
  • Develop a consensus-driven demand forecast.
• Outcome: A data-backed demand plan guiding the supply chain.

2. Supply Review

• Objective: Evaluate capacity, resources, and constraints to meet demand.
• Key Activities:
  • Assess production capabilities and supplier capacity.
  • Identify bottlenecks and resource limitations.
  • Adjust inventory, procurement, or production plans as needed.
• Outcome: A realistic supply plan that aligns with demand expectations.

3. Pre-S&OP Meeting (Balancing Supply & Demand)

• Objective: Reconcile demand and supply while addressing gaps and constraints.
• Key Activities:
  • Compare demand forecasts with supply capabilities.
  • Identify imbalances and propose solutions (e.g., adjusting inventory, outsourcing, or modifying promotions).
  • Align financial projections with operational plans.
• Outcome: A refined demand-supply plan ready for executive approval.

4. Executive Meeting (Final Decision-Making)

• Objective: Secure leadership approval for the final S&OP plan.
• Key Activities:
  • Present demand and supply recommendations.
  • Discuss financial implications and potential risks.
  • Make strategic decisions on production, inventory, and resource allocation.
• Outcome: A unified business plan that integrates sales, finance, and operations.

Why S&OP Matters

A well-executed S&OP process fosters alignment across key business functions, improves forecast accuracy, and enhances collaboration. By following a structured approach—demand review, supply review, pre-S&OP, and executive decision-making—companies can optimize resource utilization, increase agility, and drive profitability.

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