Sales and Operations Planning (S&OP)

Sales and Operations Planning is all about improving supply chain execution. More precisely, it means aligning all departments, such as sales and finance, with supply chain objectives. A good S&OP is characterized by coordinated and transparently networked corporate planning. This should be demand-driven in order to maintain a balance between supply and demand on the market. All departments share the same knowledge of data, analyses and reports and can thus make well-founded decisions that affect overall corporate goals. Step by step, S&OP proceeds as follows: At the beginning of an S&OP process is data preparation. This is the central prerequisite of any planning process. What follows relates to the performance of the company. One compares the actual states and revenues with the target states. Thereupon, a demand planning is created. This then leads to production planning. Here, everything revolves around demand and how to meet it. The comparison of actual and target production values provides the necessary parameters. However, personnel capacities must also be included in the planning. Missing employees can lead to supply bottlenecks that cannot be foreseen. Therefore, it is worthwhile to include such possible spontaneous absences in one’s calculation. Such inclusion represents the final step of the S&OP cycle. Under the approval of the management level, possible problems are addressed and contingency plans are prepared.

How often this cycle needs to be run depends on the industry and the company’s reach. A weekly, monthly, as well as quarterly stint can be agreed upon.

Return on Investment (RoI)

Sales and Revenue Planning