Sales & Operation Planning (S&OP) creates a consensus-based business plan that facilitates corporations to handle inventory costs while significantly improving service levels. S&OP coordinates different business areas to meet customer demand with the appropriate level of supply.

It is a monthly business management process that allows experts to focus on core Supply Chain drivers encompassing marketing, production, inventory management, sales, and demand management. It joins forces to generate a single production/supply plan. The far-reaching goal is to line up future company strategy with functional capability.

Implementing S&OP

Initially identify the roles and responsibilities of each individual/team in the S&OP process.

When setting up your strategy, it is essential to ponder who will control each stage—set opportunities for meetings, hand-offs, and how you will communicate changes; the input determines the effectiveness of the S&OP planning. To advance with a monthly S&OP plan, you must establish that minimal significant modifications can be added to the demand plan within the month.

Outline functions, responsibilities, and timing of each step after the end of each month. The actions and responsibilities can then be introduced into a collective plan with reminders, meetings, and attendee’s scheduled responsibilities.

Typical S&OP process 

Demand Planning

This phase demands data on trend analysis, past sales, and forecast accuracy assessments of forecast accuracy. Advanced S&OP planning software can supervise several tasks through developing automated data and built-in reports. The Demand Planner usually is accountable for leading this phase in the process. Principal contributions for this phase will come from sales and marketing, and you should consider the information previously supplied from operations/supply and logistics.

Supply Planning

Supply planning encompasses translating the demand plan into an appropriate supply plan. Its tasks are determining inventory targets, production methods for safety stock levels, and demand track. It also involves assessing the ability to meet demand by reviewing available capacity, inventory, and operations scheduling.

The Head of Supply will be accountable for creating the Supply Plan. For input and authentication, check with the strategic team from finance, manufacturing, operations, logistics.

Understanding of Plans through a Pre-S&OP meeting

The S&OP leader is typically responsible for the efficient execution of this meeting. Essential partakers incorporate Marketing, Sales, Operations, and Logistics (including finance).

Resolving if the sales plan adjusts inventory and backlog objectives demands classifying through supply-side issues to determine if the sales plan can be modified, inventory and backlog purposes can be met. This step happens during the monthly pre-S&OP meeting. Additional tasks include evaluating supply performance from the earlier month and submitting forecasts.

Executive S&OP meeting to agree and make public outcomes

Once the demand and supply plans are settled, planners communicate the result to the decision-making team in the monthly Executive S&OP meeting. The meeting results are an agreed demand and supply plan that the company can effectively implement.

The S&OP leader will supervise this meeting/step in the process, but the Executive Sponsor is a vital partaker and will be needed to conclude all decisions/outcomes of the meeting.

Roles and Responsibilities

Executive management: The CEO/Leader is the principal connection for dispute resolution throughout the S&OP process:

• S&OP Board meeting serves as ultimate decision-making authority.
• It holds the companies’ responsibility for planning.

Marketing and Sales leaders: It is the central contact for issues associated with strategic sales/customer decisions:

• Establish expectancies with Sales team members; they will implement sales forecasting and improve forecast accuracy.
• They are the owners and speak for sales performance and forecasts in the executive S&OP meeting.
• Ensure adherence to the monthly forecasting cycle.

Demand planning: Is the contact for issues related to the development of sales, analysis of forecasts, and progress of final demand planning:

• The leader submits the demand plan report in a timely, accurate, ready-to-use condition.
• The Planner performs some of the pre-plan analysis and statistical forecasting.
• The Demand Planner works with sales to complete data collection and demand planning.
• The leader centers on any issue and tackles possible interruptions to future forecasts.

Sales personnel: Each account manager is the key contact for issues related to sales forecasts for customers and segments and assists in gathering data from designated customers and incorporating outcomes into the demand plan:

• Accomplish sales forecasting for assigned customers, markets, or other sales subdivisions.
• Must know the actual vs. forecast sales accomplishment, reasons, and remedial actions.
• Update the sales forecast monthly and align in the corporate sales review meeting.

Operation leader: Is the principal advocate for issues correlated to strategic operations/supply decisions:

• Establishes the expectation with the production and materials team to develop the supply plan corresponding to the process and proceed to that plan.
• Warrants that the aggregate level data presented the link to all the detailed developed planning.
• They preside over the monthly or periodic supply planning meeting.
• Explains inventory and bottleneck performance vs. forecast in the executive S&OP meeting.
• They display the actual vs. forecast performance for inventory.

Supply planning and master scheduling: The principal contacts for issues attached to orders, inventory, and the supply planning process:

• They review the inventory plan monthly or more frequently.
• Take care of manufacture rates, safety stocks, vendor implementation, lead times, and other supply planning features.
• They communicate the inventory factors in the supply planning business meeting.
• Checks orders, due dates, and inventory and determines via analysis what, when, where to build for each supply plan.

S&OP drives enormous benefits to lower inventory expenses, higher efficiency, and better customer satisfaction. Top Supply Chain planning solutions further enhance benefits by facilitating the S&OP plan to drive requirements  and move from planning to implementation.