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What Is Sales and Operations Planning (S&OP)?

By June 24, 2022No Comments

Sales and operations planning, or S&OP, is a business process that combines various departmental plans into one integrated business strategy. The aim of S&OP is to meet customer demand while quickly identifying and assessing challenges, controlling inventory costs, and improving customer satisfaction. This process is typically managed monthly, with the entire executive team coming together to create a coordinated plan. 

The S&OP Process

The S&OP process begins with a plan, and the first step in the planning process is to conduct a full product review. This review includes product development or R&D, along with details about current products, product pipelines and market analysis.  

Next, it’s important to conduct a review of customer demand. Carefully review demand forecasts and the data that support them. Include details on market trends and customer input. It’s vital to consider sales, marketing, and product plans, then combine this data with historical performance reports and statistical forecasting. 

The third piece of the S&OP puzzle is thoroughly reviewing your supply chain. Look into details on production and capacity, and carefully analyze and evaluate your suppliers. Run various scenarios to determine the strengths and weaknesses of your supply chain and more fully understand its limitations.

Finally, conducting a full review of your business’s financial performance, including costs, budgets, and forecasts, is essential.  Ideally, this review should be constantly ongoing, and you’ll want to ensure that it’s as thorough as possible to avoid missing any crucial details that could cause problems later in the process. 

Once these pieces have been reviewed, and their data points gathered, begin to conduct S&OP meetings. Bring together the executive team and department heads to align each element of your business into one cohesive plan. Again, be sure to run scenarios that ask “What if?” to ensure you are planning for all likely possibilities. 

S&OP Benefits

There are many benefits to a thorough and accurate S&OP process that are difficult to achieve otherwise. 

The first, and probably the most important, is that robust and thorough planning helps your business achieve a stronger bottom line. When every part of your company works together through S&OP, you create an environment where people, processes, and technology come together, leading to higher productivity and profitability.

Secondly, when your entire organization works toward a common planning goal, you’re sure to achieve better communication across all departments and locations. There will be no more problems with the right hand not knowing what the left hand is doing. Instead, you’ll have built-in ways for various departments to give each other feedback and help one another to align to your overall goals. 

Next, a thorough and ongoing analysis of your business goals and methods can help with better decision-making. It’s inevitable that disruptions will happen no matter how well you plan, and you’ll need to make important decisions on the fly. When you have all of the data and research from your S&OP available at your fingertips, these difficult decisions become more straightforward.

Finally, once you’ve implemented an S&OP process, you’ll find that subsequent S&OPs become easier and easier. Each time your team comes together to plan and forecast for the next month, they can build on the data and insights gained from prior months. Effective decisions are more easily executed across your enterprise, truly driving integrated business planning with greater executive team alignment.  A more efficient planning process means a clearer understanding of your business with less difficulty in getting there.

Integrated Business Planning

At Blue Ridge, we want to help your business achieve these results and more with the most insightful and complete data available. Our Integrated Business Planning solution builds upon S&OP and offers a robust dashboard broken down into simplified charts and graphs that make it easy to align and unify all parts of your business.

Our business forecasting software is the perfect blend of intelligence and automation to bring you visible, actionable insights and measurable results. By offering complete and accurate real-time data, Blue Ridge enables you to craft a consensus operational plan for your business that ensures accountability and communication across functional silos. 

Do you want improved forecast accuracy, greater inventory turns, fewer stockouts, better service levels, and rapid results? Schedule a 30-minute call with a supply chain planning and pricing expert to learn how we can help.