S&OP is an integrated business management process through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization.
The S&OP process includes an updated forecast that leads to a sales plan, production plan, inventory plan, customer lead time (backlog) plan, new product development plan, strategic initiative plan and resulting financial plan.
Plan frequency and planning horizon depend on the specifics of the industry. Short product life cycles and high demand volatility require a tighter S&OP than steadily consumed products. Done well, the S&OP process also enables effective supply chain management.
A properly implemented S&OP process routinely reviews customer demand and supply resources and “re-plans” quantitatively across an agreed rolling horizon.
The re-planning process focuses on changes from the previously agreed sales and operations plan, while it helps the management team to understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results.
Newest developments in Sales and Operations Planning on how the planning process becomes more customer centric was written by Richard (Dick) Ling and Andy Coldrick