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

S&OP, or sales & operations planning, is a monthly integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, and new product introduction.

With an eye on financial and business impact, the goal of S&OP software is to enable executives to make better-informed decisions through a dynamic connection of plans and strategies across the business. Often repeated on a monthly basis, S&OP enables effective
supply chain management and focuses the resources of an organization on delivering what their customers need while staying profitable.

The 6 Steps of the S&OP Processes

Product Review: In this first phase of the S&OP process, planners involved in R&D, product development, and new product introduction analyze the health of products in the market, examine product pipelines, and arrive at decisions about product planning.

Demand Review: The goal of this phase is an unconstrained forecast or consensus demand planning, incorporating a holistic picture of independent and dependent demand.

Supply Review: The goal of this phase is a supply plan that syncs with the consensus demand plan. Ideally, these two plans work in unison.

Finance Review: There’s some debate around the position of this stage in the process. Some insist that it falls after the first three phases are complete, and others preach that it should be “always on.” Either way, the mission remains the same: to produce a set of baselines that then become adjustments to product, demand, and supply review, along with input used in pre-S&OP and executive S&OP reviews. matter where this step in the process falls, financial analysis plays a key role in producing inputs into pre-S&OP and executive S&OP.

Pre-S&OP: Pre-S&OP is a series of meetings conducted with leaders at various levels that showcase the connectivity of plans across product, demand, supply, and finance. Ideally, these meetings center around a cloud-based platform that houses all the plans in a single place. Executive S&OP: The finish line is in sight. The final phase of S&OP brings all plans and data together in a unified, cloud-based platform to be used in executive S&OP meetings. “What-if” scenarios and the associated risks are reviewed, and decision points are noted so leadership knows when they’ll need to make the appropriate choices. Any key decisions that weren’t resolved in the first five phases are addressed in this phase, the reasons for escalation are examined, and decision deadlines are set.

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