Overview of Sales and Operations Planning

Creating a valuable Sales and Operations Plan (S&OP) is all about integrated decision-making. Effective S&OPs are simple; you want to drill down to what’s most important without a lot of distractions. It’s a balancing act that takes into consideration every part of your company with the overarching goal of improving profitability and growth.


Experts advise that to be successful; you can’t work two sets of numbers in the S&OP. It’s acceptable for sales, operations, and finance to have different forecasts or plans specific to their business goals. All those numbers need to be reconciled monthly to clearly view the big picture and update strategies.

At those “check-up” meetings, use a single approved sales forecast. This allows colleagues from different departments to understand the goals and challenges of each other.


Creating a comprehensive S&OP is a collaborative effort. The different departments cannot operate as individual businesses. There must be a mutual sharing of information and challenges. 


A successful S&OP involves actively anticipating demand and taking proactive steps to meet that demand. This is accomplished by coordinating the end-to-end supply chain with each sector that makes up your company. A broken supply chain can cost your company revenue and lead to lay-offs or closing the doors.


The team initially building your S&OP should include the CEO or GM, plus leaders from sales and operation to begin. Then add members from human resources, marketing, materials, product management, and marketing.

S&OP Principles for Success


There are many moving parts, but keep in mind that each adjustment will change just a portion of the overall plan. And utilize your managers and employees. Offer opportunities for additional training so you’re growing your workforce along with your company and you’re in a position to keep them for the long term.  

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Examples of segments you and your team may need to adjust along the way include reconciling sales forecasts, inventory, production, and capacity. In addition, you’ll manage demand (forecasting), supply, and folding in new factors such as products, new customers, and market initiatives.


You have a winning plan in place; launch it while reviewing pertinent external influences before focusing on internal activities. Examples of external forces include strategies deployed by a competitor, shifting customer preference and market feedback, a dramatic increase in supply lead time, a natural disaster, or a pandemic. Watch for what could disrupt you so you’re ready to adjust quickly.


Take note and action when you spot large over or underconsumption numbers that deviate from the forecast. Also, be mindful of significant production delays or the beginnings of a breakdown. Know which customer is affected so you can anticipate how to continue providing excellent service.


Brainstorm with S&OP team leaders on whether a supply chain break or other problem warrants capital investment to bring that segment of the workflow in-house rather than relying on suppliers.


Ultimately for S&OP to be effective and profitable, it has to highlight the most core and specific information you’ll use to make decisions.




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