Demand Management
Turn historical data and market signals into forecasts you can actually use to plan.
Sales Operations Planning
A plan developed jointly by sales, operations, and finance, based on actual production capacity.
In highly demand-driven markets, optimizing Sales & Operations Planning (S&OP) is key to enabling companies to achieve their business objectives. Behind the acronym S&O (Sales & Operations) lies one of the most important—and sometimes least structured—processes in manufacturing companies: sales and operations planning at the managerial level.
Understanding Sales & Operations Planning
S&OP is the process by which a manufacturing company aligns its sales forecasts, production capacity, and financial resources. Simple in theory, but in practice one of the most difficult processes to manage.
Without a structured S&OP, business functions operate on different levels: sales promise delivery dates that production cannot meet, inventory swells to cover uncertainty, and finance chases numbers that change every week. The result is reactive planning, not strategic planning.
An effective S&OP breaks down these silos. Bring together demand, supply, and finance to develop a single, regularly updated plan on which the entire organization can base its decisions.
sedApta's Supply Chain Planning Solutions
Each module addresses a specific planning issue. You can adopt them individually or combine them into an integrated program.
Intelligent Forecasting
Track actual demand in near real time and reduce the gap between forecasts and actual results.
Inventory Management
Keep your inventory at the right level: not too much to account for uncertainty, nor too little to risk disruptions.
Resource & Supply Planning
Build realistic plans based on actual capacity, not theoretical capacity.
Order Promising
Confirm realistic delivery dates, based on actual availability and capacity.
Smart Supplier Collaboration
Involve suppliers in the planning process and minimize surprises early on.
Distribution Requirements Planning (DRP)
Coordinates distribution flows between plants and warehouses to meet demand without excess inventory.
Demand Driven Material Requirements Planning (DDMRP)
Place buffers where they're really needed and plan based on actual demand, not on forecasts.
Financial Throughput & Operations Planning
Align operations and finance to maximize the value generated by the supply chain, planning based on actual capacity and demand rather than static assumptions.
What is S&OP?
Sales and Operations Planning (S&OP) is a supply chain planning process that helps business leaders make decisions on a wide range of topics.
Sales and Operations Planning is a process designed to improve the alignment between a manufacturer’s supply and demand by having the sales department collaborate with operations to create a single production plan. In this context, the production process is designed and organized to optimize available resources and meet market demands. This process is also known as Sales & Operations Planning, Sales & Operation Planning, or Sales Planning and Operations.
The goal of a Sales & Operations Planning model is to balance market demand with the company’s supply capacity.
S&OP processes are, by their very nature, closely linked to corporate and commercial policies; therefore, each company follows a different model and uses different methodologies to address this issue, one of which is sales planning.
Is Sales & Operations Planning a strategic planning process?
Sales and Operations Planning (S&OP) is an integrated business management process through which the executive team continuously achieves focus, alignment, and synchronization across all functions of the organization. This is essential for describing an effective production process that includes all the steps necessary to transform raw materials into finished products.
The Sales & Operations Planning process includes an up-to-date forecast that leads to:
- sales plan
- production plan
- inventory plan
- customer delivery schedule (backlog)
- new product development plan
- strategic initiatives plan
- resulting financial plan
The frequency of planning and the planning horizon depend on the specific context. Short product lifecycles and high demand volatility require a tighter S&OP than products with steady consumption. When implemented correctly, the S&OP process also enables effective supply chain management.
What is the workflow of the Sales & Operations Planning process?
The Sales & Operations Planning (S&OP) process consists of several steps, which are typically carried out during monthly meetings. The names and number of steps in each company’s planning process vary, but they all include the following, in this order:
- Demand Planning. Processes for analyzing, forecasting, and influencing demand, including demand collection.
- Procurement planning. The process of identifying and consolidating requirements and determining the timelines for procuring them, with the goal of having them available when needed.
- Production planning. Assessment of production and distribution capacity and constraints. This involves a wide range of activities, including forecasting, supply chain management, inventory tracking, and work scheduling. It is important to define the production process clearly and in detail to ensure an optimal production flow.
- Distribution planning. The process of determining the correct quantity of goods to be shipped to each distribution center or warehouse to meet customer demand.
- Financial planning. A comprehensive process of assessing the financial situation and developing a specific financial plan to achieve one’s objectives.
S&OP is closely linked to—and often a component of—integrated business planning, a more comprehensive and long-term planning process that brings together the plans of each department and links them to the company’s financial performance and strategy.
S&OP Software
Although S&OP is first and foremost a process, not a technology, various types of software often play important roles in automating the process and facilitating collaboration between sales, finance, and operations, making relevant data more accessible and providing analyses and simulations of hypothetical scenarios.
Through the sedApta Suite, we are able to offer companies an integrated ecosystem based on a new methodology and implementation approach. Furthermore, thanks to the modularity of the Suite’s components, companies will be able to support and coordinate the interoperability of functions and processes and orchestrate complex business workflows and multi-role scenarios across multiple products.
Want to see how it works in practice?
Many of our customers started with a single critical area—demand management or production planning—and then expanded the suite as results became apparent. We can show you how it might work in your specific situation.