Sales and Operating Planning (S&OP)

Posted in Operations and Supply Chain Terms, Total Reads: 1211

Definition: Sales and Operating Planning (S&OP)

A process to make strategic plans that give the management the ability to direct its businesses to achieve competitive gain continuously by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, and development, manufacturing, sourcing, and financial) into one integrated set of plans


Interaction of S&OP in an organisation



Why S&OP is required

• Lack of planning leading to material and product shortage required for production

• To improve teamwork thereby increasing productivity of the organisation

• Proper resource planning leading to excessive inventories

• Ineffective utilization of resource when required

Objectives of S&OP

• It enables to identify the challenges that are to be given priority and focus

• To analyse and monitor the progress of a business plan and take corrective actions in case there is a deviation from the plan in terms of time and cost

• To develop strategy to fulfil the customer demand while optimising resources at disposal

• To plan for future expansion or capacity addition

• To make various departments accountable for the work allotted to them


Benefits of S&OP

• Reduction in Inventory and allied cost

• Improvement in the utilization of resources viz. Machinery, labour, material etc.

• Due to cross functional planning there is integration between production, sales or financial plans

• Improved forecasting thereby leading better production planning


Hence, this concludes the definition of Sales and Operating Planning (S&OP) along with its overview.


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