S&OP Explained

S&OP Explained

S&OP is a pivotal process for companies to conduct monthly. In this article, we will explain what S&OP is and the six steps of the S&OP process. Let’s get started!

What Is S&OP?

S&OP stands for Sales & Operations Planning and is an integrated business management process conducted monthly. What the S&OP process does is empowers leaders to focus on crucial supply chain drivers such as marketing, sales, demand management, inventory, production, and new product introductions.

The S&OP process has the goal of enabling more informed decision-making from executives. It achieves this with dynamic connections of plans and strategies across the entire business. It’s conducted monthly to retain effectiveness with supply chain management and proper distribution of company resources. At the end of the day, S&OP helps you better manage your business and serve your customers, all while staying profitable.

The Six Steps of The S&OP Process

Here are the six steps crucial to the S&OP process that make it the powerhouse process that it is:

Step 1: Reviewing The Product

The first step in the S&OP process is revolved around the product itself. You have planners that are involved in R&D, new product introduction, and product development which then analyze the examine product pipelines and assess the health of products in the market to arrive at decisions regarding product planning.

Step 2: Reviewing The Demand

In the demand review phase, your goal is to produce an unconstrained forecast by incorporating a holistic picture of dependent and independent demand. So what can influence dependent and independent demand? It can be things like new product information, consumer trends, marketing, product hierarchy, and interplant part demand.

Step 3: Reviewing The Supply

Using your demand plan, it’s time to sync that with a supply plan. In a perfect world, these two plans, separate but equally essential, work in unison. A supply plan needs to balance customer demand while minimizing inventory and operating costs.

Step 4: Reviewing The Finances

The financial review is the process in which you produce some baselines that are adjustable in accordance with the product, demand, and supply review. S&OP managers take the prior month’s financial performance statements and use them to provide inputs. These inputs are then used to create S&OP for the current month’s cycle.

Step 5: Pre-S&OP

This step is all about meetings that are conducted with various level leaders to express and showcase the connectivity of the plans across product, demand, supply, and finance. Here you’ll identify gaps in the plan and problem solve before implementing the plan.

Step 6: Executive S&OP

The final step is to take all that hard work and the plans you’ve created and execute your S&OP. As you do this, you’ll consider risk factors and ‘what if’ situations before making ultimate decisions on various aspects of your carefully crafted plan.

Conclusion

Now that you know what S&OP is, it’s time to use a winning tool like Atlas Planning Platform to follow these steps the best way possible. Find out more on the John Galt website and sign up today.


By – Profit Parrot

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