How to Execute Sales and Operations Planning

Sales and operations planning (S&OP) is a business strategy model that’s very much like a sports team. You have a game plan, but you need to adapt quickly to what’s happening on field, and plan ahead as much as you can. In this case, you’re planning for the next 6 to 18 months, striving to establish how to use the company’s resources to achieve a harmony between maximizing profit and reaching operational goals. Since most business strategies adhere to the notion that better organization equates to a more fruitful season, embracing an operations schema can and should help you stay with your team.

How Does Sales and Operations Planning Work?

Monthly S&OP meetings should ideally gather executives from all operational departments, such as sales, marketing, manufacturing, and finance, to assess management of company resources, such as outsourcing, sub-contracting, and labor time. Re-planning focuses on the changes from the last agreement, helping the management team to understand performance, and anticipate future actions.

To begin to properly assess your planning horizon and forecast, you need to consider your industry specifications. Short product lifespans, for example, require a more cataloged planning and consistent evaluation into supply chain management. You need to evaluate your demand with up-to-date data preparation, with a baseline forecast through assessment of customer patterns and market indicators, comparing these to prior months. Then, to evaluate your supply chain, you need to examine production capacities, inventories, and any limitations on resources. What problems could you potentially highlight on your forecast?

With both your supply and demand avenues properly analyzed, you can begin to develop a financial review. This will allow you to start eliminating any gaps between budget plans and the operations as well as prepare for seasonal and market changes. The critical and ultimate objective at the end of a Sales and Operations meeting is to approve and align one set of figures: finance, and sales and operations. This establishes the get-go for motions and activities to actually achieve what you’re planning.

Having accurate and up-to-date data is essential as it’s at the very core of your planning structure. Misreporting can lead to loss of share value and can impair your carefully planned strategy. Watch out for any inaccuracies that are easily overlooked, such as reference errors, copy and paste errors, omission errors, and input errors (bad data). Be vigilant in identifying any problematic elements thoroughly and well in advance.

Every company needs a practical navigation system to help determine where you’re going, where you’ve been, when you’re off course, and how to get back on course. Armed with the right information, your team can execute competent decision-making, differentiating between what is and isn’t realistic. Successful S&OP systems need all of those instruments to play, and win, in the field.

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