Importance of Sales & Operations Planning Process ( S&OP)

Sales & Operations Planning Process - S&OP is a process that shares information and brings people together in a structured, single plan that is defined across the functional departments. People often confuse S&OP with complex, expensive software tools, but the process comes first, not the system. If you haven’t thought out your process properly, then even the most expensive software in the world won’t save you. SOP Process is applicable to both Manufacturers and Large Retailers or Wholesalers.



What is Sales and Operations Planning?
Each year, the imbalance between supply and demand costs companies billions of dollars in out-of-stocks, excess inventory and excessive discounting. Promotions, new product introductions, packaging changes and changing demand patterns can all wreak havoc on the demand and supply planning process.

But companies that use Sales and Operations Planning (S&OP) are gaining the visibility and agility to improve product management and promotional planning, minimize unnecessary buildups of inventory and better predict revenue. S&OP is effective because it develops a well coordinated operating plan in support of your customer demand, your business plan and your strategy. It gives a complete picture of forecasted demand, supply capacity and corresponding financial information.
S&OP is a vehicle for communication that puts the vision, strategy, financial and tactical plans of a business into one unified operating plan in order to optimize the allocation of critical resources: people, capacity, materials, time and money.

When do you need S&OP Process
Companies which do not have S&OP Process implemented typically have the following problems which easily surface in the day to day to transactions of a company. The below is a just small list of things that can go wrong when S&OP is not implemented to Companies.

1. High levels of “SLOB” (SLow Moving & Obsolete) stock
2. Frequent changes to your demand plan and master production schedule
3. Wild proliferation of SKUs (stock-keeping units)
4. Excessive stockouts
5. Poor forecast accuracy—or no forecasting at all
6. Poor Utilization of Assets
7. Imbalanced Production Schedule
8. Misalignment of Numbers between Finance, Sales, Marketing, Production & Materials Team
9. Production/Sales Information mismatch throughout the Organization

Benefits of S&OP Process
It is widely suggested to implement S&OP process for any Manufacturing Company. It helps to bring many entities in alignment. Implementing S&OP is the best method to align Customers, Suppliers, Manufacturing, Sales, Marketing, Production & Transportation Teams. Some of the benefits of Implementing S&OP

1. One Number across the Company
2. Greater visibility of demand and supply across the company
3. Improved Product Lifecycle Management process
4. Better promotional planning
5. Improved inventory management
6. More predictable revenue management
7. More accurate budget forecasting
8. Lesser fire fighting
9. Improved Service Levels

If you are experiencing some of the Supply Chain Challenges as listed above do write to us at admin@axium.co.in. We will do a detailed assessment and also a presentation of the S&OP Process which will then help to see the reason behind the importance of Sales & Operations Planning Process.
Importance of Sales & Operations Planning Process ( S&OP)

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