Sales and operations planning determines customer purchasing habits to ensure that a company can satisfy the forecasted production of goods, distribution and purchasing demands.
The process is conducted by management professionals on an executive level every month, enabling them to align their strategies according to the company’s objectives. One of the common problems businesses face is the lack of coordination between the operations and sales teams. However, this issue can be easily solved by engaging in efficient sales and operations planning through S&OP software. The main motive should be to earn profits while improving the relationship between the company’s different departments.
What is Sales and Operations Planning?
S&OP is a supply chain planning method which is developed to assist supply chain executives in deciding on things such as:
- Comprehending and generating planning adjustments relevant to near-term sales and operations execution difficulties
- Balancing supply and demand strategies for mid to long-term planning.
- Inspecting proposals and investments which are associated with entering or exiting markets.
- Ensure that the organization’s KPIs and annual operating strategies are met while choosing a consensus plan.
- Examining investments and proposals concerning onboarding new suppliers.
- Smoothen the introduction of new product launches and phase out old products.
Supply chain leaders develop and execute the sales and operations process, however inter-departmental collaboration is essential for the process to succeed. Departments such as sales and marketing, procurement, finance, engineering and operations need to provide the required data and work together. Sales and operations planning allows executives to make well-informed decisions with a collection of strategies and plans across the organization. These are repeated every month, but there are weekly inputs by essential participants. The process allows for efficient supply chain management and streamlines the organization’s resources toward delivering what customers want while earning profits.
- department should also be consulted for input and verification.
- Supply Planning – Supply planning includes interpreting the demand plan for generating a proper supply plan. Some of its tasks include identifying inventory aims, safety stock levels, and production methods for demand chase and level loading. It also involves examining the capability to satisfy demand by evaluating the available inventory, capacity and operations planning. The head of supply is in chage of producing the supply plan. Important employees from operations, logistics, manufacturing and finance should also be consulted for input and verification.
- Resolution of Plans – This step happens when the monthly pre-S&OP meeting occurs. It involves managing the supply side problems to identify if the sales strategies can be incorporated and the backlog goals can be achieved. Additional tasks involve checking the supply performance of the preceding month and generating forecasts. The S&OP leader is usually in charge of this meeting in accordance with the sales, marketing, finance, and logistics departments.
- Approve and Release – When the demand and supply plans have been finalized, the outcome is sent to the executive team when the monthly S&OP meeting is conducted. The outcome of the meeting is an approved demand and supply plan which can be effectively performed by operations. The S&OP leader supervises the step but the executive sponsor finalizes all the decisions.
Steps for Improving the S&OP Processes
Sales and operations planning is complex and requires streamlined operations and functioning. To make the sales and operations effective, you can implement specific steps and best practices and implement the S&OP software:
- The S&OP Process Should Start at the Leadership Level
Businesses’ sales and operations processes would be successful when company authorities participate in the process and take charge of the process. Without authoritative supervision, the process would not be able to progress as lower-level employees constantly ask for approvals. Management by the upper authorities boosts the company’s spirit and sets the entire group’s mentality. When the employees see their higher authorities attach importance to the S&OP process, they would also put in the necessary efforts.
- Clearly Set the Objectives
You should clearly set your company’s objectives and understand the ultimate goal of utilizing the sales and operations process. Whether your company is planning for inventory optimization, reducing the supply chain expenses, or enhancing the demand forecasting accuracy, you should understand the end objective beforehand. You should ensure that everything is evident & clear at the beginning of the S&OP process so that everyone remains in the loop and is informed about the ultimate aim. They can therefore collaborate cross-functionally to establish it.
- Be Prepared for the Unanticipated
Nobody has seen the future and nothing is certain and thus one should be prepared to handle uncertain events.. Businesses should have contingency strategies for different circumstances. For example: How would your company overcome the situation if it lose the most prominent clients? How would you meet the fluctuating demand? You might not be able to plan for everything in advance, but you should have certain backup strategies to conduct smart business.
- Have an Idea about the Sales Numbers
Ordinarily, sales are hard to predict. Too many factors can contribute to and influence the number of sales a company makes in a given period. But the least you can do is to predict the sales numbers. By looking at the figures for the previous months and years, you can approximately predict the future sales numbers properly.
- Comprehend the Effect of Supply and Demand Changes
Suppose you cannot comprehend how supply and demand changes would impact your organization. In that case, you might face issues which could efficiently be avoided with an understanding of the chain and the time spent modelling various situations.
About the Company
Fountain9 is one of the best S&OP software provider companies that help food businesses and D2C brands determine customer purchasing habits to ensure that a company can satisfy the forecasted production of goods, distribution and purchasing demands and thus maximize profits and minimize waste It also helps businesses to maintain a high availability and forecast future inventory needs in order to avoid out-of-stock looses and overstocking. With fountain9’s S&OP system every department is kept in loop regadring the demand & supply requirements.
please take the steps for S&OP here –
https://www.demandcaster.com/implementing-sales-and-operations-planning-sop/