Thought Leadership

The S&OP process: the cornerstone of the Supply Chain

At the crossroads of strategic and operational planning, the S&OP process has become the cornerstone of the supply chain



Sales and operations planning (S&OP) is a process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage.  The purpose is to integrate, on a regularly basis, customer-focused marketing plans for new and existing products with the management of the supply chain.

The primary target of the S&OP process is to determine what and how much your customers are going to buy, and your capability to meet this demand. A second target of the S&OP process is to align plans with financial goals. At a minimum, this implies that financial goals may need to be revised, but there are several strategic alternatives available for the organization to increase sales or lower costs.

A process that brings everyone together

The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company’s plans for the near to intermediate future, coving a horizon long enough to plan resources and support the annual business planning process. Executed properly, the S&OP process links the strategic plan for the business with its execution and reviews performance measurements for continuous improvement.

S&OP stands for sales and operation plan and sales and operations planning at the same time. It is both a plan and the process that creates, implements, monitors, and continuously improves the plan.  The S&OP process involves a series of meetings to meet a consensus. A demand and production plans that reflect the results of demand-side sensing and influencing activities and supply- and finance-side capabilities and constraints.