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What Is S&OP Process?

Dick Ling was the first to coin the phrase

“S&OP” back in the 1980s. He has written

books explaining the process and is a

How Did S&OP Get Started?

professional consultant that many big names look to for

S&OP setup within their business.  

A simple definition of S&OP is the collaboration and executive

decision-making process of sales forecasting, supply planning,

and demand planning, meeting financial considerations and the

requirements of each individual division.

What is an S&OP Process?

The Need for S&OP S&OP isn’t only for companies struggling with communication. It’s a method to

enhance the processes of each sector, and achieve overarching company

objectives.

Dick Ling puts it best in his book Orchestrating Success: Improve Control of the

Business with Sales & Operations Planning:

“Sales & Operations Planning provides the general and his staff a means of gaining

more control. With it, they can operate their business more effectively: set

attainable objective, see consequences, evaluate alternatives, communicate

approved plans, measure performance, and achieve predicted results.”

The S&OP meeting should be held at least once monthly and

include the sales, manufacturing, business, and finance units.

General planning of S&OP encompasses company policies,

strategic objectives, financial constraints, demand forecasts,

and capacity constraints.

S&OP Meetings

A typical S&OP executive meeting agenda should encompass

changes that occurred in the past month, state of financial goals,

risks that should be addressed, decisions to be made, production

performance, constraints, and overview of long term plans.

The overall objective of S&OP meetings is to improve the

processes of each division and achieve optimal performance.

S&OP Meetings

S&OP Monthly Overview

Often times, the process starts strong but falls into pits that inhibit growth. Some things

that could potentially slow the planning down*:

�  Lack of understanding of S&OP (be educated and pull in consultants if needed).

�  Wide scope of typical S&OP process makes it difficult to transition because it

encompasses many parts of the organization.

�  Losing pace with drastic changes that occur during the process (globalization,

outsourcing, offshoring, and increased networked organizations).

�  Focusing on process and systems, while forgetting about the people side.

�  Law of Perspective- Your process is great for supply chain, but if it’s disconnected from

Sales team, there could be a potential for problems.

*Taken from Building the Bridge and Making the Process Stick by Duncan Alexander.

Avoid the Pitfalls

�  Focus actions and thoughts more on revenue, growth, category development, brands,

and channels versus forecast error & inventory record accuracy KPIs.

�  Engage all business functions to achieve better participate; S&OP manager should be

facilitator.

�  Focus meetings on expectations to keep meetings within a reasonable time frame.

�  Talk forecast in dollars, if it help all divisions understand an accurate forecast.

�  Full team meeting should have a goal of forming a partnership plan; a strategy used to

develop the financial forecast.

(Tips taken from S&OP Step by Step by Jenny Schneider)

Tips for Successful S&OP Process