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Execution, Measurement and Control of Operations
Cristian Colín Chavero
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Sales and Operations Planning (S & OP)
By Randall Schaefer, CPIM
Sales and operations planning is an aspect of supply chain planning.
which aims to create a unified business plan based on consensus. Obtain
information on the key functional areas of the organization, including sales, marketing, manufacturing,
distribution and finance. Interfunctional collaboration has produced plans that all parties
interested parties understand and are committed to supporting.
In all aspects of supply chain planning activities, S&OP is often a
more advanced discipline. It is possible that many smaller organizations or new companies only
they need inventory planning. They can add functions such as demand planning and
the planning of supply as demand grows. Once it starts selling
more differentiated products, organizations usually use the S&OP function.
Some planning activities (such as statistical forecasting) can produce excellent results.
results. However, the scope of these results is often very limited. For example, a good
statistical forecasting will use algorithms and the project's history to generate estimates. But
other data (such as revenue and profit forecasts and marketing events) usually do not form
official part of the statistical forecasts.
As a result, there is a lack of collaboration with the key components of the business. On the contrary,
the aim of sales and operations planning is to obtain an overview of the overall plan by extending
the process of forecasting the input and overall adjustment of sales, marketing, finance, and operations. The
more advanced S&OP practices also include point of sale (POS) and other information
related to the market.
Organizations looking to acquire S&OP functions can find them in the main ones
software solutions for supply chain planning. The true value and benefits
The performance of S&OP comes from collaboration. All parties can align because they use
the same set of data.
Through the integrated mechanism of checks and balances, S&OP eliminates excuses and increases the
sense of responsibility. The results of such cooperation are usually impressive. The studies
show that, compared to their peers, high-performing companies driven by S&OP
on average they experience:
Less inventory
Perfect order fulfillment
Effective cycle times
Sales and operations plans are generally completed by senior management and are usually
they execute once a month. It is an iterative process in which the results of one cycle of
planning is compared with the results of the following planning cycle to provide to the
direction information about trends across the company.
Participants assess supply and demand forecasts in stages to ensure that plans
tactics in all business functions and regions are aligned with the company's strategy and
they support it. In traditional 'warehouse' companies, the sales, manufacturing, and
finances often compete with each other. Without a unified plan, small problems soon
they will turn into bigger problems.
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These problems can be quickly identified and proactively resolved through reports.
S&OP and other measures. Some of the benefits of an effective sales and operations planning process.
operations include1:
Increase in customer service levels
Higher profitability
Higher income from products
Lower inventories and obsolescence
Reduced delivery times
Faster response capacity
Top-down management control
Predictable operational performance for shareholders
While the sales and operations planning process can vary greatly between the
organizations, there are usually certain important steps that practically all follow
planners. The following were developed by Thomas Wallace and Robert Stahl2, co-authors of
the definitive guide, sales and operations planning.
Collection / management of data: collect information on past sales, analyze trends
and report forecasts. Execute the Pareto analysis to assign forecasting parameters (it is
say, item in front of group). Manage new items and discontinue old items.
Demand planning: validate the forecasts, understand the sources of demand,
take into account variability and review customer service policies; layer on plans of
promotion, unique events, and launches of new products and customers.
Supply planning: assess the ability to meet demand by reviewing
of the available capacity, inventory, and the scheduling of the required operations.
Set inventory targets and plan supply by load level and/or tracking
from the demand.
Reconciliation Plan (Pre S&OP): Align the supply and demand plans with
financial considerations.
Finalize and publish the S&OP: finalize the plan and publish it for implementation.
Within this operational research framework and the application of this methodology linking as
As the text says, the sales and manufacturing part should not be an impediment for these.
two fundamental parts of a company have linear and uninterrupted communication. In the
work field in which I operate, speaking of the construction sector, we can say that the part of
Sales and manufacturing (construction) are closely linked since a project must foresee
the lead time of a potential client including the analysis in a work schedule to project the start
from the showroom or the exact moment to start the operations of the point of sale. For all this
Even for the construction manager, it is very important to determine and analyze the exact times to ask
material and establish a link/communication with the material suppliers on site.
1 Randall Schaefer, CPIM
2 Sales and operations planning: the how-to handbook
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