What Is Sales And Operations Planning

Zurab Samushia
Jun 18, 2021

Sales and operations planning, alternatively known as S&OP or simply SOP, is an important managerial function, which is called to provide the consistency and synchronization of all processes of an enterprise, which relies on resources other than human power and time to create the output. Thus, it is broadly used in manufacturing enterprises, which operate with various resources and workflows to create a product. We’re considering below, what SOP is and what makes it so hard.

Sales plan explained

When making the sales planning, a manager tries to make sure that the product-making capacities satisfy the level of planned sales (based on their forecasts), the stock has enough output to satisfy the competitive customer lead times, and that all other, main and supporting, functionalities create and maintain the level of planned financial profitability, operational cash flow, and that all processes work in agreement in order to satisfy the general business plan within given resources, providing the evenness of workforce usage. Wise planning makes sure the enterprise lives, develops, has enough resources for new product research and design, and brings a planned profit.

Thus, it is a complex process, which has hundreds to millions of inputs. As it is performed for the enterprise in its entirety, it relies upon the data that’s gathered from all contributing departments: sales, financial, engineering, material supply, manufacturing, marketing, accounting, and others.

Typically, a sales plan template would allow connecting all resources and their usage to meet the general goals of profitability of the enterprise on several layers of the term (short, mid, long). It includes financial planning, connecting the costs and cash flows to required manpower, materials, demand and supply, sales, and all connected auxiliary processes.

For manufacturing enterprises, planning the S&OP includes several large and constantly going processes done on all levels of management, with the corrections typically made from several times a month to once a year (depending on the level of a business, type of activity of an enterprise and its output, and other contributing factors).

The planning process as a recurring event relies upon manned and automated source data provision required to make reporting, estimations, and decisions.

It typically has such steps:

  1. Sales forecasting based on past sales and analysis of trends
  2. Planning demand. At this stage, the output is planned based on the demand forecasts and extrapolations
  3. Planning supply. It is calculated what procurements and inputs are required to provide the level of the product output and other financial expenditures of an enterprise
  4. Assessment and reconciliation of plans
  5. Final decision and passing it to implementation.

The plan of sales is a part of a bigger integrated business planning, a long-term continuing process, which usually includes planning for all periods in time and on all levels of the enterprise.

Plan of sales strategy templates

The sales strategies template would be unique for each market. For an enterprise with software output, it would be completely different from an enterprise with hard output. In the first case, only time and human resources are primarily required to make some product, while having a PC to work on, a table and a chair to sit at are auxiliary processes. It is totally different in a factory packed with mechanisms, raw materials going through conveyor lines, and people who make those processes run, which might require thousands of types of raw materials.

However, it is possible to draw up some sales plans examples suitable for every enterprise (in general), which must be built on such principles:

  • Relying on a recurring approach, which requires assessing the data periodically and as frequent as possible and expedient for an enterprise
  • Automation of planning and forecasting: usage of various software allows speeding-up this process because people tend to linger and add errors
  • Focus on as accurate data as possible
  • Focus on the main importance of primary processes, not auxiliary ones
  • Improvement of the demand chain analysis and better forecasting.

It must be understood that planning of sales and operations often has conflicts of resources and it is a managerial task to withdraw these conflicts during planning.

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