sales and operations planning

Essay by mtmurphy30University, Bachelor'sA+, June 2014

download word file, 1 pages 0.0

Michael Murphy


Sales and operations planning is business management process that focuses on aligning all functions of the organization. Some objectives of S&OP are higher customer service, more stable production rates, faster and more controlled new product introductions, and shorter customer lead times for make-to-order products. The components of a S&OP process on a monthly basis would start with sales forecasting. This first step would require data to be gathered from past sales and then analyze trends to produce forecast reports.

Following sales forecasting would be demand planning, which validates the forecasts as well as accounting for demand variability. Also during this step it is important to understand sources of demand and revise inventory and customer service policies. Next, the supply planning step assess the ability to meet demand by reviewing available capacity and scheduling required operations. This step lead to Pre-S&OP reconciliation of plans, which requires you match supply and demand plans with financial considerations.

The final step in this monthly process is to finalize S&OP and link to implementation, this step is where the plan is finalized and released to be implemented.

An important part of sustaining an effective S&OP is indentify and understand your key performance indicators(KPI's). KPI's are used to periodically asses the performance of the organizations processes in order measure how effective or ineffective that process is. Often KPI's follow the same criteria and SMART goals in the sense that they measure a Specific process, it is Measurable to really get a value of the KPI, the defined norms have to be Achievable, the improvement of a KPI has to be Relevant to the success of the organization, and finally it must be Time phased, which means the value or outcomes are shown for a predefined and relevant period.