Sales and Operations Planning (S&OP) and Its Need

Let’s again take a look at the stepwise supply chain planning approach (also known as sales and operations planning process). The next two steps in line are related to the sales and operations planning (S&OP) activity. 
Let’s hear from Shyam as he explains what sales and operations planning (S&OP) is.

In the video above, you understood that the sales and operations planning (S&OP) is an aspect of supply chain planning whose goal is to create a unified, consensus-based business plan. This consensus is achieved through the cross-functional collaboration between the following departments:

• Sales
• Marketing
• Manufacturing
• Distribution
• Finance
• Human resources

In the next video, you will understand the need for sales and operations planning (S&OP).

As you learnt in the video above, there are certain limitations to statistical forecasting, as it relies heavily on models and historical data to produce estimates. However, other data, such as revenue, profit projections and marketing events are often not a part of statistical forecasting.

This major drawback leads to the development of the sales and operation planning (S&OP) process.

The aim of sales and operations planning (S&OP) is to gain a holistic view of the planning process by extending the forecasting process to other functions and departments.