What are S&OP Processes?

What are S&OP Processes?

Sales and operations planning is a crucial part of a business aligning the demand, supply, and financial planning. It makes up part of the master plan for any business. S&OP supports executive decision-making to approve profitable yet feasible material with financial planning.

The method uses a global demand as the starting point to compare the anticipated need to an available supply of resources like workforce, material capacity, and machines. With the information, an executive team knows the decision criteria to decide how the company must move forward.

The S&OP is Part of Strategic and Tactical Planning

Strategic planning gives people insight into how the demand shifts in specific geographies for a particular product line.

It can impact decisions like increasing/decreasing the manufacturing capacity or the need to increase/decrease the workforce, or determining prolonged supplier management.

So tactically, the S&OP process helps create a production plan approved by the executive management team to create a master schedule for material requirements known as the MRP.

The S&OP Process

The sales and operation process you find taking place regularly within the finance, marketing, sales, and manufacturing groups. With an S&OP process in place that works effectively, it helps establish accurate reporting of the demand and the supply chain inputs to help support decision-making.

Furthermore, it provides a pre-work analysis recognizing changes in the supply and demand chain to plan for supply, costs, and revenue. It also helps introduce a new product line with existing products. Lastly, it helps to transform extensive data from different systems into actionable decision-making support for reporting.

The S&OP Process Trends

Many companies use ERP (enterprise resource planning) software with SCM (supply chain management) systems to manage their supply chain challenges. In addition, many businesses use S&OP process spreadsheets as they have easy access to them.

But spreadsheets cannot integrate with modern technology, and data usage is limited. Other concerns are that it needs to be a more secure method for distributing throughout a company, leaving them with more challenges.

Things Are Changing Fast

These days, machine learning technology and AI are used more frequently with S&OP processes. For example, you are using machines to predict available capacity while driving promotion planning or discovering and recommending changes to plan to reduce the cycle. Currently, you find many SCM applications using the technology to improve the S&OP outcomes. For example, you can use it to predict maintenance or provide the executive’s insights on when the capacity will roll in or out of service.

Originally posted 2022-10-27 15:02:00.