{"id":16167,"date":"2022-06-14T14:36:53","date_gmt":"2022-06-14T18:36:53","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/?p=16167"},"modified":"2025-06-24T09:48:56","modified_gmt":"2025-06-24T13:48:56","slug":"sales-and-operations-planning","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/sales-and-operations-planning\/","title":{"rendered":"Sales and Operations Planning – What Is It, and Why Should You Care?"},"content":{"rendered":"
What is S&OP?<\/h5>\n

S&OP stands for Sales and Operations Planning<\/strong>. In simple terms, it is a decision-making process that ensures that the tactical plans in all business functions are aligned and in support of the company strategy, business plans, and goals. A properly implemented S&OP process achieves this alignment. It is done through routine reviews and conflict resolution dealing with market demand and supply resources, keeping them in balance by re-planning quantitatively across an extended rolling horizon.<\/p>\n

Originally the term S&OP was used to identify aggregate planning (i.e., volume). A lot of people, and a lot of literature, still retain this perspective. Many, however, have blurred the distinction between volume and mix. Short- and long-term horizons have come to be considered simultaneously in one discussion (this major issue will be tackled in a future column). In this broader perspective, the process includes executive S&OP, Material Requirements Planning, Master Scheduling, Plant and Supplier Scheduling, Manufacturing Capacity, Outsourcing, Distribution and other detailed planning\/coordination (1).<\/p>\n

Companies like have found S&OP especially useful for aligning rapid-growth sales channels with supplier responsiveness and operational efficiency.<\/p>\n

To eliminate confusion between past and current definitions, the term executive Sales and Operations Planning<\/strong>, or eS&OP<\/strong>, was coined by Thomas F. Wallace and Robert A. Stahl. The word \u2018executive or e\u2019 is an adjective, not part of the actual term. It intends to add clarity, referring to the executive or volume element of the morphed definition. The term first appeared in print in the 3rd Edition of their book \u201cSales and Operations Planning \u2013 The How-To Handbook\u201d (T.F. Wallace and Co., 2008). This is now a generally accepted definition that appears in the APICS Dictionary 13th Edition (October 2010) and onward.<\/p>\n

The Mission of eS&OP<\/h5>\n

The executive component to Sales and Operations Planning is top management\u2019s portion of the overall S&OP process. It is a decision-making activity involving the leader of the business (President, General Manager, COO or Managing Director), his\/her staff, a number of middle managers and specialists. The mission (2) of eS&OP is to:<\/p>\n

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  1. Balance supply and demand at the aggregate level<\/li>\n
  2. Align operational planning with financial planning<\/li>\n
  3. Link strategic planning with day-to-day sales and operational activities<\/li>\n
  4. Act as a forum for disciplined discussion around setting policy, strategy, risk and budget changes<\/li>\n<\/ol>\n

    , as a case example in digitally mature industries, has adopted eS&OP processes to bridge the gap between customer demand and capacity planning with great success.<\/p>\n

    It is a multi-step process involving demand planning, supply planning, middle and top management meetings resulting in decision-making and authorization. This process occurs monthly, displaying information in terms of production units and revenue ($). The time horizon starts at the cumulative material lead time (demand time fence) across a horizon typically not shorter than 18 months.<\/p>\n

    The 5-step eS&OP planning process includes:<\/p>\n