The document describes the sales and operations planning (S&OP) process. It consists of 5 phases: 1) data collection, 2) demand planning, 3) supply planning, 4) pre-meeting, and 5) executive meeting. The process aims to integrate customer marketing plans with supply chain management to provide strategic direction. It allows management to balance demand and supply on an ongoing basis and make timely decisions to impact profitability.

1. G.D.Pawan Kumar
gdpawan@gmail.com
SALES AND OPERATIONS PLANNING - PROCESS

2. GDPK
SALES AND OPERATIONS PLANNING-PROCESS
Introduction:
 Sales and Operation Planning is known as S&OP.
 It has evolved out of SCM and aims at demand-supply
management with active involvement by top Management .
 It has a strong base in Production Planning techniques.
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3. GDPK
SALES AND OPERATIONS PLANNING-PROCESS
Definition:
 APICS Dictionary defines S&OP as a process that provides
management the ability to strategically direct the businesses
to competitive advantage on a continual basis by integrating
customer focused marketing plans for new and existing
products with the management of supply chain.
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WHAT EXPERTS SAY ABOUT S&0P
 In the words of Majumdar & Fontanella (2006) , S&OP is a set of
processes that enable a company to respond effectively to demand
variability and take timely decisions which could have direct impact
on profitability, customer satisfaction and the product portfolio.
 In the view of Lapide (2004), S&OP process is a collaborative effort
leading to consensus and accountability of a Cross Functional Team
(CFT).
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SALES & OPERATIONS PLANNING (S&OP)
PROCESS
 The model designed is based on framework proposed by
Thomas F. Wallace and Robert A. Stahl and comprises of
five Phases
1. Data Collection Phase
2. Demand Planning Phase
3. Supply Planning Phase
4. Pre- meeting Phase
5. Executive meeting Phase
The Process is explained in the following slides.
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6. GDPK
S&OP PHASE 1 - DATA COLLECTION PROCESS
Phase 5
Executive Meeting
Phase 4
Pre-meeting
Phase 3
Supply Planning
Phase 2
Demand Planning
Phase 1
Updating info with actual
Demand & Supply data,
Data Collection
incl Inventory , Generating
info for new forecast etc.
Figure 1
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S&OP PHASE 1 - DATA COLLECTION PROCESS
 This is the Phase 1 of the process which begins in the first
week of each month .
 Data on sales, production , inventory from plants , Internal
requisitions from regional offices , direct customer orders
and from warehouses is collected and compiled by sales
planning department for preparing the new sales forecast .
 The information is segregated under category ,customer
and warehouse both in units and value terms.
(See Figure 2 on the next
slide)
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S&OP PHASE 2- DEMAND PLANNING PROCESS
Phase 5
Executive Meeting
Phase 4
Pre-meeting
Phase 3
Supply Planning
First Cut Management Forecast Phase 2
in Units & Rupees for next 15 to
18 months is prepared., Demand Planning
Assumptions and other info etc
are listed out. Phase 1
Updating info with actual
Demand & Supply Data Collection
data, incl
Inventory, Generating info
for new forecast etc.
Figure 2
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S&0P PHASE 2 -DEMAND PLANNING PROCESS
 From information received from Phase 1, sales team at
the Head Office prepares new forecast spanning next
fifteen to eighteen months. This is called Management
Forecast.
 All information available from trade, industry, competition
and customers are factored in while preparing the new
forecast.
 The data would be under different families both in units
and rupees terms and covers After Market as well as OEM
customers.
Contd…..
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S&OP PHASE 2- DEMAND PLANNING PROCESS
CONTD…….
 Assumptions made are noted and circulated as part of
the report.
 The demand planning phase is converted into rupee
terms to compare with the Quarterly/Half yearly /Annual
Business Plan.
 Discussed at the VP-Sales level to check for veracity and
to ensure „Ownership‟ of the Forecast.
 The Spread Sheet containing the updated management
forecast becomes the input document for the Supply
Planning which is Phase 3 of the process.
( See Figure 3 on the next
slide).
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S&OPM PHASE 3 –SUPPLY PLANNING PROCESS
Phase 5
Executive Meeting
Phase 4
Pre-meeting
Phase 3
Resource Requirements plan
,capacity constraints, Vendor & RM Supply Planning
issues etc are looked at .
Phase 2
First Cut Management Forecasts in
Units & Rupees for next 15 to 18 Demand Planning
months is prepared . Assumptions
and other info etc are listed out. Phase 1
Updating info with actual
Demand & Supply data, incl
Data Collection
Inventory, Generating info for
new forecast etc.
Figure 3
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12. GDPK
S&OP PHASE 3 - SUPPLY PLANNING PROCESS
Supply planning reflects the ability of the company to support
the forecast. The activities involved are-
1.Review of Actual Supply with Plan ,
2.Validate or Modify Assumptions
3. Prepare Rough cut Capacity Planning
Other activities include -
 Review of forecast by the Production Planners of plant(s)
for availability of RM, capacity, labour and other relevant
issues .
 The internal and external constraints are studied carefully to
ensure customer supplies and quality levels.
 Issues involving financial outlay like capacity enhancement
requiring approvals at Phase 4/5 are reviewed.
(See Figure 4 next 12

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S&OP PHASE 4- PRE(LIMINARY) MEETING
Phase 5
Executive Meeting
Decisions on balancing Demand /Supply,
Recommendations, What if Scenarios, Phase 4
Agenda for the Phase5 meeting for
Executive decisions, etc are worked Pre-meeting
out.
Phase 3
Resource Requirements plan ,capacity
constraints, Vendor & RM issues etc Supply Planning
looked at.
Phase 2
First Cut Management Forecasts in
Units & Rupees for next 15 to 18 Demand Planning
months is prepared. Assumptions,
and other info etc are listed out. Phase 1
Updating info with actual Data Collection
Demand & Supply data, incl
Inventory, Generating info for
new forecast etc.
Figure 4
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14. GDPK
S&OP PHASE 4 - PRE- MEETING PROCESS
 Issues which are not resolved and agreement not reached
due to serious concerns of delivery, capacity, quality etc are
compiled by the Team in this Phase for decision at the
Executive Meeting of Phase 5.
The output documents of Phase 4 would contain.
1. A recommendation on increasing or decreasing the sales
plan.
2. A recommendation on increasing or decreasing the
Production plan.
3. NP Development Issues.
4. Resource requirements in terms of manpower, number of
shifts offloading downsizing etc.
Contd….
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S&OP PHASE4 - PRE-MEETING PROCESS
CONTD……
 The discussions would be family wise as well as individual
sizes critical in nature.
 Decisions for balancing of demand with supply are taken.
 Where conflicts persist, recourse to yield management is
taken by playing „What-if‟ scenarios.
 Finally, the financial outlook of the sales plan with Annual
Business Plan is compared.
 The Agenda for Phase 5 ( Figure 5 on the next slide) is
prepared by team and should cover industry review , sales
and production review, customer ratings review etc.
 Should be considered as a „ownership‟ taking meeting by
all concerned. ( See Figure 5 on the next
slide)
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S&OP PHASE 5 - EXECUTIVE MEETING PROCESS
Decisions of Phase 4 are reviewed,
Changes authorized , decisions to adjust Phase 5
S&OP with Business Plan and updated
Rolling Plan Etc. are undertaken Executive Meeting
Decisions balancing Demand Phase 4
/Supply, Recommendations, What if
Scenarios, Agenda for the Phase5 meeting
Pre-meeting
for Executive decisions, etc are worked out. Phase 3
Resource Requirements plan
,capacity constraints, Vendor & RM
Supply Planning
issues etc are looked at . Phase 2
First Cut Management Forecasts in
Units & Rupees for next 15 to 18
months is prepared.
Demand Planning
Assumptions, and other info etc are
listed out. Phase 1
Updating info with actual Data Collection
Demand & Supply data
, Inventory, Generating info
for new forecast etc.
Figure 5
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S&OP PHASE 5- EXECUTIVE MEETING PROCESS
Executive Meeting is held once a month and is chaired by
the President / President designate. The Agenda of this
meeting could be :
 Review of outstanding issues of the previous month.
 Review of KPI‟s which include important operational, financial and
strategic indicators. Authorize expenditures.
 Review of products-wise sales , demand , inventory , assumptions ,
scenarios worked out etc.
 Review of NP and Special Projects against resources, attainments
etc.
 Accept, reject or alter the decisions of the Preliminary Meeting.
 Review strategies and policies in order to balance demand and
supply.
Contd….. 17

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S&OP PHASE 5 - EXECUTIVE MEETING PROCESS
CONTD.....
The minutes of the meeting should be sent out within 2 days to all the
concerned for effective communication and implementation of the
decisions taken.
Attendees of Executive Meeting would be VP‟s of sales &
marketing, heads of production, planning , R&D, finance, head
strategic sourcing, sales planner and S&OP champion ,process
owner and IT rep .
Schorr (2008), calls the executive meeting as Management Business
Review (MBR) and informs that the meeting is not meant to be a
“discovery meeting but rather a decision making and direction setting
meeting”.
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IMPLEMENTATION OF S&OP- TIME FRAME
 Stage 1 meeting of Data Collection should be held around 3rd of every
month,
 Stage 2 meeting of Demand Planning should be held around 7th,
 Stage 3 of Supply Planning is to be targeted around 13th ,
 Stage 4 of Preliminary Meeting is to be held after 5 to 6 days, that is
around 18th of the month and
 Stage 5 of final Executive S&OP Meeting is to be planned around 25th
of the month .Alternatively , a particular day in respective weeks may be
selected.
 The Participation of President or her designate is essential.
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S&OP PROCESS - ADVANTAGES
 The forward planning by fifteen to eighteen months
beyond the current month( in total 24 – 27 months)
provides greater visibility for taking timely corrective
action.
 KPI‟s like delivery compliance , profit margins per family
or customer, inventory turns, variance from ABP and a
host of other things could be tracked /monitored for
assessing the performance .
 As the data is captured in a single sheet it helps in
highlighting only necessary information avoiding
unnecessary elements.
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S&OP PROCESS - EXPECTED BENEFITS
1. Higher Productivity with stable production.
2. Improved Team Work.
3. Better Demand – Supply balance.
4. A single plan with one set of numbers guide the company.
5. Better visibility of future opportunities and threats.
6. Improved control of business.
7. Greater accountability of each department.
8. Improved customer service.
9. Lower inventory levels.
10. A monthly snap shot of business plan.
11. Improved communication between suppliers and customers.
12. Faster decision making by top management.
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S&OP AS MANAGEMENT BY EXCEPTION
Reekie(2005),has a final word when he says that effective
exception management is a key to successful
implementation of S&OP process as it is impractical to go
through and resolve issues for thousands of products on
monthly basis. The solution would be to prioritize and focus
on issues falling beyond pre defined boundaries.
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REFERENCES
 Majumdar Maha and Fontanella John, “The Secrets to S&OP Success”
,Supply Chain Management Review,(2006)
 Lapide ,Larry, “Sales & Operations Planning Part I: The Process” The Journal
Of Business Forecasting,(2004)
 Wallas Thomas F and Stahl Robert A.,” Sales & Operations Planning- The
How -to Handbook”, T.F.Wallace & Company, (2008)
 Schorr John,” Integrated Business Management”, Business Excellence,(2007)
 Reekie, Stuart ,”How to Extend SAP to Create a Global, Integrated S&OP
Process, Integrated Supply Chain”, Air Products, Steelwedge, Inc, (2005)
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24. G.D.Pawan Kumar
gdpawan@gmail.com
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