Sales and Operations Planning (S&OP)

The DemandCaster Sales and Operations Planning (S&OP) is ideal for manufacturing, distribution, and CPG companies running Sales and Operations Planning or integrated business planning.

The S&OP add-on product builds on either of the two core platforms: Retail and Distribution Advanced Forecasting and Planning or Manufacturing Advanced Forecasting and Planning.

S&OP can layer promotion plans as well as use POS and other external data to improve the accuracy of the plan. The demand plan is then translated to a location specific supply plan where the plans may be reviewed with a sandboxed requirement plan and capacity plan to help uncover potential material or capacity constraints. The output of S&OP is an approved master production/procurement plan that drives your Enterprise Resource Planning’s (ERP's) or DemandCaster's Material Requirements Planning (MRP).

DemandCaster Demand Planning View

The DemandCaster Sales and Operations Planning (S&OP) Platform is another name for Demand Planning and Supply Planning or Integrated Business Planning. The core DemandCaster Advanced Forecasting and Planning platform is designed to produce item level forecasts by taking an items total history and projecting a demand forecast.

The focus of the core Advanced Planning and Forecasting platform is on the supply side with inventory optimization, requirement planning, and distribution planning. The concern is that in most cases the sales plans are not tightly integrated with the supply side forecasts.

S&OP facilitates the involvement of sales and marketing in the process and eliminating the need for manual spreadsheets:

  • Edits to forecasts can be made at any level of the hierarchy (customer, item, product class) and the changes roll top down and bottom up.
  • Pricing may be modified to change revenue projections.

Promotion and one-time events may be layered in and most importantly actual to plan performance is tracked on an ongoing basis.

3 Myths About Sales and Operations Planning Systems

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Why Sales and Operations Planning (S&OP)?

S&OP is the alignment of supply and demand with financial objectives. It’s a dynamic, integrated business management process through which management continually works to align all functions of the organization. S&OP systems are an enabler to the people side of the process. Industry analysts conservatively estimate that S&OP systems can:

  • reduce inventories by 5-10%
  • increase inventory turns by 5-10%
  • increase service levels by 5-10%.
  • All of these combined improvements can help boost top-line growth by 2-5%.

DemandCaster S&OP

Figure 2: DemandCaster 5-Step S&OP Process

What is involved in the S&OP process?

The S&OP process follows a five-step process and includes an updated sales plan, promotion plan, production plan, inventory plan, new product development plan, and a resulting financial plan—designed to achieve the financial and strategic objectives of the company.

In most companies, the planning frequency is monthly and planning horizons are 12 months. Some circumstances require a more frequent S&OP process schedule.

A properly implemented S&OP process routinely reviews customer demand and supply resources and “re-plans” quantitatively across an agreed rolling horizon. The re-planning process focuses on changes from the previously agreed sales and operations plan. Although, it helps the management team to understand how the company achieved its current level of performance.

DemandCaster Sales and Operations Planning

DemandCaster S&OP Process Flow

Figure 4: DemandCaster S&OP Process Tool Bar

DemandCaster offers a robust S&OP platform, designed around a traditional 5-step planning process:

  1. Data Gathering: Collect information on past sales, analyze trends, and report forecasts. This happens automatically via the regular data upload process and built in reports. Run Pareto analysis to assign forecast parameters (i.e., item vs. group).
  2. Demand Planning: Validate forecasts, understand sources of demand, account for variability, and revise customer service policies; Layer on promotion plans, one-time events, and new product and customer launches in the 4-P Trade Promotions component. Please visit the Demand Planning page to learn more.
  3. Supply Planning: Assess the ability to meet demand by reviewing available capacity, inventory, and scheduling required operations. Set inventory targets and plan supply by level loading and/or demand chase. Please visit the Supply Planning page to learn more.
  4. Reconciliation of Plans: Match supply and demand plans with financial considerations.
  5. Finalize and Release: Finalize the plan and release it to implementation.

Watch this quick overview video to learn more: