S&OP: one plan for the whole company
Every month, sales, purchasing, operations and finance review demand and supply for the next 18 months together, and management makes the calls. The whole company then works from one set of numbers.
Without S&OP every department has its own number. Sales promises what customers ask for, purchasing orders what it thinks will sell, the warehouse receives whatever arrives, and finance finds out at month-end how much cash is sitting in stock. Everyone works hard, in different directions.
S&OP (Sales and Operations Planning) is the monthly process that puts everyone in front of the same plan. It is not a meeting: it is a sequence of steps, each with an owner, with data going in and decisions coming out. What one step decides is the input of the next.
The key piece is the executive meeting. There, the general manager sees the gap between what the market will ask for and what the company can supply, compares scenarios in money and decides. That decision becomes the official plan everyone executes: the forecast that feeds MRP and DRP, the purchasing budget and the service targets.
The stage has three views. The monthly cycle shows who does what each week. The horizon shows how far ahead you look and what can still change in each stretch. The executive meeting puts you in the general manager's chair facing a peak season.
The process, step by step
Each step has an owner, a fixed date in the calendar, data going in, a topic to discuss, data coming out and decisions. Open each step for the detail.
- Month close and data (business days 1–3)Sales, inventory and purchases are closed. History is updated, outliers cleaned and the statistical forecast runs. Owner: demand planner, with IT support.
1Product reviewWhat will we sell, and what do we stop selling?Days 4–5 · meeting on day 5
Review the portfolio before talking numbers: new products, part-number supersessions, lines being discontinued and supplier changes. If a new product is not raised here, nobody forecasts it or buys it in time.
Owner: Commercial manager (portfolio owner) · Participants: S&OP coordinator, demand planner, purchasing, finance · Duration: 1 hour
In (data)
- Launches and changes from the brands you represent
- Products with no sales in 6–12 months
- Supersessions and obsolete part numbers
- Margins by line
What is discussed
- New products and their start date
- Products to discontinue and what to do with their stock
- Substitutions and equivalents
- Supplier risks by line
Out (data)
- Calendar of launches and exits
- List of products to clear
- Portfolio assumptions for the forecast
Decided
- Which products come in and when
- Which products go and how their stock is cleared
2Demand reviewHow much will customers buy over the next 18 months?Days 6–8 · meeting on day 8
Turn the statistical forecast into a consensus forecast. The system proposes from history; sales and marketing adjust it with what they know about the market: projects, tenders, customers coming or going, promotions.
Owner: Demand planner (runs it) · Commercial manager (signs off) · Participants: Key account sellers, marketing, S&OP coordinator, finance · Duration: 1.5 hours
In (data)
- Statistical forecast by family and branch
- Actual sales vs. last month's forecast (accuracy and bias)
- Open projects, tenders and quotes
- Promotion and pricing plan
What is discussed
- How well we forecast last month and why we missed
- Sales adjustments, each with a written assumption
- Big risks and opportunities
- Unconstrained demand: what the market would ask for
Out (data)
- Unconstrained consensus forecast (units and dollars, 18 months)
- List of assumptions and risks
- Accuracy and bias by family
Decided
- Which forecast adjustments are accepted
- Which demand risks go up to the executive meeting
3Supply reviewCan we supply that demand?Days 9–12 · meeting on day 12
Check the consensus demand against what can be brought in and moved: supplier lead times and allocations, warehouse capacity, fleet and staff, money available for purchasing. This is where the gaps show up.
Owner: Purchasing and logistics manager · Participants: Warehouse lead, transport, supply planner, finance · Duration: 1.5 hours
In (data)
- Consensus forecast
- Current stock and open orders
- Lead times and allocations by supplier
- Warehouse, fleet and shift capacity
- MRP and DRP results
What is discussed
- Month-by-month gaps between demand and supply
- Suppliers at risk or late
- Options: buy ahead, second supplier, overtime, transfers
- Cost of each option
Out (data)
- Constrained supply plan
- Gaps quantified by month and family
- Solution scenarios with their cost
Decided
- Which gaps are solved within the area
- Which scenarios go to the pre-S&OP
4Financial reviewWhat is this plan worth in money?Days 13–14 · meeting on day 14
Translate the plans into sales, margin, inventory and cash flow, and compare them with the budget. A plan that hits service but doubles the stock may not be acceptable.
Owner: Finance manager · Participants: S&OP coordinator, purchasing, commercial · Duration: 1 hour
In (data)
- Consensus forecast in dollars
- Supply plan and scenarios
- Annual budget
- Holding and freight costs
What is discussed
- Plan vs. budget: sales, margin, inventory
- Working capital needed each month
- Cost of each supply scenario
Out (data)
- Financial projection of the plan (P&L and inventory)
- Gap to budget
- Scenarios valued in money
Decided
- Which scenarios are financially viable
- Inventory and purchasing limits to respect
5Pre-S&OPWhat do we recommend to management?Days 15–16 · meeting on day 16
The step owners reconcile demand, supply and finance into one proposal. They solve what they can, and bring to the executive meeting only the decisions that need management, with options and numbers.
Owner: S&OP coordinator · Participants: Commercial, demand planner, purchasing and logistics, finance · Duration: 2 hours
In (data)
- Consensus forecast
- Supply plan and gaps
- Financial projection and scenarios
What is discussed
- Reconcile one plan
- Resolve conflicts between departments
- Build 2–3 scenarios for what could not be resolved
- Prepare the executive deck
Out (data)
- Recommended integrated plan
- Pending decisions with options and money impact
- Executive deck (one-page dashboard)
Decided
- What is recommended for each pending decision
- What was settled without escalating
6Executive S&OPWhat do we decide, and who carries it out?Days 18–19 · meeting on day 19
The general manager reviews performance, gaps and scenarios, and decides. It is a short decision meeting, not a data review. It ends with an approved plan and a list of actions with owner and date.
Owner: General manager · Participants: Sales, purchasing and logistics, operations and finance managers; S&OP coordinator · Duration: 1.5–2 hours
In (data)
- Executive deck from the pre-S&OP
- Monthly KPIs: service, accuracy, inventory, plan adherence
- Pending decisions with scenarios
What is discussed
- Last month's performance
- Gaps and risks over the next 3–18 months
- Choose between scenarios
- Approve the plan
Out (data)
- Approved demand and supply plan (the official plan)
- Service and inventory targets
- Action list with owner and date
- Budget update if needed
Decided
- Which scenario is executed
- Investment in stock, suppliers or capacity
- Priorities when there is not enough for everyone
- Price changes or promotions
- Publish and execute (business days 20–22)The approved plan is loaded into the system: the consensus forecast feeds MRP and DRP, purchasing releases orders and each owner starts their actions. Owner: S&OP coordinator.
Who does what
Each step has exactly one person accountable. If everyone is accountable, nobody is.
| Role | Product review | Demand review | Supply review | Financial review | Pre-S&OP | Executive S&OP |
|---|---|---|---|---|---|---|
| General manager | I | I | I | I | I | A |
| Commercial manager | A | A | C | C | C | C |
| Demand planner | C | R | C | I | C | I |
| Purchasing and logistics manager | C | I | A | C | C | C |
| Warehouse and transport | I | I | R | I | C | C |
| Finance manager | C | C | C | A | C | C |
| S&OP coordinator | R | C | C | R | A | R |
A = approves and answers for the result · R = does the work · C = consulted · I = informed
The final decision
The executive meeting ends when there is an approved plan. These are the decisions that typically come out of it:
- The official demand plan for the next 18 months (the one MRP, DRP and purchasing use)
- How each gap is closed: build ahead, second supplier, promotion, or accept losing sales
- Service level and inventory targets by family
- Investments: working capital, warehouse space, fleet, new suppliers
- Allocation priorities when there is not enough for every customer
- Action list with owner and date, reviewed in the next cycle
The horizon: why 18 months
S&OP looks far ahead because big decisions take time to work. Finding a second supplier, expanding the warehouse or negotiating an annual contract takes months. If you only look at next month, the problem arrives before the solution.
That is why the plan is made by product family and by month, not by part number and by day. Management does not need to see 1,000 parts: it needs to see filters, engine parts, equipment, and how much money and capacity each family asks for.
The horizon's zones say what can be decided in each stretch. The near term is already committed; the far term is where the game is won. Every month the horizon rolls: the finished month drops off, a new one is added at the end and the cycle starts again.
What is measured every month
| Forecast accuracy | How close the forecast was to actual sales (1 − percentage error) | Demand planner |
| Forecast bias | Whether you systematically forecast too high or too low | Commercial manager |
| Service level | Share of orders or lines delivered complete and on time | Purchasing and logistics |
| Days of inventory | How many days of sales are sitting in the warehouse | Finance |
| Plan adherence | Purchases and transfers executed vs. what was approved | S&OP coordinator |
| Actions closed | Share of last cycle's actions finished on time | General manager |
Common mistakes
- Turning the executive meeting into a data review: management should decide there, not discover the numbers.
- Discussing part numbers instead of families: the meeting drowns in detail.
- Sales bringing its own number separate from the consensus forecast.
- Skipping months when things get busy: that is exactly when it is needed most.
- Looking only at next month: the decisions that close gaps take time.
- Leaving the meeting without owners or dates.
Try this
What to remember
- S&OP is a six-step monthly process, not a meeting: each step has an owner, a date, input data and output decisions.
- The result is one official plan used by sales, purchasing, warehouse and finance.
- You plan 18 months ahead by product family, because big decisions take months to work.
- The executive meeting chooses between scenarios with numbers in money: service, margin and inventory.
- Closing a gap always costs something; S&OP is how you pick the cheapest cost before the problem arrives.