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Complete Guide to Sales and Operations Planning

Posted in: Buyer Engagement, Sales and Marketing Management, Sales Training, Coaching, and Onboarding

Are you overwhelmed by inaccurate forecasting, inventory surplus, and fragmented team communication? You’re not alone. This is where the importance of Sales and Operations Planning (S&OP) becomes evident.

This guide will walk sales teams through the details of S&OP. We will cover best practices, S&OP maturity tips, success metrics, common challenges, and misconceptions.

What Is Sales and Operations Planning?

Sales and Operations Planning (S&OP) is a cross-department process that helps ensure companies have the right amount of products to satisfy customers without extra stock piling up. S&OP’s intention: to align sales operations with long-term goals.

Here’s how it breaks down:

  • Sales planning process: Teams typically use a sales analytics platform to thoroughly analyse past sales, industry trends, and marketing plans to forecast future product sales.
  • Operations planning process: Ensure resources, such as raw materials and manufacturing capacity, are available to meet projected customer demand.
  • Meeting and balancing: Different departments collaborate to solve associated issues, like adjusting warehouse capacity or developing risk management strategies for supply chain disruptions. 90% of McKinsey survey respondents say they want to increase resilience further, and almost three-quarters expect to increase the budget allocated to resilience-related actions.
  • Action plan: Finalise and implement a detailed production plan.

S&OP has evolved to be more than just an integrated business planning process. It’s a way of life for mature organisations – a culture essential for adapting quickly to market changes. By including Sales and Operations Execution (S&OE), S&OP can tackle short-term challenges and keep sight of long-term goals, making it a comprehensive business strategy.

3 Components of S&OP

S&OP’s success hinges on people, technology, and process. The people must collaborate. The technology, including ERP and AI, ensures forecast accuracy. The process is a structured, systematic approach from data collection to action. Each component contributes to better decision-making.


People from across departments, including sales, finance, operations, and supply chain, are necessary for S&OP to function. This cross-functional team brings different views and skills. For S&OP success, you must have committed leadership, clear roles, and a culture of collaboration and trust.

To highlight the evolving nature of S&OP as part of the job: 70% of sales professionals now say S&OP is a key part of their job responsibilities. This shift indicates the growing recognition of S&OP’s value beyond traditional operational roles and its significance in planning and execution.

S&OP roles include:

  • Executive leader
  • Sales leader
  • Marketing leader
  • Demand planner
  • Operational leader
  • Supply chain leader


S&OP software and technology support tasks like real-time data analysis, forecasting, and planning for uncertainty. This includes enterprise resource planning (ERP) systems, which combine various business activities into one system, and AI-powered dashboards to help predict future trends.


The process guides S&OP from start to finish. It includes everything from data gathering and analysis to strategy and implementation. The process should adapt to changes yet provide stability.

Why a Well-Executed S&OP Matters for Every Business

A well-executed S&OP process helps navigate business complexities. It is the frontline defence against challenges, from excess inventory to missed sales opportunities. Integrating S&OE with S&OP helps balance short-term tactics with long-term goals, ultimately contributing to enhanced sales productivity.

Michael Youssef, Senior Director Analyst at Gartner, emphasises the importance of S&OP, stating, “S&OP is the single most important and critical cross-functional process. If S&OP is done properly, it leads to significant returns, including increased revenue and profitability.” This highlights the importance of integrated S&OP.

Without an S&OP process, businesses face a range of disruptions, from minor inconveniences to significant failures. These disruptions can manifest as excess inventory, resource bottlenecks, missed sales opportunities due to misaligned production and demand, siloed decision-making, or an inability to adapt, resulting in lost competitive edge and potential revenue.

Ultimately, S&OP is more than just a planning process; it’s a business management tool that helps prevent excess operational costs and hits to revenue and profitability. This significance is further echoed by current trends in digitisation efforts, which now prioritise capturing the demand signal as the next challenge in supply chain management. According to recent McKinsey surveys, the top two priorities for digital investments are demand and supply planning, cited by 74% and 69% of respondents, respectively. This shift towards digitisation underscores the critical role of S&OP in adapting to and anticipating market demands.

Top Benefits of S&OP

High-quality S&OP is evident in a company’s performance and culture. If a company is experiencing growth and employees and customers are satisfied, it’s a strong indicator of a healthy and mature S&OP process.

The primary benefits of S&OP include:

1. Informed Decision-Making

S&OP helps businesses make informed product demand and supply decisions. This will help balance inventory with market needs. For example, a retailer might adjust orders based on seasonal forecasts to avoid too much stock.

2. Streamlined Processes

S&OP reduces waste and speeds up production and sales cycles by making operations more efficient. A manufacturer might streamline its assembly line to meet increased demand and ensure on-time delivery every holiday season.

3. Transparency and Cross-Functional Collaboration

S&OP enhances departmental communication, leading to unified goals. For instance, marketing and production teams might collaborate on product launches to ensure availability aligns with promotional activities.

4. Better Sales and Budget Forecasting

Accurate sales predictions and financial planning help companies prepare for future growth. A company might use S&OP to adjust its budget forecast and working capital based on an anticipated increase in demand.

5. Enhanced Inventory Management

A well-planned S&OP helps businesses adjust inventory levels to minimise the risk of production surpluses or shortages, especially when anticipating a new product release.

6. Improve Product Lifecycle Management Process

S&OP equips teams with insights for important product launches and end-of-life management decisions. For example, a tech provider might use S&OP to plan the phase-out of an older version to ensure a smooth transition and market relevance.

7. Improve Customer Service

By meeting aggregate demand, S&OP leads to higher customer satisfaction and loyalty. A retailer might use S&OP insights to ensure popular items are always in stock.

8. Profitability

Optimising sales and reducing manufacturing and delivery costs boosts the bottom line. A company might identify cost-saving opportunities in its supply chain, increasing its profit margins.

S&OP Maturity

The path to S&OP maturity progresses through stages, from basic and disjointed to more refined planning processes. Tactical companies react with little coordination. Over time, they adopt formal processes, improve collaboration, and define roles. Ultimately, strategic businesses plan and respond with agility.

A recent Gartner survey sheds light on a significant challenge in this progression: 27% of respondents indicate their S&OP time horizon is less than 12 months, and 62% have a planning horizon of less than 18 months. This prevalent focus on short-term planning drives tactical plans rather than strategic discussions and decisions during S&OP meetings, limiting the ability to anticipate and prepare for future needs. Decisions like expanding warehouse capacity or negotiating contract volumes with suppliers require long-term foresight well beyond a 12-month horizon. Companies need to mature past the all-too-common short-term planning to grow and compete.

How to Mature Your Sales and Operations Planning

Mature S&OP is important for companies in industries with complex supply chains, changing demand, and intense competition. To improve your S&OP process, consider these suggestions. They will help guide you from basic to advanced process stages.

  • Improve communication: It’s natural for departments to work in silos, focusing on their own immediate needs. Begin by improving how departments talk to each other and start seeking tools that automate simple tasks.
  • Collaborate: Once you start talking, work on cross-department planning together. Use tools that let everyone share information easily.
  • Integrate plans: When sales and operations start working together, use tools that help combine your plans. Set goals that everyone understands and can work towards.
  • Connect everything: Planning should include everyone, even your suppliers. Share market trends and predictive analytics in real time for better forecasting and resource allocation.
  • Incorporate more advanced technology: Finally, use advanced technology like AI to make your planning process data-driven and focused on the future. This helps the organisation supplement or replace reactive measures with long-term ahead of the curve planning.

The aim is a fully integrated S&OP, using data and technology to make smart decisions. Maturation takes organisations from reacting to immediate problems to planning for the future.

In certain cases, it’s okay to maintain a more reactive and less mature S&OP stance. For small businesses, startups, or companies in stable markets with simple products, the need for a sophisticated S&OP process may not be urgent. These organisations benefit from flexibility and the ability to quickly respond to challenges without the overhead of complex planning. However, it’s important to recognise the signs of growth or market changes that necessitate a shift toward a more mature S&OP.

S&OP Process

Sales and Operations Planning Process

The S&OP process guides supply chain leaders in balancing supply with customers’ wants. It helps them adjust S&OE, maintain appropriate stock, launch new products, phase out old ones, make smart investments, and hit goals.

Let’s take a look at the steps in the S&OP process:

Product Data Gathering

This initial stage involves collecting and analysing data. Research and development (R&D), product development, and marketing teams examine market trends, product performance, and upcoming product launches to predict future sales. This phase sets the groundwork for aligning product planning with market expectations.

Demand Planning

Demand planning predicts expected demand with inputs from marketing, sales, and external trends. This forecast aims to create a consensus on future demand. It factors historical data, market trends, and predictive models.

Production and Supply Planning

A supply plan is created in sync with the agreed-upon demand forecast. The aim is to align distribution, manufacturing, and procurement operations to fulfil demand predictions. This involves planning for the unknowns, including capacity constraints and demand variations.

Pre-S&OP Meeting (Plan Reconciliation)

Pre-S&OP meetings align product, demand, supply, and finance plans. These meetings aim to identify and strategise around any significant gaps or discrepancies in the plans. This shared review ensures that all departments are aligned and prepared for the executive S&OP meeting.

Executive Meeting

The executive S&OP meeting is the culmination of the S&OP process, where senior leaders review all proposals. This stage focuses on decision-making, with “what-if” scenarios and risk assessments guiding the discussions. Execs resolve remaining issues and ensure the business’s objectives are met.

The output of the executive meeting is the approved demand and supply plan for implementation.


Following executive team approval, the strategic plans are put into action. This involves coordinating across departments and continuously monitoring KPIs.

S&OP Tips and Best Practices

Navigating S&OP requires coordination across business units, each with unique challenges and inputs. The following best practices act as a guide to coordinate efforts and reduce friction.

1. Foster a Culture that Supports S&OP

Embed S&OP as a core element of your business, driven by leadership and embraced by all employees. It’s instrumental to financial success. For S&OP to thrive, a culture rooted in clear communication, collaboration, and continuous improvement is crucial. Regular meetings, shared tools, and documentation should be standard practice.

2. Refine the Sales and Operations Execution Process

Continuously improve the S&OP process by analysing outcomes, soliciting feedback, and implementing changes when needed. This could mean streamlining data collection methods or adopting new tools to integrate sales forecasts with production and inventory planning.

3. Roll-out Cross Department Training

Implement comprehensive training programmes that promote understanding of the S&OP process across departments. Your training platform could include workshops on data analysis, forecasting techniques, and how different roles contribute to the S&OP process, ensuring everyone understands how their actions impact overall business performance.

4. Include All Internal Stakeholders

S&OP breaks down organisational silos. By connecting the expertise of sales, finance, marketing, supply chain, procurement, and production, S&OP becomes a powerful tool for focusing the entire business on common goals.

5. Ensure Sales and Operations Alignment With Business Strategy

Business goals trump departmental goals. To maintain alignment, regularly reassess and fine-tune sales and operations plans. Organising quarterly alignment sessions can ensure that sales forecasts and production capacity are matched with the business’s long-term objectives. These sessions facilitate review and adjustment as standard practice.

6. Assign Ownership

Designate a champion with a thorough understanding of the business. They should have a broad view of sales, operations, finance, and supply chain to oversee S&OP’s continuity. Typically, a Director of Operations, COO, or a specialised S&OP Manager is well-suited for this role.

7. Maintain Records

Ensure data is always current, and monitor metrics and KPIs weekly to identify any adverse trends that require corrective actions. It’s crucial to keep thorough records of all S&OP meetings, decisions, and outcomes. These records should be available to inform future planning, performance, and accountability.

8. Get Executive Buy-In

Secure support from senior leadership. Executive support helps with access to resources, authority, and visibility. It also ensures that S&OP aligns with the company’s goals.

Debunking Misconceptions About S&OP

S&OP is often shrouded in myths that deter companies. The opportunity to dispel these myths is possible when a company understands the true intention and values of S&OP. Let’s clear up some of the most common misconceptions:

S&OP is Unnecessary

Many view S&OP as an optional extra rather than a necessity. S&OP ensures that all departments move in the same direction, aligning a company’s goals with its operational capacity.

S&OP is Just a Review of Historical Data

S&OP does involve looking at past performance, but it’s far more than a historical review. It uses historical data to predict future demand and supply needs. This helps anticipate market changes, adjust sales strategies, and stay ahead of competitors.

Short-Term Focus

This misconception stems from a focus on immediate issues rather than long-term strategic planning. Short-term is not the intention of S&OP.

Despite S&OP’s importance, many companies still focus on short-term S&OP planning. This can limit the ability to make decisions that require longer lead times, such as new product development and launch. By embracing a longer-term approach, businesses can leverage S&OP for more than immediate operational needs, using it to shape decisions that ensure long-term success and sustainability.

S&OP is Difficult to Manage

Though S&OP might seem daunting due to its cross-function and the need for detailed planning, it’s far from unmanageable. The secret lies in the right team, tools, and leadership commitment. Reduce the complexity with communication, structured processes, and regular review cycles.

Common S&OP Problems and How to Overcome Them

Admittedly, S&OP is not without challenges. It is more complex than many other business processes. However, understanding these challenges helps overcome them. Here are two common issues and best practices to address them:

  • Overcoming time constraints: The S&OP process can be incredibly time-intensive, often at the expense of other duties. This often stems from insufficient, inaccurate, or unavailable data and process problems. To mitigate this, automate data collection wherever possible. Don’t overwhelm the team with endless KPIs and metrics. Simplify the process by focusing on those that genuinely impact business outcomes. Regularly reassess the process to identify and remove redundant steps.
  • Bridging the departmental divide: S&OP involves many people from different departments, sometimes leading to tension from conflicting goals or misunderstandings. To tackle this, work on a collaborative culture that respects differences. Implement cross-functional training programmes to help departments understand each other’s duties and challenges. Use neutral facilitators to help mediate meetings and ensure all perspectives are considered and valued.

Measuring the Success of S&OP

Monitoring and measuring are fundamental to any process, including S&OP. Without metrics, there’s no clear way to identify improvement areas or justify investing in the process. Here’s how you can measure the impact and success of your S&OP efforts:

  • Customer satisfaction: Use surveys and feedback tools to gauge customer satisfaction levels before and after implementing S&OP. An increase in satisfaction indicates better alignment of product availability with customer demand.
  • Inventory costs: Monitor inventory levels and related costs, such as storage and obsolescence. A successful S&OP process should optimise inventory levels and reduce excess stock and associated costs.
  • Sales: Track sales performance and productivity closely. An S&OP process should result in fewer stockouts, driving sales upwards.
  • Operations and business goal alignment: Regularly review how operational activities and outcomes stack up against the entire organisation’s strategic objectives. S&OP success means operations are aligned with the long-term vision and goals of the business, leading to more cohesive and strategic decision-making.

S&OP Made Easy with Highspot

Diving into S&OP doesn’t have to be daunting. It’s all about teamwork, staying proactive, and always aiming for better ways to do things. The use of digital technologies is essential to robust supply chain planning.

Highspot offers the right mix of tools, insights, and training. This ensures your sales team is perfectly engaged with what your business can do and where it aims to go, boosting customer happiness, streamlining operations, and making your operations more resilient.

Let Highspot show you how to make all the pieces fit. Request a demo today.