In a nutshell: Sales and Operations Planning

The aim of a Sales and Operations Planning (S&OP) process is to ensure the company’s own supply readiness as well as possible in the event of strongly fluctuating market requirements, unreliable procurement quantities or a lack of resources, such as capacities or funds.

If sufficient material and resources cannot be provided for the necessary market requirements and if the anticipated or already known market requirements cannot be met on the desired dates and in the desired quantities, sales and operations planning culminates in “shortage management”. Customer orders must be prioritized and delivery quantities adjusted.

In the run-up to this final strategic decision-making step, many calculation and accounting steps with extensive data are required. A prerequisite for an efficient S&OP process is therefore usually the use of suitable software. The use of spreadsheet tables is only sufficient for a few items and simple manufacturing processes.

Our tip:

A company does not always need an S&OP process. To avoid repairing problems caused at the beginning of the process chain using S&OP at the end of the process chain, you should first check whether it is sufficient,

  • correctly adjust the “logistics business model”,
  • improve the quality of automatic demand forecasts,
  • correctly set planning and scheduling parameters in the ERP system.

If an S&OP process is required, then the tools you use to support your S&OP process must be so easy to use and so automated that you can run through the S&OP cycle once a month.

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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