Above is a general structure and sequence of the Sales and Operations Planning Process.

In the S&OP planning process, the first step in the monthly cycle would be to review the key performance indicators (KPIs), demand, supply, and metrics across the entire supply chain. This marks the beginning of the monthly cycle. 

Sales and operations planning typically follows a monthly cadence, with different activities occurring from week one through week four. It starts with compiling and reviewing KPIs, metrics that measure performance across the supply chain. 

Based on the insights that's unearthed from the KPIs, both in terms of service levels, inventory issues, stockouts, excess inventory, and forecast accuracy, the next step would be providing insights into the data science or modeling team. This step involves analyzing the models to determine if any adjustments are needed. 

Model tuning or adjustments by data science would be the first step to review by exception because data and business changes all the time. The next step is to use the baseline generated from a statistical or machine learning model and provide this information as a baseline to the regional sales teams. 

The regional sales teams or the customer teams then develop a customer-level forecast based on the selling activity that is happening on an ongoing basis. This baseline forecast serves to be one indicator or general baseline for the review, but further adjustments and refinement of the forecast will happen based on discussion with the customers, and key stakeholders.

Further, the regional sales teams formulate the forecast at both the account and customer levels. It could be customer SKU or customer product family at slightly higher level.

At the end of the day, you want to gather market intelligence from the customers and market. This information is then passed to a product forecasting team, often referred to as the Business Unit (BU) team, responsible for forecasting at the category level.  

Further, they would review the account-level forecast for each SKUs as one data point, but primarily coordinate with the marketing team to consider new product plans, product transitions, discontinuations, and other factors. This team triangulates between the regional information that comes from the sales teams at the account-level and the marketing information and plans that are put together at the product-level.

Subsequently, this data is integrated into a demand planning or a reconciliation process. Demand planners review both product-level and account-level forecasts and engage in discussions with various demand teams to understand the financial and supply chain impacts. 

The forecast reconciliation process is critical. Most companies would call it a demand dialogue process or a demand consensus process within S&OP. So, the key step in the S&OP is initially to have a demand consensus. Once this is accomplished, the information is passed to supply planners during the second week to formulate with a supply response.

The supply response is based on running a rough-cut plan and a production plan. The final step would be a demand supply dialogue to identify any issues and how they can be solved collaboratively. This information may serve as an input to both the sales and the product teams to see how they can resolve potential stock out issues and supply issues, or what kind of programs can be implemented to address an excess supply situation.

Now, this is a supply-driven process, but it is also market-facing, allowing you to return to the market and offer various promotions to move excess inventory. This is an ongoing process involving demand and supply, and the dynamic is continuously evolving between product teams, customer teams, and the supply teams.

This forms a holistic S&OP process where the cycle rotates every month and sometimes within the month to address either excess inventory situations or stock out situations caused by demand surges. A tactical version of demand-response will be orchestrated through the Sales and Operations Execution (S&OE) process within the month. 

For the detailed information, please check out the video below: 

Valtitude provides consulting services and solutions implementation in Demand Planning, Integrated Business Planning (IBP), S&OP, and Supply Chain Optimization.

Click here to shedule a 30-minute demo with Valtitude’s industry experts today and discover how we can help you transform your supply chain!