Sales and operations planning (S&OP) is one aspect of supply chain management which aims to create a consistent, consensus-based business plan and can therefore be considered an integrated business management process. It draws input from the main functional areas of an organization, including sales, marketing, manufacturing, distribution, and finance.
Cross-functional collaboration leads to plans that all stakeholders understand and are committed to supporting. The sales and operations planning process includes an updated forecast that leads to a sales plan, a production plan, a stock plan, a customer lead time plan (backlog), a new product development plan, a strategic initiative plan, and a resulting financial plan. The planning frequency and planning horizon depend on the specifics of the industry.
Short product lifecycles and high fluctuations in demand require a stricter S&OP than products that are consumed continuously. When used well, the S&OP process provides a communication tool between sales, planning, and production of a company.
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