Sales and Operations Planning
Sales and Operations planning is a cross-functional business process that aligns a company’s demand, supply, and financial plans to balance customer service, operational efficiency, and profitability. It ensures that sales forecasts, production plans, inventory levels, and financial targets are coordinated and achievable.
Think of it as the “bridge” between strategy and execution—making sure what the market wants can actually be delivered by operations within budget and capacity. Key objectives of a sales and operations planning program are:
- Align demand, supply, and financial plans across the organization.
- Improve customer service by reducing stockouts and delays.
- Optimize inventory and production resources.
- Reduce costs and improve profitability.
- Enhance agility to respond to market changes or disruptions.
SCT Advisory supports these critical elements of sales and operations planning:
- Data Aggregation and Reporting Design:
- Demand Planning Inputs – Uses sales forecasts, market insights, promotions, and historical data.
- Supply Planning Inputs – Incorporates production capacity, inventory, supplier capabilities, and logistics constraints.
- Financial Inputs – Supports connections between operational plans to revenue, cost, and profit targets.
- Report and Dashboard Design – Providing a consistent view across stakeholder areas
- Process Facilitation
- Gap Analysis & Scenario Planning – Identifies mismatches between demand and supply, or between operations and financial goals. Explores “what-if” scenarios (e.g., sudden demand spike, supply disruption).
- Executive Review & Decision Making – Cross-functional leaders agree on a consensus plan that balances service, cost, and risk. Decisions include prioritization of products, adjustments to production, inventory positioning, or promotional plans.
With SCT Advisory’s guidance, sales and operations planning projects can deliver significant ROI because it improves coordination across demand, supply, and finance, reducing costs and improving service simultaneously. SCT observes the following ROI opportunities from sales and operations planning initiatives:
- Inventory Reduction (10–20%)
- Improved alignment between demand and supply reduces excess stock.
- Frees up working capital and reduces storage costs. Example: A global CPG company reduced safety stock by 15% after implementing S&OP.
- Improved Service Levels (2–8% OTIF / fill rate increase)
- Consensus planning reduces stockouts and late deliveries.
- Enhances customer satisfaction and retailer compliance.
- Production & Capacity Optimization (5–15%)
- Better visibility of demand vs. supply improves line balancing and resource utilization.
- Fewer production bottlenecks and emergency runs.
- Cost-to-Serve Reduction (5–10%)
- Fewer expedited shipments and emergency production runs.
- Optimized inventory positioning reduces transportation and handling costs.
- Agility & Risk Management (Soft ROI)
- Faster response to demand shifts, promotions, or supply disruptions.
- Reduced financial impact from unexpected events (e.g., supplier delays or market volatility).
- Planning Cycle Efficiency (20–50% faster S&OP cycles)
- Automated workflows and integrated data reduce time spent in meetings and reconciliation.
- Executives can focus on scenario planning and strategic decisions rather than firefighting.
Overall ROI: Companies typically see 2–6x ROI within 12–24 months after implementing structured S&OP processes and supporting systems. Benefits compound when S&OP is integrated with demand planning, supply planning, production planning, and inventory planning.
