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The Sales Operations Planning (S&OP) is management's statement of intention and is the master scheduler's authority to organize the use of the capacity and the supply of material to meet the plan. It also provides the means of comparing resources available against those required and this check is carried out by using resource requirements planning - an interactive what-if module.
The plan takes into account the fact that forecasts and plans can vary and, therefore, a provision is made for adjustments. This, difference is taken into account by storing the well-determined level of extra finished goods.
The significance benefits achieved through effective S&OP are:
S&OP is a proven process to bridge the gap between manufacturing and sales. In fact, S&OP is likely to reduce the quantity of communication, but substantially increase the quality of communication between manufacturing and sales regarding demand and supply.
A real benefit of implementing an S&OP effectively is that an adversarial relationship moves to co-existence and ultimately to real teamwork.
Taking into account its features, S&OP in a way helps in driving the ERP strategy. Today's business demands close contact with the customers and working with lesser inventory, S&OP helps in both. It is called a "People Process', and thus is significant for people across departments in the organization.
S&OP stands for sales and operations planning. This function targets balancing supply and demand within the business. This process starts with the sales forecast, then a production plan to meet the forecasted sales if possible due to availability of raw material and components and production capacities. That banlance is reviewed periodically (usually monthly) to take actual performance and forecast changes into account to produce the next months production plan.
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