Sales and Operations Planning, Part I: The Process

SALES AND OPERATIONS PLANNING PART I: THE PROCESS By Larry Lapide (This is an ongoing column in The Journal, which is intended to give a brief view on a potential topic of interest to practitioners of business forecasting. Suggestions on topics that you would like to see covered should be sent via email to llapide@mit.edu. Ed) The Sales and Operations Planning (S&OP) process has been around for quite some time. I started including it in many of my presentations on forecasting in the mid-1990s. As I polled audiences along the way, I found that about one-third of the early ones had implemented an S&OP at their company, while lately, the number has been hovering over 80%. Clearly the S&OP process was becoming more prevalent over the last decade or so, with a crescendo of interest in the last couple of years. HEIGHTENED INTEREST IN THE S&OP PROCESS An indicator of the interest in the S&OP process is the fact that, according to AMR Research (my former employer), companies have spent over $12 billion in supply chain planning application software over the last 6 years. Yet while spending significant sums of money on S&OP-related software, they were not seeing the benefits they expected, ...