S&OP is a structured monthly process that aligns all functional areas under a unified set of assumptions to enable and coordinate decision making. It integrates demand, supply, operations, and financial planning into one game plan for business. It also links strategic plans to operational plans and attempts to provide a decision-making framework to maximize sales and profit.
A key concept of S&OP from a demand perspective is that we are building a plan of what the Sales & Marketing organization will deliver. To better do this, we need to utilize the process to develop an unconstrained and consensus demand plan and relay this information to other functions in the S&OP process.
Demand Planning, with the major output being the Demand Plan, is just one important aspect of S&OP. We still need to look at other trade-offs like balancing our demand with our supply capabilities. With a more mature S&OP process, it is about managing trade-offs like these and other functions through structured process steps. These usually include:
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