Sales and Operations Planning (S&OP)
Definition
Sales and Operations Planning (S&OP) is a monthly cross-functional process that aligns demand, supply, inventory, and financial plans into one company-wide plan. It gives leadership a single set of numbers to run the business on over a 3-to-24-month horizon.
In Practice
S&OP typically runs as a monthly cycle: a demand review builds consensus on the forecast, a supply review tests feasibility against capacity and materials, a pre-S&OP meeting resolves gaps, and an executive meeting makes the final calls. The output is an approved plan that finance, sales, and operations all commit to.
For planners, S&OP is where trade-offs get decided at the right level. Should we add a weekend shift, pre-build ahead of a capacity crunch, or let service slip on low-margin items? Without S&OP, those choices are made ad hoc by whoever shouts loudest; with it, they are made deliberately with the P&L in view.
A brewer heading into peak season, for example, uses S&OP to agree three months early that it will pre-build stock in April and May, accepting higher carrying cost to protect summer availability.
Related Calculators
Related Terms
Demand planning is the process of predicting future customer demand and shaping it into a consensus plan that drives supply, inventory, and financial decisions. It combines statistical forecasting with market intelligence from sales, marketing, and customers.
Supply PlanningSupply planning determines how a company will meet the demand plan: what to make or buy, in what quantities, where, and when. It translates forecasted demand into production schedules, purchase plans, and inventory targets.
Capacity PlanningCapacity planning is the process of determining the production, storage, and labor resources needed to meet expected demand, and deciding how to close gaps between required and available capacity.
Master Production Schedule (MPS)The Master Production Schedule (MPS) is the anticipated build plan for finished products or key end items, stating what will be produced, in what quantity, and in which time period. It is the primary input that drives MRP.