Sales and operations planning (S&OP) is a critical part of any business. Done right, it can provide a significant competitive advantage for any organization. Yet many companies are struggling to realize the full value from their S&OP process.

At its core, S&OP is a business process that links your supply chain to your business strategy. It provides a snapshot of your sales, inventory and supply plan today; and where they stand in relation to your annual operating plan and budget targets.

S&OP informs you of the differences between these plans and provides you with scenarios that help you decide the best way of closing the gaps.

To find out if you have gaps in your S&OP process, here are three questions you need to ask:

1. Is your organization working off the same plan?

A common misconception is that S&OP is a supply chain only activity, but the reality today is that S&OP is a cross-functional process that concerns nearly every function of the organization.

To work off the same set of numbers, collaboration is key.

Different departments have different areas of focus and input – for example, marketing may consider the impact of market share, new products, green initiatives and advertising spend while sales is focused on key accounts, order books and revenue plans.

To run an effective S&OP process, collaborators must be able to view and input planning data in a manner that suits them while S&OP systems must be able to transform that data to the level of detail required by the supply chain organization.

Do you have one unified plan and dataset across the board, or does the fact that each department operate on different systems and spreadsheets hamper effective collaboration?

2. Is your volume plan integrated with your revenue plan?

In many organizations today, the supply chain drives a volume planning process but is disconnected from the business planning process. The result is that once the S&OP process reaches the boardroom, there are often two different sets of forecast numbers to drive the business. The question is, which set do you choose?

Read also: 10 questions that lead to outstanding S&OP profitability

In some businesses, this is further complicated by the fact that different functions focus on different time horizons. Again, they’re all starting from a different base. The best practice for integrated business planning is to link the volume plan from the S&OP process to the business plan, so the two are always in sync.

How many forecasts do you have in your business today? How does this impact the decisions you make each month to drive your sales and operations plans?

3. Is your supply plan linked to your operational plan?

Finally, look to see if the aggregate supply plans that you create during the S&OP process are reflected in your operational schedules on the ground. For example, is your master production schedule or distribution schedule in sync with the rest of the S&OP process?

Ultimately, the key to better S&OP is an integrated system that lets you plan ahead and respond quickly to demands in the market place. To achieve this, your S&OP process needs to be integrated with your supply chain planning processes.

To learn more about S&OP best practices and how you can improve your planning, watch the “Closing the gap” webinar, presented by industry veteran and VP of Supply Chain Solutions at DELMIA Quintiq, John Sookias. Watch the webinar recording.

Connect with Ilka Schulte and John Sookias on LinkedIn.