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Sales&Operation Planning

(S&OP)

Establishment, Optimization or Re-structuring Sales and Operational Planning (S&OP) Processes

 

If you want to create a quality product and provide an outstanding customer experience, your business processes should be fine-tuned so every step — from manufacturing to delivery- is well-executed. Processes can be made for just about anything. And the sales and operations planning (S&OP) process is crucial to any successful business. As Henry Ford, the founder of the Ford Motor Company, once said "Quality means doing it right when no one is looking".

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Sales and Operations Planning (S&OP)

  • S&OP is an integrated business management process that empowers leadership to focus on key supply chain drivers, including sales, marketing, demand management, production, inventory management, quality and new product introduction which allow the management to make better-informed decisions through a dynamic connection of plans and strategies across the business.

  • S&OP is a periodic multi-functional process and accompanying tools to adjust demand, inventory and supply at an aggregated level and maintain an integrated business plan to guide operations.

  • S&OP is a business management process where leadership and executive teams meet to ensure each business function is aligned to balance supply and demand. S&OP requires cross-organizational collaboration to create detailed forecasts for predicted sales.

  • S&OP provides the guidelines for the operational execution of the enterprise-wide plan, also called sales and operations execution (S&OE).

  • S&OP allows the enterprises effective supply chain management and focuses the resources of an organization on delivering what customers need while staying profitable.

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To coordinate across business units, increase transparency, balance supply and demand, and to achieve profitability. S&OP can occur on a monthly, yearly, or even two or three-year basis, depending on the company and its goals.

Here are some key benefits to sales and operations planning (S&OP):

  • Increased transparency between departments

  • Informed decision making about a product's demand and supply

  • Improved inventory management

  • Better sales and budget forecasting

  • A clear understanding of a product's lifecycle and its management

  • Streamlined processes that improve the overall customer experience

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The S&OP Process Steps

  1. Forecasting

  2. Demand planning

  3. Supply planning

  4. Pre-S&OP meeting

  5. Executive S&OP meeting

  6. Finalize and implement S&OP

 

The S&OP process includes forecasting, demand and supply planning, and executive review. The goal is to coordinate sales and operations planning across business functions so they're all on the same page. The exact steps can vary depending on the company, its products, and its industry.

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Forecasting

At this stage of the S&OP process, data is gathered about prior sales and forecasts are made for future sales. It's important to consider any internal and external factors that can impact sales (e.g., industry, customers, competition). Any trends will be identified and analyzed.

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Demand planning

Demand planning is when cross-functional collaboration comes into play. The forecasts are analyzed, and adjustments are made to inventory and customer service policies based on the product demand and sources of demand. The demand can be measured in either revenue or units of a product.

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Supply planning

During supply planning, representatives from finance, operations, and materials to evaluate capacity. They'll determine if there are any constraints on people, machinery, and suppliers. From there, a supply plan is created that will account for any capacity constraints.

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Pre-S&OP meeting

During this stage of the S&OP process, leaders from finance, sales, marketing, operations, materials, product management, and human resources meet to collaborate. They'll compare the forecasts to the demand and supply plans, and they'll consider the financial impact of the plans.

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Executive S&OP meeting

In this stage, executives meet to analyze all the forecasts, plans, and recommendations from the pre-S&OP meeting. By the end of the executive S&OP meeting, a final sales and operations plan will be approved.

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Finalize and implement

Once the sales and operations plan has been approved, it is time for implementation. After implementation, the S&OP should be evaluated on a regular basis to ensure success. 

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S&OP Metrics

When evaluating your S&OP process, there are some key metrics you can use to gauge performance.

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Demand and Supply S&OP Metrics

Demand and supply metrics will help you determine if your forecasts are accurate and the demand matches the supply.

  • Demand forecast versus actual

  • Production forecast versus actual

  • Inventory turnover

  • Capacity utilization

  • On-time delivery

  • Accuracy in order delivery

  • Cycle times

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Financial S&OP Metrics

These metrics show you how the business is performing from a financial perspective.

  • Total sales in a period (e.g., month, quarter, year)

  • Total sales versus forecast

  • Gross margin

  • Working capital versus plan

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Reference Works for S&OP Solutions

  • Manufacturing Enterprises (in Nanotechnology, Power Generation, Renewables, PV Solar)

  • Distribution Firms (in Nanotechnology, Energy, Power Generation, Boilers & Heat Exchangers, Renewables, PV Solar, HVAC)

  • Warehouses (HVAC)

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Project Locations for Operations Consulting/Restructuring/Process Optimization 

  • Manufacturing Enterprises (Turkey) (6 Companies)

  • Distribution Firms (USA, Turkey, Netherlands, Italy, UAE, Germany) (12 Companies)

  • Warehouses (Turkey) (1 Company)

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CONTRIBUTION SNAPSHOT

A Turkish industrial machinery producer market leader in Turkey and leading player worldwide-In the times of the local recession in which firms had been suffering to sell machines to local customers working for state projects with almost no budget, a transformational shift in business was targeting the customers in MENA Region who had focus on equipment of world leading brands. Played an instrumental role in bringing a new view to the company by focusing on customer-focused projects/services, alternative aftermarket solutions, complementary machinery, attachments, tools, equipment and components and niche projects for local customers and in emerging countries by applying new aftermarket/customer support/dealer support/after sales services marketing and business development strategy, product quality improvement scheme, customer-centric and cost-effective products/services, improved service quality, creativity, pragmatic overview communication skills to build value and keep the company competitive even in the face of declining local market and competitive threats by global giants in emerging markets and challenging gaps in quality perception between the customers and the company.

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A U.S. Multinational Turnkey Power Plant Installer and Equipment Manufacturer which is active in 135 countries in the world-Brought track record of success promoting, optimizing existing sales & business development processes, products and solutions, re-launch existing products and launching new solutions in geothermal power plant business which were derived from a combination of existing products. Transformed marketing materials to strategic messaging with easily understood terms promoting the overall value proposition to the customers instead of product specifications and cost calculations who have technical challenges in their existing power plants and who focused on maximum efficiency and revenue gain for their new power plant investments in geothermal, biomass and coal-fired plants. This optimization has brought the enterprise to the market leader in flash plants and cold-end solutions for binary plants, generated a  Hybrid Cold-End Solution (condenser + cooling tower pack) to improve cooling inefficiency in air-cooled geothermal plants during hot weather which is the first in its kind in the world.

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A Turkish Diesel Power Generator Manufacturer market leader in Turkey and leading player worldwide-In the global recession in which diesel generator manufacturers had been suffering to sell to their customers who have budget constraints, brought a new ROI-Oriented Mindset, transforming the manufacturer profile into turnkey system integrator, shifting the internal focus to Solutions. Introduced systems for tracking and measuring quality results, significantly lessened previously wasteful spending on inventory and focused on increasing revenue, profit margins, productivity, operational efficiency and access to projects. Ultimately established cooperation between formerly disconnected teams to unite technical & financial operations and corporate cultural change enabling employees to empower creative problem solving under new structure.

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A Turkish Energy Solutions Manufacturer market leader in Turkey and leading player worldwide-Developed reputation for resourcefulness and ability to deliver real value and tangible results on shoestring marketing budgets, low-budget customers looking for low-value products with budget constraints in challenging and turbulent emerging markets, top customers in the developed markets with strict quality expectations. Brought cross-industrial experience after raising awareness and demand high-quality, economic early-market products in power solutions and green energy solutions, created compelling marketing and sales pitches, aggressively follow bids, tenders & dealer opportunities, shortened sales and production cycles, introduced innovative solutions which improve investment cost of customers and production cost of the company. Built market share with leading edge customers. Built strategic alliances with renewable energy solution providers and develop projects with them in which existing products have higher sales value that improved the profitability of operations and introduced new project awards that generates millions of USD revenue additionally. Repurposed existing products and matched with innovative solutions to align with needs. Created systems & standardized processes that minimized costs while maximizing returns for the company with few investment dollars. Implemented integrated customer solution center concept (field assessment-costing-design-production-installation-customer support project management-audit-maintenance). Devised plan /Strategy to achieve a fundamental market shift by responding the market needs in target market a product rollout & MRP plan that build rapid adoption.

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A U.S. Multinational Life Solution Provider which is active in US-EU-Middle East-Launched new sales, business development and project management processes, products and solutions, re-launch existing products of waste-to-energy plants and water generators and launching them new solutions in  energy business which were derived from a combination of existing products. Transformed marketing materials to strategic messaging with easily understood terms promoting the overall value proposition to the customers instead of product specifications and cost calculations who have technical and challenges in their energy and water stressed territory. This optimization has brought the enterprise to get awarded multimillion USD projects and introduced a totally independent energy and water generation resource which is the first in its kind in the world.

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A Turkish Distributor of Diesel Power Generator Manufacturer7Construction Machinery Manufacturer and Rental Solutions Provider in Turkey-In a declining, low profit business in an emerging market, devised inventive and creative strategies to generate maximum exposure at the lowest possible costs by identifying/capitalizing on untapped market opportunities in what was previously considered a «dead-end» market. Played key role in growing business of power train to exporting OEM SMEs, power generation packs to end-users; and aftermarket packs (filters, lubes, oil and  maintenance packs) to the customers and dealers who focus on high quality and economic pricing. Launched new products of Diesel Power Generators, Rental Diesel Generators, Power Train Solutions and Aftermarket Solutions after preparing Strategic Plans, Go-to-Market Strategy & Plans and contract management with vendors. Introduced solutions for technical sales, rental sales, project sales, corporate sales and aftermarket sales after establishing business development team and optimizing the processes, procedures and workflows between sales, aftermarket, drive train, rental, power generation, procurement and supply chain teams to improve revenue and market share in Turkey. Actively accessed more than 200+ OEMs physically in 15 segments, securing prototype and serial production purchase orders with OEMs for drive train solutions.

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