Sales and operations planning (S&OP)

Sales and operations planning (S&OP) is a recurring, cross-functional process — typically monthly — where sales, operations, finance, and supply chain leaders agree on one shared demand and supply plan, rather than each function planning independently from its own numbers.

It generally runs through stages: a demand review, a supply review, reconciliation of any gaps between what sales expects to sell and what operations can produce or source, and executive sign-off. The output is usually a rolling forecast extending several months or quarters ahead, updated each cycle rather than fixed once a year.

S&OP matters because it reduces the mismatch between sales expectations and operational plans, one of the underlying drivers of the bullwhip effect, and it depends on reasonably accurate demand forecasting to be useful. A common pitfall is treating the S&OP meeting as a status readout rather than a decision-making forum — the process only adds value if it actually changes production, procurement, or inventory commitments, not just reports on them.