The Essential Guide To Sales and Operations Planning (S&OP)

A business running at peak efficiency is like an orchestra. Sales, operations, and finance teams work harmoniously — everyone is right on cue. No team overshadows the others, and everyone stays focused on their part as the business progresses.

Sales and operations planning (S&OP) makes this harmony possible, ensuring your core teams are aligned with strategic goals. But, S&OP requires time, effort, and a high level of collaboration to get it right.

This step-by-step guide explains the importance of S&OP, how new tech is enhancing the process, and how to implement a plan at your organization.

What is sales and operations planning (S&OP)?

Sales and operations planning (S&OP) is all about helping companies balance supply and demand by bringing different departments together to work in sync. It’s a key part of a company’s overall strategy, helping to boost revenue, control costs, and minimize risks. 

Thanks to new technology and digital collaboration tools, the process has become much faster and more efficient. While the executive team gives final approval on the S&OP, they may make adjustments along the way to respond to market shifts, unexpected challenges, or changes in business priorities.

What are the steps involved in the S&OP process?

Although this process may vary among companies, it typically involves seven steps. Understanding what’s involved in each phase of the process will help you create a more comprehensive plan.

1. Analysis and forecasting

First, collect and analyze information from your sales, marketing, finance, and operations teams. If you use Slack, create a channel where everyone can collaborate and review essential data. Factor in any trends that might influence your sales forecast, such as changes in the market, customer preferences, or newly released products from your competitors. Creating an accurate sales forecast lays the foundation for your entire S&OP process.

2. Demand planning

Next, gather the relevant teams from each department to review your sales forecast and adjust projections as needed. The goal is to create a plan that balances inventory levels with customer needs to ensure products are delivered on time and customers are satisfied. Demand planning can help businesses avoid the costs associated with overstocking — such as increased inventory and issuing product discounts to move stock.

3. Supply planning

Do you have enough supply to meet the projected demand? It’s important for finance, operations, and materials teams to connect to assess inventory, determine possible supply chain, staffing, or equipment challenges, and brainstorm solutions. For example, if you anticipate staffing issues, you can use automated workflows to support pipeline management and deal approvals from right within Slack. Lastly, create a supply plan and backup plans for worse-case scenarios to address the issues you’ve identified.

4. Financial planning

At this stage, finance teams should assess plans for accuracy, using recent financial performance data to compare actual costs with budget data, sales forecasts, and demand forecasts. By integrating your sales data with Slack Sales Elevate, your financial team can get deal insight notifications and real-time visibility into changes that may impact forecasting. Focus on specific areas such as products, markets, customer segmentation, and channels. If your supply plan includes alternate plans for different scenarios, you should create a financial plan for each one.

5. Pre-S&OP review

Conduct a pre-review before finalizing your plan, and invite leaders from all departments to analyze the plan for accuracy. A shared dashboard makes this process much easier: By integrating Sales Cloud with Slack, relevant team members can access sales dashboards with key information for quick reference.

Compare your sales forecast to your demand and supply plans, factoring in your anticipated financial impact. If you spot any major gaps or potential issues, address them at this stage, before the final plan goes to the executive team for review and sign-off.

6. Executive review

Your executive team should review forecasts, plans, and recommendations finalized in the pre-review meeting. Remote or hybrid teams can use huddles or video conferences to openly discuss the plan, raise questions, and make adjustments as needed. Once approved, teams will implement S&OP right away, so it’s important that any necessary changes are made during this stage.

7. Implementation

Once you have executive approval, it’s time to put the plan into action. By integrating Sales Elevate with Slack, your teams can track progress with role-specific dashboards and monitor both individual and team goals, including key performance indicators (KPIs). As things change, it’s crucial to regularly review your S&OP plan to make sure it aligns with your company’s needs. While S&OP is usually updated monthly, the frequency may vary based on your organization’s size and complexity.

Benefits of sales and operations planning

S&OP leads to various operational efficiencies and benefits for companies, including:

• Increased transparency and collaboration: Recurring teamwork between leaders and teams helps create business alignment, provides insight into other areas of the organization, and highlights opportunities to work together.
• Better decision-making: When teams understand business goals and how they fit into the bigger picture, it enables smarter decision-making. 
• Improved inventory management: S&OP helps teams efficiently manage inventories to maximize profits, ensuring they have enough product to meet demand while avoiding overstock.
• More accurate forecasts: Sales and operations planning helps businesses understand demand better so they can optimize their stock investments.
• Improved customer experience: S&OP can help improve customer satisfaction by addressing supply chain issues like delivery delays and backorders.
• Increased profitability: Planning ahead and considering how to mitigate challenges before they arise can help businesses improve efficiency and reduce costs.

 

Challenges of S&OP

S&OP only works when the whole organization is on board and departments are aligned. Collaboration is key, but that can be tough in companies where teams work in silos. If teams aren’t encouraged to work together toward common goals or don’t see the value in S&OP, it can be hard to make it work. S&OP also relies on having access to data from all teams, and without it, forecasting, tracking progress, and measuring results becomes a real challenge. 

To really make S&OP effective, businesses need to invest in the right sales tools, like automated workflows, shared communication channels, collaborative spaces, AI tools, and seamless integrations.

How to successfully implement new plans in your organization

Executive support is crucial for S&OP success. It drives organizational buy-in, breaks down silos, and promotes cross-team collaboration. A change management plan can help smooth transitions, and while conflicts may pop up, being transparent about goals and fostering open communication can help resolve them.

Managing big initiatives like S&OP takes a lot of attention to detail. While it’s important to keep an eye on the bigger picture to avoid delays, don’t forget to set KPIs to track progress and celebrate wins along the way. Documenting your S&OP process is also key to spotting areas where you can improve.

Outdated or legacy tech can slow you down, so it’s important to use software and digital tools that enable collaboration and support efficient sales and operations planning. Slack’s AI and automation capabilities can speed up your S&OP process, so be sure to research and invest in the right technical solutions to support your needs.

How AI and tech are changing how S&OP works

Sales and operations planning has come a long way in recent years. Gone are the days of fixed, siloed, and slow monthly processes. Today’s modern S&OP solutions automate workflows and make everything more collaborative and efficient. In fact, 29% of Salesforce customers who adopted Slack for their sales teams saw a big boost in teamwork and collaboration.

Having accurate data is key to effective sales forecasting and S&OP. By integrating Slack and Salesforce, sales operations teams can access important sales data, customer insights, AI summaries, and more, all directly within Slack. This makes it much quicker to identify focus areas and potential risks across accounts and opportunities. Plus, with AI prompts, they can create new workflows and simplify processes right in Slack.

Once S&OP is underway, sales teams can use templates to automate best practices and other processes. They can also set up real-time alerts to stay on top of any important deal movements or changes in the pipeline, making it easier to execute S&OP effectively.

A smart S&OP process drives business growth

Sales and operations planning has always been critical to a company’s success. And with new technology helping businesses automate workflows, streamline collaboration, and access data faster, S&OP is becoming a simpler task. While it still requires coordination, review, and buy-in from your entire organization, it’s essential for sales teams to meet their goals. 

For higher efficiency and more integrated business operations, explore how S&OP — and AI and automation tools — can positively impact your team, customers, and drive growth for your company.