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In this article, you will learn about the sales and operations planning process and best practices, including steps for success and a discussion of common challenges. Here’s how the American Production and Inventory Control Society (APICS) defines S&OP: “The function of setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan.” The sales and operations process alerts executives to timely adjustments they should make in any area. The high-level strategy in the annual business plan is integrated and aligned with the sales plan, production plan, marketing plan, new product development (NPD) plan, inventory/backlog plan, financial plan, and more. With sales and operations planning, executives can manage the entire supply chain, optimize resources, and maximize profits. The goal of sales and operations planning is to keep everything in balance. Simply put, a company can run into trouble if it sells far more than it produces, or if it produces far more than it sells. This allows them to continuously match high-level strategy with day-to-day operational tactics in all departments. S&OP gives executives a comprehensive overview of the business so they can grasp where it stands (in all its complexity). Sales and operations planning (S&OP) is a popular process that aligns a company’s diverse functions while balancing supply and demand.
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