Before beginning the process of creating and implementing a sales and operation plan, it is important to fully grasp what the main processes and objectives of this system are. When it comes to creating cohesive mechanisms that function effectively within a business, the following processes and objectives should be considered as you develop a system that functions well when it comes to your sales and operations planning. The following are a few of the objectives and processes to consider.
Product Review
Planning the offerings that a business will look to sell is an incredibly important part of any business plan. In order to ensure that you can make a profit off of certain products, you need to have a good understanding of what your target audience is looking for as well as know what is currently on the market. Product reviews are crucial to any company, and when introducing new products or services to your market, there are many different things you will need to consider. One of the main things to look at is how a new product or service would impact your current offerings. Would it price them out of the market? Does it make sense to have two of these different products or services on offer? Which one would be most beneficial to the company? Taking these questions into account when looking at the products you supply to your customers is extremely important as it can impact how profitable and successful your business will be.
Demand Review
There is little point in developing new products or services without knowing whether or not there is actually a demand for what you are planning on offering. One of the main objectives of sales and operations planning is determining whether or not there is demand for your offerings within a certain market. Taking historic performance, your target audience and any new products that you are thinking of introducing are all important to consider when performing a market review within your industry. One of the main goals of a demand review is to gain a holistic view of your own financial capabilities compared to the demand of a product and what you need to do in order to supply it to your audience. Thinking about this holistically instead of separately can ensure that you have the most accurate information to go off of!
Supply Review
After having determined the demand for certain products you will need to analyze how you can keep up with it through the supply of products. This step of the process will have to look into customer demand and inventory capabilities synonymously to determine how you can ensure you meet the demands of your customers. You want to be as accurate as possible during this stage of the process as any excess supply would cost you money to store. When a business has excess inventory at the end of a season, they often decide to place these items on sale, which results in less profit for a business. A supply review is an important part of S&OP processes
Finance Review
A finance review looks to analyze the costs and profits of the previous month or quarter to estimate how sales and operations can be better constructed. This part of the process will take each of the above objectives into account and review how costs measured over a certain period of time impacted the financial stability of the business. The total cost of operations is measured against the budgets that were set out and the amount of revenue that was earned will be measured against the financial goals of the business.
Pre-S&OP Meeting
Before implementing your sales and operations plan, you will need to have a pre-s&op meeting with all facilitators and leaders within each of the different departments. This meeting is centered around consolidating information as all the relevant planning from each department comes together. The main goal of sales and operations planning is to create a system whereby all information is gathered together and decisions are based on all of this information as an entirety, rather than having separate decisions made without seeing a bigger picture.
Executive S&OP Meeting
The executive S&OP meeting is the final stage and this is where all decisions are finalized. Any questions that were unanswered will need to be decided on and all final checks will need to be completed to ensure that your sales and operations planning is complete. Another important step in this part of the process is deciding on deadlines, considering when targets need to be assessed to ensure that the sales and operation plan is working.
