Also called integrated business planning, demand planning
What is sales and operations planning?
A monthly meeting where sales, operations and finance agree one set of numbers for the months ahead.
What else it is called
- Other names
- integrated business planning, demand planning
- In French
- planification des ventes et des opérations
Related entries
Understanding sales and operations planning
A monthly cycle in which the demand plan from sales, the supply plan from operations and the financial plan are reconciled into one set of numbers that everybody commits to. The horizon is long enough to act on: twelve to eighteen months, at the level of product families rather than individual part numbers.
The value is in catching the decisions early. Hiring, a second shift, a new machine and a major material commitment all have lead times measured in months, and a plant working only from this week’s order book meets those decisions as crises. A process that looks a year out meets them as choices.
What makes it fail is ambiguity about authority. If sales keep a more optimistic number for their targets and operations plan to a quieter one, the meeting has produced a document rather than a decision. It needs the general manager in the chair and one set of numbers afterwards.
In practice
The test is whether the production plan, the sales target and the budget are the same numbers. In most companies they are three different numbers and everybody knows it.
Frequently asked
Is this worth doing in a small plant?
Yes, and it can be an hour a month round one table. The size of the company changes the formality, not the value of sales and operations agreeing what they expect before the material has to be ordered.