The Importance Of The Sales And Operations Planning Process

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2.1 Sales and Operations Planning Definition
Today’s competitive business environment in conjunction with the global economic crisis calls for effective solutions in the day-to-day business operational framework. Especially, when it comes to small to medium manufacturing enterprises (SMEs), the challenge of decreasing costs while improving the customer satisfaction demands a solid answer in order for the firms’ sustainable future (Christopher, 2011) (Thome, et al., 2014). These challenges force the companies to improve their operations by implementing an integrated supply chain management (Thome, et al., 2014).
An effective practice of responding in the aforementioned issues is the sales and operations planning process (S&OP). The supply chain
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The process is reviewed every month by the functional managers, who attend the S&OP meeting in order to discuss, review and finally confirm the plan. The S&OP meeting ensures that all the executives are fully informed and empowered to implement the agreed plan. The process usually covers a planning horizon of 3 to 18 months (Thome, et al., 2012) (Novak, 2006). Each month the previous outcomes are used in order to take full advantage of the past experience. Likewise, the initial S&OP is regularly reviewed avoiding the risk of recurring mistakes (Novak, 2006).
It is essential to clarify that S&OP has to be conducted based on units and not on monetary terms. Given that the most operations are carried out taking into account raw material or product units, it is confusing to plan in monetary terms which change over time (Moon,
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The sales manager takes into consideration past data, but more importantly interacts with the key stakeholders so as to extract a reliable forecast. Once again, communication between the various departments is of pivotal importance (Novak, 2006). The S&OP meeting serves this purpose by giving the opportunity to amend the forecast. Ideally, the manager who leads the S&OP process should specialise in sales, supply and operations fields (Cecere, 2015). These competences enhance the meeting’s coordination. Likewise, all the departments reach a consensus which enables them to support the sales forecast in terms of orders’ specifications and resources’ constraints.
The quality of demand forecasts depends on three factors. First, the forecasts should be estimated in an aggregate volume of a product family. It is much more difficult to estimate the expected sales of each individual product (Novak, 2006) (Stellwagen, 2015). For example, a computer electronics manufacturing firm should forecast the total expected sales of personal computers instead of forecasting the sales of computers with different specifications

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