S&OP process: an effective lever to increase your sales and profitability

Reduced inventory and cycles, more reliable forecasts … adopting an S&OP approach makes your company more efficient. This way, you have all the cards to increase your sales and profitability! Here are some explanations.

S&OP process: what is it?

S&OP: Definition

S&OP is a strategic planning process. It aims to develop tactical plans allowing the company to direct its activity to achieve a competitive advantage strategically.

The S&OP process has been around for more than 30 years, but it is only in recent years that it has come to the forefront. This structured plan is an effective lever to increase the company’s sales, mainly through the alignment of all functions.

S&OP objectives

S&OP aims to ensure that the strategic plans align with the company’s financial goals and that the operational side works in the same direction. This implies adjustments for each of them to achieve a shared and coherent vision. For this reason, S&OP is a collaborative process.

Note that to work well, the S&OP process must be regular. Ideally, it will be carried out and reviewed monthly during a team meeting.

Read: What is S&OP or Sales and Operations Planning?

What are the benefits of S&OP?

For companies that opt for an S&OP process, the benefits are numerous.

1.    Better control of the planning load

Thanks to S&OP, the various departments can better size the bandwidth. Everything is calibrated correctly, within the correct orders of magnitude. Planners and production managers spend much less time trying to solve potentially unsolvable problems at their level. All employees gain peace of mind!

2.    Reduced cycles

Better control means fewer emergencies, fewer last-minute operations, less cutting up of orders, etc. The flow is thus much more regular and suffers fewer disruptions.

3.    More reliable forecasts

Teams work collaboratively on demand planning and forecasting. Month after month, employees improve their forecasts by focusing on the right areas. 

4.    Better managed inventories

With S&OP, the company’s departments benefit from a global and shared vision. This process, therefore, helps to gain relevance in inventory management. The result is a reduction in excess inventory, the risk of stock-outs, and financial optimization of stock.

5.    A decrease in late deliveries and backorders

S&OP reduces order delivery delays. A problem that creates disorganization and, by a “snowball effect,” generates other delays! Thanks to S&OP, the organization is much more fluid. Everyone knows what needs to be done to be consistent with the strategy. Delays are thus avoided, and the quality of customer service is improved.

6.    An impact on the financial aspect

S&OP helps you prioritize tasks more. This allows you to gain efficiency and increase margins.

With Sales and Operations Planning, you can also positively influence the working capital requirement (WCR) and improve your cash flow!

7.    More stable teams that work better together

Turnover is a real problem for companies. S&OP allows you to avoid this phenomenon, forcing you to rehire or train regularly. Thanks to S&OP, processes are effectively streamlined, and department discussions accompany each decision. Ultimately, the work atmosphere improves, creating more potent synergy between the teams.

Read also: S&OP process: what impact on the company’s performance?

white paper s&op

How will S&OP help you increase your sales?

In addition to all these advantages, S&OP directly contributes to the increase in sales through various levers.

Supplying market demand

S&OP helps you grow your business by reducing the risk of stock-outs. The right stocks are available in the right places: you can meet demand. This means more sales!

Customer loyalty

Reducing delivery delays throughout the supply chain, from procurement to the end customer, improves satisfaction. Customers get the product they expect on time. They are more loyal.

Increasing business through rebound awareness

If customers are satisfied, they are likely to talk about you. A well-executed S&OP process can increase your business through awareness rebound: your customers tell their ecosystems about your virtues, which can lead to new requests.

S&OP: towards improved profitability

In addition to increasing sales, S&OP helps improve the company’s profitability by reducing costs.

Better supplied, your company increases its profitability

S&OP is a process that helps you increase profitability by allowing you to anticipate supplies better. This means that procurement costs you less than emergency repairs.

Better financial decisions

Another advantage of S&OP is that it helps you make the best strategic decisions from a financial perspective. It gives you better visibility over the long term, allowing you to make the right choices.

The parallelism between S&OP and IBP (Integrated Business Planning) also facilitates the alignment between the finance department and the supply chain. Each action or assumption is valued: making decisions that guarantee better overall performance becomes possible.

Increased investment capacity

Finally, thanks to S&OP, you limit losses. The result: less overstock, less obsolescence, and, therefore, more savings! You improve your cash flow, which frees up investment capacity to grow your business. In short, you have everything to gain!

Fine-tune your strategy and improve your company’s sales with S&OP! Colibri S&OP is the ideal tool to manage your Sales & Operations Planning from A to Z. Deployed in 3 months at 90% of its customers, Colibri S&OP is quick and easy to implement and allows you to run simulations in record time to make the best strategic and financial decisions for your company. Thus, you fully embrace the benefits of S&OP! Discover an intuitive and collaborative solution that surpasses simple Excel spreadsheets: contact us!

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