What is S&OP?

In the FMCG world, S&OP (Sales and Operations Planning) is a key process that allows the integrated planning of demand, supply and productive capacity of a company. The goal of S&OP is to achieve a balance between market demand and production capacity, to maximize the efficiency and profitability of the company.

The three fundamental phases of an efficient S&OP process are:

  • Demand planning: This phase involves forecasting future demand for the company’s products. Historical sales data, market trends, and expert opinion are used to estimate short- and long-term demand. The result of this phase is a projection of future sales that will be used for production planning and inventory management.
  • Supply planning: in this phase the production capacity necessary to meet the expected demand is established. Resource constraints such as plant capacity, supplier lead times and human resource constraints are considered. The result of this phase is a production plan allowing to meet the expected demand efficiently.
  • Review and adjustment: Once demand and supply plans have been established, periodic review and adjustment is carried out to ensure that the company’s objectives are being met. In this phase, actual sales data is analyzed and compared to sales projections. In the event of significant deviations, production plans and inventory levels are adjusted to ensure the efficiency and profitability of the company.

An efficient S&OP process allows FMCG companies to quickly adapt to changes in the market and consumer demand, while reducing costs and improving the quality of customer service. In addition, communication and collaboration between the different departments of the company, such as sales, marketing, production and finance, are fundamental to the success of the S&OP process.

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