Sales and operations planning

Published on May 31, 2023   29 min
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Hello, my name is Eric Wilson. I'm the Director of Thought Leadership for the Institute of Business Forecasting. Today, I want to talk about sales and operations planning. What exactly sales and operations planning is, how it fits into demand planning, business forecasting, and business planning as a whole.
Before I get into what exactly S&OP is, I want to talk a little bit about the history of sales and operations planning. Sales and operations planning has been around for a few decades. It actually started in the late 1980s, and it started off as consulting working for the government of the United States. From there, large organizations started to pick it up. And through the 1990s, a lot of large Fortune 100 companies and Fortune 500 companies started to do sales and operations planning. By the 2000s, they'd seen it was more than just balancing supply and demand, so they started to bring inventory into it as well. That's when you see acronyms like SI&OP start to become more popular. Then, in the late 2008, 2009, the same consulting company decided to rebrand the traditional sales and operations planning as integrated business planning. With that, they added a couple of extra steps, but more so, it was just a rebranding exercise to allow them to restart to sell it into organizations. Where we are today, we have IBP, SI&OP, S&OP. With that, there's a lot of other software providers, consultants that got into it as well and started to add more and more acronyms. The important thing of this journey is the fundamentals of what sales and operations planning is has not changed a lot since the 1990s. It matters less what we call it, and more what we're trying to accomplish with it and what the underlying tenets of S&OP are.