More companies are understanding the importance of sales and operations planning. The process is used by many different businesses to coordinate the efforts of different departments, including finance, marketing, operations, and sales. This process links corporate strategic plans to the daily operations plans and enables the company to balance supply and demand and their products. Sales and operations planning creates plans for the next 18 months and is typically used for product families instead of individual products.
The process is usually misunderstood by the management team but one big benefit is that it helps with important communication links for the top managers in order to plan within the business efficiently. The main goal of sales and operations planning is to create a business process that will integrate all functional planning activities in the most efficient way possible.
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Helps Balance Supply and Demand
When your company has sales and operation planning, it’s much easier to balance supply and demand, along with production capacity, up-to-date inventory, and sales. The process helps top management better work out the profit margins for the company. For example, if there is a specific product that can meet the demand from customers then this information is found in the process and can be given to the sales and marketing teams to then promote a different supply. Using this process gives you the powerful ability to balance the demand and supply and then have to collaborate to meet the needs of your customers.
With cross-functional collaboration and involvement, you get better planning for the major stakeholders in the process. The sales and operations planning process help you commit and understand what is necessary in order to have success. It also helps add better integration for the functional parts of your business. When you are able to support the collaboration and development within the top levels of the business, you get a comprehensive plan that is better aligned with your vision.
There Won’t Be Surprises
When you have a detailed sales and operations process, it means you have fewer surprises throughout the process. Even though without a plan that job can be completed, it will come with a price and this could mean excess inventory, panicked operations, bad customer service, excess capacity, or long lead times. With a detailed plan, you instead get zero or not many surprises since the decisions are made by the right personnel in order to deliver the best results for the company.
One Set of Numbers
It helps to run a business by focusing on just one set of numbers. With sales and operations planning, the important departments such as marketing, sales, production, and finance all agree on one set of numbers and how these numbers can be met. This teamwork is important in order to achieve the goals. It helps to invest some time into the sales and operations planning process and then step back and allow the process to work and you start to see success within the business.
An Important Communication Tool
Sales and operations planning helps give you a defined communication method to achieve set goals, as well as improve transparency and communication protocol. This process gives top management in your business the visibility that is needed to participate in critical interactions involving marketing, sales, production, finance, and occasionally HR. Each process has a schedule that eliminates the questions about who is in control, leading to better communication overall.
By utilizing proper sales and operation planning, you have a process to help you have a successful business. When you review the performance against your goals, you can create better plans as necessary.