What is the S&OP process and what are its main steps?

• A. A cross-functional planning process aligning demand and supply; steps typically include data gathering, demand planning, supply planning, reconciliation, executive review, and approval.
• B. A financial budgeting method that focuses on costs.
• C. A marketing campaign cycle.
• D. A manufacturing floor scheduling method.

Answer: (A)

S&OP is a cross-functional planning process that aligns demand and supply to balance service levels, cost, and inventory across the organization. The main steps are data gathering, where you collect demand data, inventory, capacity, and constraints; demand planning, where forecasts are developed and a consensus demand plan is created; supply planning, where production, procurement, and inventory plans are formulated to meet that demand; reconciliation, where gaps between the demand and supply plans are resolved and an integrated plan is formed; executive review, where leadership evaluates the plan and its trade-offs; and final approval and dissemination for execution. This process brings together sales, marketing, operations, finance, and procurement to produce one feasible, agreed-upon plan. It’s distinct from financial budgeting, which focuses on costs; a marketing campaign cycle; or manufacturing floor scheduling, which is about day-to-day production sequencing.