Reasons why Sales and operations planning is crucial for organizations
With today’s dynamic markets and increased competition, it is now a best practice to frequently monitor your sales plans and evolving market conditions to respond swiftly to them. This allows organizations to stay as relevant and competitive as they can be. This approach to streamlined sales performance is called Operational Sales Management (OSM).
It empowers enterprises to update their plans rapidly by delivering pathways to revenue that connect data, increase ROI, and drive growth. By streamlining processes, organizations can quickly change and take new approaches to quotas, territories, roles, and targets with their sales organizations based on shifting market dynamics.
Through active monitoring of performance data, companies can pinpoint any deviations and course-correct before being derailed from their target goals.
Some organizations still conduct sales planning as a manual, once-a-year exercise, but according to recent research, this is no longer acceptable. In a study conducted by Forrester, business leaders stated that speed was the most important aspect to effectively planning and executing their goals. Annual — or even quarterly — planning is a thing of the past.
Organizations must now make near-real-time course corrections based on current and trusted data. But there is a catch. Leaders already know this but struggle to correct the issue. While participants in the Forrester study cited continuous planning enablement as the top benefit, less than 1/3 can do so. That means over 60 percent of organizations are unequipped to respond to market changes. They know continuous planning is necessary but cannot do it effectively.
If your primary goal is to deliver a top-quality product, an exceptional CX, and forecast accuracy, sales and operation planning is an essential undertaking. To get over these goals, every process requires to be fine-tuned to make sure that each link in the supply chain is perfectly executed.
Sales and operations planning (S&OP) is a business process, much like any other. But what makes S&OP unique is that it requires engagement from various departments within the companies. It depends on consensus and collaboration from each executive stakeholder to formulate forecasts for future sales.
Depending on your organization’s goals, Sales & Operations planning might take place monthly, quarterly, or yearly. For some organizations, however, it might happen more or less frequently.
Why is Sales and operations planning (S&OP) Important?
Sales and operations planning is arguably the least understood process in the management team. One major benefit is it offers vital communication links for top management to manage the different planning phases within a business process effectively. The primary goal is to create an overall business process that integrates all functional planning activities efficiently.
Let’s look at four reasons why Sales and Operations Planning is essential in revolutionizing your business.
1. Balances Supply and Demand
With the Sales &Operation process integrated into the business, organizations can easily balance the supply and demand as all key aspects are up-to-date on production capacity, inventory, and sales. This process also helps top management to work out profit margins for the organization. For example, in cases where a particular product cannot meet customer demand, information taken from the S&OP process can be given to the Sales and Marketing to promote other needed supply. This example also highlights S&OP’s powerful ability to balance supply and demand through collaboration to meet the end-user needs.
2. Cross-Functional Involvement
The delivery of cross-functional collaboration leads to far better planning amongst the significant stakeholders in organizational processes. The Sales & Operations process assists organizations to commit, understand and create the required support to bring sheer success. Another crucial advantage is it also adds better integration amongst functional parts in the entire business process. As soon as you sort the development and collaboration among the top levels of the functional areas, it translates into a comprehensive plan aligned with the business vision.
3. Key Business Communication Tool
S&OP provides a defined communication methodology that serves as key business communication Tools towards achieving set goals, transparency, and enhanced communication protocol. Sales & Operations gives top management on your organizations and the required visibility to partake in crucial interactions involving Production, Finance, Sales, Marketing, and HR sometimes. Under Sales & Operations, each sub-process maintains a schedule that eliminates any clash over who is in control.
4. Predictive capabilities
Ask any supply, manufacturing, or freight manager what their core power would be, and most would probably select the capability to see into and predict the future outcomes. While Sales& operations, solutions would not help you pick winning numbers. Sales and planning technologies do offer organizations with the capability to run ‘what if scenarios?’ and simulations to create in-depth predictive and forecasting models. These models, along with the ability to pull and review data based on past demand and supply analytics, allow organizations to craft proactive strategies to manage future inventory and supply to meet market demands.
Final Thought
Therefore, summing up, we can say that reviewing the business performance against set business goals is needed to create better plans where required.
Overall, every organizations must consider integrating the Sales & Operations process for steady growth and improvement and achieve gradual maturity.
