Sales and Operations Planning

Oftentimes, success in business can be correlated to how well the departments within a company communicate with each other and achieve their own personal goals. Some of these department goals may include: Finance – Stay within the budget, Sales – to meet the demand of the consumers, Operations – Manage a supply that is as close to the demand as possible, Marketing – Create more demand, etc.

It would be significantly more difficult for all of these departments to achieve their own personal goals without collaboration. Let’s take sales and operations for example. The goal of the sales team is to make sure that the consumer demand is met. The goal of the operations team is to make sure that there is enough supply to meet the demand without producing too much supply. This is a tricky task because it is entirely based on what the sales team is able to accomplish.

For these reasons and more, Sales and Operations Planning software was created. Sales and Operations Planning, commonly referred to as S&OP, allows the user to create a sales forecast that uses historical data to calculate how many sales, and more specifically, how much revenue will be generated. This allows the sales team to set goals around how much they are predicted to sell. This then in turn allows the operations team to have an accurate prediction of how much product they will need to have in order to meet the predicted demand without overstocking or stocking out.

The consequences of overstocking or stocking out on an item can be detrimental to the progress of a company and even negatively impact every single department within. If a popular item is understocked, then marketing becomes useless because the demand is there, but the product isn’t. Sales are useless because they couldn’t meet the demand even if they wanted to. Finance is hurt because a lack of revenue leaves fewer resources for the company to meet their expenses. However, without product, the opportunity to receive revenue is lost and therefore it is as if the company has lost money it otherwise would have had. Therefore, we see that stocking out, an event that can be prevented by a proper sales forecasting tool is detrimental to every department within the company.

Not only is understocking a product an issue, but if an item is overstocked, similar problems occur as well. Valuable space that could have housed other products is taken up by the overstocked product. This means that the operations department will not be able to have enough of a possible, higher-value product. The sales/marketing departments may not be able to push the products that they otherwise would have intended to because of an urgent need to clear up space in the warehouse by pushing the overstocked product. Finance once again is not able to meet budget goals, likely due to the sales required to push the overstocked product combine with a lack of sales for more valuable products. Therefore, we see again a plethora of issues that could have been prevented by a proper revenue forecast.

With the wide array and availability of sales forecasting software options, there is no excuse for any company, that has a desire to increase value, to continue on without sales forecasting models. Unfortunately, sometimes a solution might either have too many features that a company may not need, or not enough features that a company does need.

For this reason, Avercast has created a personalized solution with the latest client-requested features. We offer a wide array of products that you can pick and choose depending on the plan and budget you have available. Even if we do not have a feature that you require, we are always happy to work on developing that solution so that we are able to help both your company, as well as other companies, that may have the same issue and therefore require the same solution.

With confidence in an efficient plan for demand by having an accurate revenue forecast, sales and operations will be able to work together seamlessly in order to meet the right demand at the right time in the right place.

All of the departmental issues that previously occurred, as a result of overstocking/stocking out, are now resolved and therefore every department is impacted in a positive way. We can guarantee an increase in both efficiency and quality of the planning process of any company. This will result directly in a surplus of accessible funds within the first year. Each year the forecast will grow even more in both accuracy and value due to the implantation of sales and operations planning software.

Understanding the cooperation between each department in a company is integral to the success of that company which is why we are writing articles such as these to explain the importance of software that can cohesively unite such departmental divides. Through research and personal development experience, we strive to present the most relevant and useful information to you, as a reader, in order to successfully present a report.

We will continue to keep you up to date on all things supply chain and software related. We are also constantly striving to keep our articles relevant and interesting to help both small businesses and large corporations alike.