Sales and Operations Planning Framework

Abstract

Sales and Operations Planning (S&OP) is a strategic and cross-functional planning process that aims to balance supply and demand while aligning operational plans with the company’s strategic objectives. It plays a vital role in improving forecast accuracy, optimizing inventory levels, and enhancing responsiveness across the supply chain. S&OP integrates key functions such as sales, procurement, supply chain, and finance, requiring collaboration and data sharing across organizational boundaries. In a service-oriented spare parts environment, where demand is volatile and supply relies heavily on external vendors, the challenges of implementing an effective S&OP process are amplified.

This Master’s Thesis focuses on creating a structured S&OP process for a global industrial company operating in the spare parts sector. The work begins with a comprehensive literature review, which forms the theoretical basis for identifying what constitutes an optimal S&OP process. The most significant outcome of the literature review is a unified understanding that effective S&OP must be cross-functional, data-driven, and aligned with the company’s strategic goals. Best practices emphasize the importance of executive sponsorship, shared performance metrics, formal meeting routines, continuous improvement, and the use of digital tools such as Enterprise Resource Planning (ERP) system and forecasting platforms. Scenario planning, transparency, and clear roles and responsibilities are also essential elements for ensuring success.

The empirical part of the study is based on a current state analysis conducted through interviews, internal observations, and document reviews. The findings show that the case company currently operates without a defined S&OP process, exhibiting siloed functions and reactive planning practices. Although the company has modern planning tools and systems in place, they are underutilized, and collaboration between departments is largely informal and inconsistent. Forecasting is based primarily on historical data, lacking input from market-facing roles and real-time adjustments, which leads to inefficiencies and supply-demand mismatches. The organization’s S&OP maturity currently resides in the early stages, oscillating between an undeveloped and reactive state.

In response to these challenges, a pilot-level S&OP process was created for the company. The process was built around key development targets including enhanced collaboration, improved demand visibility, reduction of inventory imbalances, and better service levels. The proposed model follows a three-phase structure: Planning, Pilot, and Execution. The Planning phase establishes governance, roles, and an S&OP calendar, using existing systems to enable crossfunctional collaboration. In the Pilot phase, a selected product group is used to test and refine the new process, including a full S&OP cycle from demand and supply planning to executive review. The Execution phase expands the process company-wide, institutionalizing planning routines and embedding S&OP into operational decision-making.

The outcome is a partially integrated S&OP model tailored for a procurement-driven service business. It enables the organization to transition from fragmented, reactive planning to a proactive and coordinated process that supports long-term agility and supply chain resilience. The S&OP handbook developed as part of this thesis serves as a practical guide for implementing and evolving the process in the case company and lays a foundation for continuous improvement and future digital integration.