Many companies describe their sales and operations planning (S&OP) as a success – until decisions must be made that hurt. When Sales prioritizes revenue, Supply Chain prioritizes capacity, and Finance prioritizes profitability, who makes the final call? This is precisely where it becomes clear whether S&OP is a genuine business control process or just a monthly exchange of slides.

An S&OP process can provide information or demand decisions. Only decisions create value. The bitter truth is often that the biggest weakness in S&OP is rarely the technology – it is the organization.

Without clear governance, S&OP has no impact. Teams discuss forecasts and capacity utilization, but postpone decisions. There is a lack of ownership and clear guidance on decision options. The result: a process that was conceived on a grand scale but ends up as an information routine.

Many companies lack a binding decision-making framework. There are no clear answers to key governance questions:

• Who owns demand – Sales or Demand Planning?
• Who prioritizes capacity in bottleneck situations – Supply Chain or Business Unit?
• Who balances service levels vs. costs – Operations or Finance?

If these questions are not answered, Sales and Operations planning becomes a stage for role ambiguity and political maneuvering. Clear governance and a collaboration model designed for decision-making are needed.

Effective S&OP thrives on cross-functional collaboration. But collaboration does not arise from good intention or calls to "coordinate better". It results from clear rules and consistency.

Leading companies therefore design S&OP as a business forum with clear governance structures:

• Sales-oriented enough to take advantage of market opportunities
• Close enough to operations to ensure delivery capability
• Financially compatible to increase value creation

Governance clarifies who decides. Collaboration ensures that decisions are made. Only through interaction can a process be created that scales new products, allocates resources cost-effectively, and aligns the supply chain with volatile market requirements.

Effective governance does not emerge from an organizational chart, but through a consciously designed operating model. To achieve this, companies should address these four areas of action:

• Define roles and responsibilities: Establish clear process owners and a transparent division of responsibilities throughout the S&OP process
• Establish decision-making logic and escalation paths: Define uniform evaluation criteria for courses of action and involve executive-level personnel to speed up decision-making
• Establish a standardized meeting structure: Define a consistent agenda focused on capacity bottlenecks and scenario options with a group of participants who have decision-making authority
• Define transparent KPI and reporting standards: Establish a standardized set of KPIs for rapid status reports and data-driven scenario assessments

Many companies invest in systems and dashboards. But no tool can solve a leadership problem. S&OP is successful where leadership becomes visible – in weighing up, prioritizing, and deciding. Organizations that master this transform uncertainty into strategic capacity to act. 

Only when roles are clear, rules are binding, and decisions are made does Sales & Operations Planning unfold its leverage and becomes a real business management tool. Because the rule is: S&OP is only as good as the decisions it enables.

Tödt, S. / Dombrowski, J.