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Sales and operations planning with volume and revenue in the same model.

We build the bridge from units to value inside the planning model, with price, mix and capacity assumptions each owned by a named person. The price is fixed after we read both plans.

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Sales and operations planning (S&OP) is the monthly cycle in which sales, operations and finance agree 1 set of volumes and the money that follows. Constancia, an EPM consultancy, builds that cycle on 1 model for multi-entity groups whose demand plan and budget have parted company before a board date.

Reads
The demand plan in units, the financial plan in value and the conversion workbook that sits between them.
Produces
1 model in which a change to volume moves revenue, cost of sales, stock and cash in the same run.
Then
The build at a fixed price, with the first S&OP cycle on the model run beside the old pair of plans.

S&OP built on 1 model joins 6 things that 2 plans keep apart, and the unit of measure is settled first.

  1. 01

    The demand plan in units

    Sales enters volume by product, customer and month in the units operations makes and ships.

  2. 02

    The supply plan

    Capacity, lead times and stock cover sit beside the demand, so a constrained month shows itself before the meeting.

  3. 03

    The price and mix

    Price per unit and product mix carry an owner in commercial finance, and revenue follows from volume through them.

  4. 04

    The volume to revenue bridge

    The model walks from last cycle's revenue to this cycle's through volume, price, mix and currency, 1 bar at a time.

  5. 05

    The cost of sales and stock

    Standard cost per unit and stock cover turn the same volumes into cost of sales and working capital.

  6. 06

    The monthly S&OP meeting

    Sales, operations and finance read 1 set of figures in the meeting, and the decisions post back to the same model.

The demand plan and the budget disagree because 1 counts units and the other counts pounds.

Where your group sells 3,000 products from 4 plants into 12 markets, sales probably plans in cases and finance plans in pounds. A conversion workbook sits between the 2, maintained by 1 planner, with a price per case that was last refreshed at budget time.

By month 4 the demand plan shows volume rising and the forecast shows revenue flat, and each team brings its own chart to the meeting. Constancia's consultants have completed 58 implementations over 35 years, and an S&OP survey with us starts by reading that conversion workbook.

We move the price, the mix and the standard cost into the model with named owners, so volume and revenue move together from then on.

S&OP on 1 model suits a group meeting 4 conditions.

  1. 01

    2 plans in 2 units

    Sales and operations plan in cases, tonnes or hours. Finance plans in pounds, with a conversion between them.

  2. 02

    A conversion 1 person maintains

    A workbook of prices, mixes and standard costs joins the plans, and it is refreshed when that person has time.

  3. 03

    Several entities making and selling

    Plants in 1 entity ship to sales companies in others, so the S&OP figures cross intercompany lines.

  4. 04

    A board date or an integration

    An acquisition has brought a second demand plan, or the board wants 1 volume and revenue view by a date.

Abacum (FP&A software) carries S&OP for a finance team whose volumes load from the CRM and the ERP and whose consolidation sits elsewhere. OneStream (EPM software) carries it for a group that wants the volumes, the revenue and the intercompany on 1 model.

Volume and revenue reconcile once in a spreadsheet and every cycle on a model with owners.

The first column is where most S&OP cycles start, and the middle column is where many stop after a platform is bought.

How the S&OP cycle behaves in a spreadsheet, on a platform nobody owns and on a platform with named owners.
A spreadsheetA platform nobody ownsA platform with named owners
The unit of measureCases in 1 workbook and pounds in another, joined by a lookup.Units and value on the platform, with the conversion loaded from a workbook nobody owns.Units and value in 1 model, with the price and mix that join them owned by commercial finance.
The demand plan loadSales emails a workbook each month, and a planner pastes it in.The CRM loads the demand plan, and a product renamed in the CRM lands in a suspense line.The CRM loads the demand plan against a product list with an owner, and a new product is held until mapped.
The capacity checkA plant manager's workbook, checked after the volume has been agreed.Capacity on the platform, entered at go-live and never revised.Capacity and lead time by plant, owned by operations, checked in the same run as the demand.
The revenue bridgeBuilt in slides the night before the meeting, from 2 sources.Produced by the platform, and finance rebuilds it in a workbook because nobody trusts the mix line.Produced from the model, with each bar traceable to the volumes and prices that made it.
The decision recordMinutes in an email, and the plans updated by hand afterwards, or never.Decisions applied to the platform by whoever attended.Decisions posted back to the model by the owner of the line they change, with the date.

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