Sales And Operations Planning: A Guide for Small Businesses

Sales and operations planning (S&OP) is a set of activities undertaken by entrepreneurs or senior leadership to coordinate sales functions and product fulfillment. Its purpose is to proactively ensure customers’ needs are met throughout the sales life cycle. It’s great for organizations with complex sales cycles. Benefits include satisfied customers and productive sales teams.

For many small businesses, CRM software is the backbone of sales and operations planning because it captures and stores key data and eliminates repetitive tasks through automation. Freshworks CRM is a CRM with workflow automation and sales analytics useful in the S&OP process. To find out if Freshworks CRM is right for you, sign up for a 21-day free trial.

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What is Sales & Operations Planning

Sales and operations planning, also referred to as S&OP, is a form of centralized planning that coordinates the overall sales and operations functions and interactions. S&OP activities include mapping out and evaluating your entire sales process for issues and opportunities and coming up with processes and procedures to address issues or take advantage of opportunities. Depending on the size of your company, it’s led by business owners or senior leadership.

For example, in medium-sized companies or even small companies with external partners like suppliers or manufacturers, sales and operations planning is carried out by stakeholders. They review sales and operations processes and create plans to eliminate bottlenecks like back orders, shipping delays, and timely sales lead follow-ups. They look for trends and create plans to capitalize on opportunities like warranty sales or sales of complementary products.

How Sales & Operations Planning (S&OP) Works

Sales and operations planning works by having both sales and operational functions of the business work together to make processes more efficient and productive. They usually form teams and the make-up of the teams depends on the size and type of business. Smaller businesses will have different functions of the business represented by one person wearing multiple hats. Larger businesses will usually have one person representing each area.

For example, larger businesses will have S&OP teams made up of leadership in sales, production, procurement, customer service, and tech support. In a smaller business, sales and operations planning teams may consist of the president wearing multiple hats like sales and product production. Both larger and smaller companies may even have outsourced functions like shipping and fulfillment partners on their S&OP team.

No matter the makeup of the team, each area works together to coordinate functions. They do this by mapping out the sales process from the beginning when a lead enters the sales funnel all the way to fulfillment when the lead becomes a customer and has the product in hand. They then identify bottlenecks caused by a lack of coordination or processes and collectively work to identify and create processes for areas of opportunity.

Benefits of Sales & Operations Planning

The two major benefits of sales and operations planning are satisfied customers who want to continue doing business with you and productive sales teams that can sell more. S&OP provides these benefits by creating more efficient processes that result in customers having a better buying experience. This efficiency leads to a reduction in salespeople’s time spent on operational issues and gives them more time to sell and build relationships.

S&OP can implement processes that prevent things that create customer dissatisfaction like delays in getting the product or slow response time from sales and service. They can also plan to take advantage of market opportunities and thus create happy sales teams that sell more.

For instance, an S&OP team for a technology company selling laptops to businesses can create processes that reduce lead times for getting laptop orders to their clients. They can also pull reports to spot trends in things that may go wrong with the product and address this with their manufacturing partners. This gives sales more time to sell and creates greater customer satisfaction, which leads to more revenue.

S&OP is also a critical part of sales and profit forecasting. Here’s what Brian Cairns, Founder of ProStrategix Consulting, a small business consulting company, had to say:

“Sales and operational planning are critical to profit forecasting and making smart investment decisions. Sales planning is key to demand/revenue forecasting. Operations planning is a core component of gross profit forecasting. You need both to ensure you’re spending wisely and will have enough cash on hand to run the business.”

—Brian Cairns, Founder of ProStrategix Consulting

How to Implement Sales & Operations Planning

In order for sales and operations planning to work for your business, you must implement it in a way that fits your needs. If you own a larger company, you must identify all areas and stakeholders who represent those areas to be part of your planning team. If you’re in a smaller company, you must do the same thing, but it may be one person representing multiple areas or you may have outsourced functions where external partners are part of your team.

Once you’ve decided on your team, here’s how to implement sales and operations planning:

1. Assess Your Company’s Sales & Operations

Assessing your company’s sales and operations functions is usually done by the company owner or a leader within the company tasked with implementing an S&OP initiative. You’ll need to do an assessment of sales and operations to get an understanding of your current state. The assessment should cover your entire sales process and reveal what’s working and what’s not working.

Assessments are conducted in many ways, including in-person interviews, surveys, job shadowing, and mystery shopping to get your customers’ perspective. Sometimes companies choose a couple of ways to assess their sales and operations processes and activities. For instance, if you want to understand what your employees and sales team experience as well as what your customers, job shadowing and mystery shopping will work for you.

Here are more details on ways you can assess your company’s sales and operations functions:

Interviews

Doing in-person or live virtual interviews is a great way to assess current sales and operations functions. For larger organizations, seek out leaders in areas that touch every stage of the sales cycle. In small companies, do the same thing, but where there is one person who owns multiple areas, be sure your interview questions cover all areas of the sales lifecycle. Also, if you partner with external organizations or freelancers in your sales process, interview them as well.

Interviews allow you to ask detailed questions and explore processes more thoroughly. You have the opportunity to probe and find out which areas within a certain part of the sales process can be improved. Conducting interviews also gives you the opportunity to build rapport with key stakeholders within both sales and operations which will come in handy when you form a team and make process improvements.

Surveys

A quick way to find out important information about the state of your sales and operations functions is by doing surveys. The great thing about surveys is that you can send them to more than just leaders in charge of sales and operations functions. Surveys can be sent to a lot of people, which reduces the amount of bias in answers you may get back from interviews. Surveys are best used in larger organizations because of the number of people.

Job Shadowing

A great way to assess sales and operations functions is through job shadowing individuals responsible for key tasks in the process. This can help you get a better understanding of the challenges they face that may reflect inefficiencies in your processes. It also allows you to build rapport which may be needed if there are changes necessary to your processes.

Mystery Shopping

Sometimes the best way to assess the state of your sales and operations processes is by putting yourself in your customers’ shoes. You can do this by going through the sales process as a real customer, have a friend or family member to do it, or hire a company to do it for you. The advantage of outsourcing is being able to hire several mystery shoppers and aggregate their experiences which will reduce bias.

Regardless of which method you choose, doing an assessment to gather information on sales and operations functions within your organization will help you lay the groundwork for doing the work of sales and operations planning. You’ll have the information you need to make immediate changes to your sales and operations process. You’ll also be armed with the data you’ll need to create planned changes for the future.

2. Create An S&OP Implementation Team

Once you’ve done an assessment, create an S&OP team. The purpose of this team is to create and plan sales and operations strategies and initiatives based on immediate needs like addressing inefficiencies, capitalizing on immediate opportunities, or planning for future growth. Team members should include representatives of every part of the sales process. Doing an initial assessment should help with recruitment because of rapport building during assessment.

Here are three things you should do to build your team:

• Identify & recruit key stakeholders: To build your team, identify and recruit key stakeholders. Your team should include representation from every aspect of your sales process from lead generation to product or service fulfillment.
• Create a purpose for your team: Once you’ve identified and recruited key stakeholders, collectively establish and articulate the purpose of your team. Is your primary goal to strategically plan how your organization will manage expansion? Or will you primarily focus on making your existing business more efficient?
• Assign roles & responsibilities: After you agree to your specific purpose, assign roles and responsibilities to each team member based on the area they represent and their areas of expertise.

3. Map Out Sales & Operations Processes

After you’ve created your S&OP team, map out sales and operations processes. Doing this will give you and your team a visual of what your sales and operations processes look like from beginning to end. It will also help you visualize where bottlenecks are or where processes and activities may be missing. You can map out your process using a variety of tools from whiteboards to software like Visio.

Below are key considerations for mapping out your processes with your S&OP team:

Choose Process Mapping Tools

The first thing you should do is choose tools to map out your process. When choosing tools, select the best ones that will work for you and your team based on your needs. You may want to start off with whiteboarding your process while all stakeholders are in a live or virtual room. If your group is more tech-savvy or if everyone is remote, use virtual or electronic tools.

Here are a few tools to consider when mapping out your sales and operations processes:

• Whiteboard or flipchart: These are great when all or the majority of your team is in the same room. It’s also good when you or your facilitator have legible handwriting.
• Process flow software: Using process flow software like Microsoft Visio or one of its alternatives is helpful because it will be legible and it allows you to incorporate “if/then” conditions into your process flow.
• Presentation software: If you don’t have Visio or a similar tool, using presentation software like Microsoft PowerPoint can work because it has process diagram images you can add to presentations. It’s not as user-friendly as process software but is a less expensive alternative.
• CRM software: Another way to map out your process is to use a CRM with Kanban boards that will allow you to lay out your entire sales process. The advantage of using a CRM is that you can see your process in action and see capture data on inefficiencies and opportunities.

Have Each Team Member Present & Map Their Current Process

Once you’ve chosen the best process mapping tool, make each team member responsible for their respective areas and present their part of the process. Have them map their part of the process in your chosen tool and allow all team members to ask questions and encourage a discussion of this aspect of the process.

Flag Opportunities for Improvement

As each team member is going through their part of the process, flag areas of opportunity for improvement. At this point, there’s no need to get into lengthy discussions about how to improve certain processes, just note these areas and any high-level ideas that come up. You will revisit and discuss these areas in more detail in the fifth step.

4. Review or Create Sales Plans & Forecasts

Once you finish process mapping, review or create sales plans and forecasts. If you’ve never done a sales forecast, you’ll need to create one from scratch. See our article on how to create a sales forecast for information on how to do that. If you’ve done them before, review and discuss with your team the implications of your sales plans and forecasts on your sales and operations processes. Note any concerns or changes that may need to take place to achieve your goals.

Next, review or create production planning forecasts. In light of your sales plans and forecasts, you will probably need to adjust your production plans so that you can meet the demand created by your sales efforts. This is especially true of businesses with physical products. For businesses offering non-tangible products or services, you may need to adjust other resources like staffing for service delivery or IT storage capacity for software.

5. Document & Discuss Issues or Opportunities

Once you’re done documenting your sales and operations processes and you’ve considered your sales and production forecasts and plans, it’s time to document issues and opportunities that have come to light. Once you’ve documented them, discuss them at length and make any changes necessary to your process.

For instance, if during this process you’ve uncovered a two-week lag time from new lead capture to loading the lead into the sales person’s queue, document and discuss this issue. First, discuss how important it is to your business. A two week lag time can result in the lead moving on. Next, find out if this is happening with all leads or ones coming from a specific source. Then look at your process to determine what changes can shorten this lead time.

This exercise helps you prioritize any future action you might take. If a lead moves on due to a two week lag time, you’ve invested time and money in generating a lead but missed your opportunity to create a sale. This is something that should be a high priority to fix.

6. Create & Document an S&OP Plan

After you’ve documented and discussed any issues and opportunities, create and document an overall S&OP plan. Your sales and operations plan should cover a specific time frame and encompass all of the issues and opportunities you’ve deemed important along with your S&OP team. Your plan should be a living and breathing document that everyone on your team can access. There should also be a document owner who makes and manages any changes.

To continuously keep your plan aligned with the direction of your organization, your S&OP team should meet regularly to ensure your sales and operations processes are supporting your sales goals and objectives. Continue to create and document plans as the needs of your organization change. This will ensure that your S&OP efforts take your company in the direction you plan.

7. Roll-out Sales & Operations Plan

The last step is to roll-out your sales and operations plan. Depending on the maturity of your organization, a roll-out can take on a variety of forms. If your company has never had a sales and operations plan, you’ll want a more formal roll-out to bring attention to your processes and changes. If your company does sales and operations planning, a phased roll-out or a roll-out of changes to specific things in the process is more appropriate.

For instance, if you’re doing a product launch and your sales forecast shows that you will sell a certain number of your new product and very similar numbers of your existing products, your S&OP changes and roll-out will more than likely focus on your new product launch. If there are critical changes that need to occur within your existing processes supporting your existing product lines, you may need to roll-out changes to existing processes first.

The best way to roll-out changes or new initiatives is with a clear communication and training strategy. With clear communication and training, everyone in the organization can be aligned with any new changes and for those whose job functions will change as a result, they will be more prepared to implement a new or modified process. This provides your team with the framework and resources needed to successfully implement your plan.

S&OP Tools & Resources

There are many tools and resources that support sales and operations planning. In addition to process mapping tools like Microsoft Visio, there are a number of other tools that support S&OP including reporting and analytics, training and courses, and ERP and inventory management.

Here are more details around additional sales and operations planning tools and resources:

• Reporting & analytics tools: Reporting and analytics tools can help you with the forecasting aspect of sales and operations planning. If your reporting and analytics are accessible to your entire S&OP team, members of your team can review reports and prepare their areas accordingly.
• S&OP training: There are training courses and certification programs in this area. Programs by the SOP Institute and IBF (Institute of Business Forecasting & Planning), can prepare you to become an expert in this area.
• ERP, inventory & production management: Business management tools like ERPs, inventory management, and production management tools come in handy for businesses selling physical goods. Among other things, it allows everyone to see the impact of things like back orders on the sales process.

Bottom Line

Sales operations and planning is a proactive way for you to ensure your operations and processes are all aligned with your sales initiatives. Sometimes sales plans and forecasts are not supported by operations and processes, and that’s where S&OP comes into play. By following the steps outlined here and customizing them to meet your needs, you’re sure to proactively plan your sales and operations initiatives in a way that achieves your overall goals.

Proactively planning your sales and operations processes is much easier when you have the tools to help you visualize your process and track your activities. A CRM like Freshworks CRM helps you do this by allowing you to capture sales data, create reports, and do sales forecasting. To see if Freshworks CRM is right for you, sign-up for a 21-day free trial enroll in their free forever plan.

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