Demand forecasting
Sales and Operations Planning (S&OP)
By the Supply Chain Manager team · Updated October 16, 2026
Sales and operations planning (S&OP) is a regular, usually monthly, process that aligns sales forecasts, purchasing, inventory and finance on one plan.
A typical cycle reviews demand (what sales expects), supply (what purchasing and suppliers can deliver), reconciles the gaps, and ends with leadership signing off one plan. The value is less in any single forecast than in everyone working from the same numbers.
For a small distributor, S&OP does not need to be elaborate. A monthly hour where sales, purchasing and finance review the next quarter's expected demand, supply risks and stock budget covers most of the benefit, as long as the meeting ends with decisions that change orders.
S&OP example
Illustrative: sales expects a new contractor account to add 15% volume on a product family from next quarter. In S&OP, purchasing confirms suppliers can support it, finance approves the extra stock investment, and the forecast is updated before orders are placed instead of after stockouts start.
Why s&OP matters for distributors
Many distributor stockouts and overstocks come from information that existed in one department but never reached purchasing. S&OP is the meeting that moves it.
Common s&OP mistakes
- Turning S&OP into a report review with no decisions.
- Planning at too detailed a level; S&OP works on product families and totals, not every SKU.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.