The Smarter Startup

Sales & Operations Planning (S&OP) Process for Startups

An S&OP process aligns demand, supply, and financial planning to help your startup manage cash and develop a resilient supply chain.

This article is the second installment of a two-part series on supply chain challenges and Sales & Operations Planning (S&OP) for startups. In last week’s article we examined cash management and supply chain challenges of startups. In today’s article we take a detailed look at how a robust S&OP process alleviates these challenges by assuring alignment between sales outlook and supply plan.

As we saw in last week’s article, managing a startup’s supply chain is a delicate balancing act. Startups often offer new products with little to no sales history, have limited resources, and are highly sensitive to cash needs. The additional supply chain challenges over the past 24 month have made a difficult challenge even more daunting.

For these reasons, startups with inventory should consider implementing an S&OP process early in its business stage – often before sales even ramp up, depending on the complexity of the supply chain and customer fulfillment goals. S&OP is an integrated planning process that aligns demand, supply, and financial planning, and is managed as part of a company’s master planning. S&OP is designed and executed to support executive decision-making related to approving a feasible and profitable material and financial plan.

S&OP Helps Startups Answer Questions Like:

  • How do I manage risk (such as lost sales due to inability to fulfill; too much inventory; obsolete inventory; supplier uncertainty)?
  • How much cash should I be tying up in inventory? How much should I be forecasting?
  • Who is responsible for managing inventory levels? How do I balance demand uncertainty with supply uncertainty?
  • How do I reconcile my sales forecast, financial forecast with my production plan and materials ordering?
  • What metrics do I use to manage the business and incentivize various parts of the organization?

What About Accounting & Control?

Accounting and control are important supporting functions for managing supply chain and business performance, but they don’t address the above questions. Financial systems with ERP capabilities help to provide accurate inventory counts and value, allow integration with work-order modules, provide up-to-date BOMs, and facilitate month-end processes. However, to assure alignment between sales outlook and supply plan, a robust process is needed. This is where the S&OP process becomes essential.

S&OP Assures Alignment Between Sales Outlook and Supply Plan

Illustration of the balancing act between sales outlook and supply plan

S&OP enables startups to make decisions and take actions to:

  • Meet customer demand in coming months
  • Implement plans to deal with inherent uncertainties in the sales forecast (and possibly supply chain); i.e., how to deal with commercial risks, and what are the right tradeoffs (cash, inventory, delayed sales)
  • Efficiently schedule production and input needs (including equipment, long lead-time items)
  • Assure coordination between event-driven items (e.g., marketing promotion) and inventory/production scheduling
  • Develop plans to economically deal with “one-time” issues (e.g., low remaining shelf-life SKUs)
  • Optimize logistics performance

Overview of the S&OP Monthly Cycle

Flowchart of the monthly process

Critical functions and inputs of an S&OP process for startups:

  • Creation of rolling sales forecast and demand uncertainties, upsides/downsides and reconciliation with financial forecast
  • Translation of demand outlook, cash needs and risk assessment into material needs based on fulfillment targets, target inventory levels, lead-time variabilities, and risk assessments
  • Coordination of S&OP process; analysis of data and preparation of decision topics (and issues) for monthly S&OP discussion
  • Monthly S&OP cycle meeting should include high-level leader participation

Implementing the Monthly S&OP Cycle


The S&OP cycle helps assure alignment between the sales outlook (customer demand, market uncertainties, customer fulfillment targets) and supply (lead-time and supply chain variabilities, inventory levels, production planning, contingencies).

Meeting Frequency – Once Per Month

It’s generally best to conduct the S&OP meeting mid-month, or as soon as the prior month’s sales numbers and updated inventory numbers are available, and the coordinator has been able to analyze the latest numbers and prepare a discussion agenda and supporting materials.

Who Attends to S&OP Meeting?

  • C-level (CEO, COO, CFO)
  • Lead from sales and marketing (close-to-customer / close-to-market person)
  • Demand planner
  • Lead from operations / production
  • S&OP coordinator

Of course due to open positions and limited resources it’s possible that a single individual may have to cover multiple roles.

S&OP Meeting Agenda & Format

Agenda should include:

  • Rolling 12-month forecast, by month; discussion should focus on:
    • Major changes from prior forecast – it is not necessary to review every item/customer if there is no change from prior forecast. This should be exception-based.
    • Major uncertainties that could create big swings in the demand (either above or below forecast); note in such cases decisions will need to be taken on how to handle the uncertainty, and what is the appropriate risk balancing for the company (examples: produce to the upside; plan for a contingency such as “production overtime”; get customer to spread out deliveries; take stockout risk,…)
  • Identified gaps between customer demand and supply that could create missed sales (either needs to be resolved in the meeting or becomes an action, with an “owner” for decision within 30 days or less)
  • Performance tracking on key metrics; examples: (a.) working capital reduction target to generate $250K of cash; (b.) inventory targets for specific components or materials; (c.) forecast accuracy; …
  • Potential promotional events; timing, impact and preparation
  • Other material supply chain items (e.g., pending shelf life or obsolescence issues that need coordinated plan of action)

Meeting Format:

  • S&OP meeting coordinator should prepare an agenda, to include updated forecast, inventory levels and tracking on key metrics
  • List of 3 to 5 high-impact issues or uncertainties that need discussion and alignment on what to do
  • Start with status on assigned actions from prior meetings; are they complete?
  • Cover agenda as outlined above
  • Drive to decisions; where more analysis or additional info is needed, action should be assigned to an individual along with a get-it-done-by date.
  • Decisions and assigned actions should be captured

Roles and Responsibilities

S&OP coordinator

  • Prepare agenda, maintain action items and tracking, update forecast and analytics, drive meeting agenda Highlight high-priority issues / decisions needed – should include suggested solutions

Sales, marketing, demand planner

  • Link to market dynamics, customer demand and outlook, sales uncertainties, and customer priorities to the extent there are trade-off that need to be made

Operations lead / COO

  • Understanding of lead times and uncertainties/variabilities; production capacity and resourcing; translation of demand outlook (and uncertainties/variabilities) to implications for inventory and supply needs; identification of potential issues


  • Quantification of risks, trade-offs; implications for cash management and runway; reconciliation of demand forecast with financial forecast and external commitments; tracking of key metrics; recommendations


  • Setting of overall policy and strategic priorities; drive to resolution on trade-off decisions

Burkland can help startups manage and reduce supply chain challenges and implement a scalable S&OP process. I and others on our CFO team have deep experience in supply chain and cash management, and this experience is critical when scaling your startup. Burkland also has a dedicated inventory team to help with inventory challenges. Contact us for more information.