S&OP: How To Use Sales and Operations Planning (2026)

Sales and operations planning (S&OP) is a recurring business planning process that integrates demand, supply, and financial planning. 

Because the acronyms are similar, people can confuse S&OP with standard operating procedure (SOP). But an SOP documents how to complete a task, while S&OP is a recurring management cycle that sets what a business will sell, produce, and stock over the coming months.

This guide covers what S&OP is, how it compares to business processes like S&OE, SIOP, and MRP, how to use the S&OP process, and the best practices to keep it on track.

What is S&OP?

Sales and operations planning (S&OP) is a regular, cross-functional process that lines up a business’s sales forecast with its production and supply capacity. Sales, operations, finance, marketing, and procurement teams bring their own numbers to the table so projected demand and available supply align with the same plan.

A 2025 study of S&OP processes says that S&OP is generally performed at least monthly and reviewed by management. The process is a core part of a business’s supply chain management, ensuring demand forecasts, production, inventory, and logistics decisions work together to keep products in stock.

S&OP has a few advantages over planning department by department:

• Data-driven forecasts. S&OP replaces best-guess sales estimates and production targets with numbers gathered from actual demand and supply data.
• Cross-department alignment. Sales, operations, finance, and procurement all work from the same plan instead of their own numbers that may not match.
• Fewer surprises in financial planning. The finance team updates its numbers alongside the sales and supply plan each cycle, so they don’t have to rework their budget after the fact.
• A built-in feedback loop. Each month’s plan is built from the previous cycle’s actual results, not a guesstimate.

S&OP vs. S&OE, SIOP, and MRP

Business planning has several similar initialisms, and each process decides something different. The table below compares four main options.

Integrated business planning (IBP) is a related but broader process. S&OP focuses on balancing sales and operations, while IBP extends the process to include financial plans, product portfolio decisions, and strategic initiatives. 

How to use the S&OP process

S&OP isn’t a one-and-done process. It’s an ongoing monthly cycle, where each cycle’s results feed into the next month’s forecast. Each participating department contributes at a different point in the cycle, moving through the following six stages.

1. Review current period

The review includes a look at:

• Your products and their life cycles, including any planned launches or discontinuations
• Trends in customer demand or changes in the market
• Inventory and production capacity
• Production, shipping, and storage costs
• The state of the economy, inflation, and regulations; in a 2026 report from the Federal Reserve, 69% of retail firms surveyed named tariff-related cost increases as a financial challenge, the highest share of any industry surveyed, and 77% reported rising costs, tariff-related cost increases, or both

Shopify’s inventory reports and analytics dashboard already cover much of this ground, including month-end inventory snapshots and sell-through rates. Operations or supply chain leads run the review, pulling in numbers from finance and sales along the way. The results of the current period review will influence your S&OP for the next period.

2. Forecast demand

Forecasting demand, sometimes called the demand review, starts by looking back at whether sales met the last forecast and, if not, why.

A reliable demand forecast combines historical sales with known promotions, product launches, discontinuations, and other assumptions about the months ahead, rather than projecting last month’s numbers alone. Shopify’s guidance on forecasting orders walks through how to build a forecast from your store’s sales history and account for changes.

Demand can shift from year to year. For example, US holiday retail sales grew 4.1% year over year in the 2025 season, inside the National Retail Federation’s pre-season forecast range of 3.7% to 4.2%. If your demand forecast only repeats last year’s holiday numbers, you’ll underestimate how much inventory your store needs.

Sales and marketing teams lead the demand review, sometimes drawing on the store’s broader sales management process to pull historical numbers and factor seasonal patterns into their forecasting.

3. Forecast supply

Supply planning follows the demand review, once the operations and purchasing teams have a number to plan against. They’ll then assess available inventory and production capacity against the forecast to determine if there’s enough in stock or enough capacity to build more.

If there’s a surplus, the question then becomes how much is sitting in inventory and what it costs to store. If there’s a shortfall, they need to pinpoint why. A lack of raw materials could mean something other than a break in the supply chain itself. Trade policy adds even more uncertainty on the supply side. Ninety-five percent of retail executives surveyed by Deloitte said they expect global trade policies to raise costs. 

4. Preliminary S&OP meeting (demand-supply reconciliation)

The preliminary S&OP meeting, sometimes called demand-supply reconciliation, is where leaders from sales, operations, and finance compare demand and supply forecasts side by side and reconcile any differences between them.

In this meeting, the finance team prices each option to close the gap. For example, they might compare the cost of a weekend production shift with the costs of building extra inventory now or putting smaller accounts on allocation.

5. Executive S&OP

Executive S&OP is where the business owner, or senior executives at larger companies, review and approve the final plan. Leadership reviews the priced options from the preliminary meeting, weighs the risk of each, and either approves the plan or sends it back for another look if the numbers don’t add up.

6. Implement the plan

Once the plan is approved, each team acts on its assigned tasks. For example, the marketing department might roll out a new advertising campaign based on an S&OP target of 10% sales growth. Meanwhile, the procurement team sends out bid requests to suppliers and begins purchasing additional materials to meet the S&OP target of a 10% production increase.

S&OP best practices

S&OP has many moving parts, and each of the following practices helps organize the process.

Define your metrics

Without shared metrics, there’s no way to tell whether last month’s plan worked, or which parts you can repeat and which you need to fix. The table below covers six metrics worth tracking and how to find each one.

In a 2025 Shopify survey, 77% of store owners reviewed sales or total revenue, making it the most commonly tracked metric, while fewer than half tracked profit margin, traffic, average order value, or conversion rate.*

Expanding the metrics you assess can give you a clearer view of your business, especially during S&OP. Shopify’s analytics field definitions cover what each built-in metric means and how it’s calculated.

Another good practice is to compare your inventory levels against your product category. For example, US general merchandise retailers carried about 1.24 months of inventory relative to sales in April 2026, while building materials and garden retailers carried about 2.1 months’ worth in the same period.

Use the right software

Programs designed for S&OP can dynamically update your business’s operations and sales data, making period-to-period planning more efficient than spreadsheets alone. 

However, a spreadsheet is still a reasonable place to start, and it can work well as long as one person owns it. Once several people edit the same file, version conflicts and copy-paste errors can creep in, and the plan drifts from the real numbers. Software can add speed and visibility, with automatic updates replacing manual reentry and a shared view making teamwork more efficient.

When deciding whether it’s time to invest in S&OP software, look at:

• How many SKUs and locations you need to track
• How many people need to see or edit the plan
• How often stockouts or overstocks happen because of outdated data

The more SKUs, locations, and people your plan covers, the more time planning software saves. 

A few Shopify tools can also help. Shopify Flow can automate low-stock alerts when inventory crosses a set threshold. Sidekick, Shopify’s AI assistant, can analyze sales data and recommend reorder or transfer amounts, even drafting the purchase order itself. Inventory Planner by Sage is a third-party Shopify App Store app that connects sales history to purchasing recommendations.

Designate a leader

If it’s a group effort, the S&OP needs someone to lead, marshaling the teams and keeping the planning process moving. That includes confirming who owns each input: sales and marketing for demand, operations for supply, and finance for costs. The point person doesn’t necessarily need to be the business owner, but they should have some sales and operations experience and be able to maintain the schedule and ensure key stakeholder participation.

Because the preliminary and executive meetings can both surface disagreements between departments, the leader also needs the authority to resolve deadlocks. If the teams involved can’t agree on a trade-off, someone has to have the final say before the next cycle starts.

Knock down silos

Silos happen when teams hoard information or use separate software systems that don’t talk to each other, and they can lead to duplicated work across departments. They can also hinder data quality. If sales and operations pull their numbers from different systems, or one team’s figures are a week behind the other’s, plans get built on mismatched information. A good S&OP process uses shared software across teams.

Plan for contingencies

The future is unknowable, and S&OP can account for this by including plans for responding to unforeseen events. For example, consider how a supplier delay might affect production, or how a sharp economic turn would change customer demand. 

Planning for contingencies can give you flexibility in the S&OP process. Safety stock––extra inventory held above forecasted demand––is one available inventory mechanism. It buys time if a shipment is running late or demand spikes unexpectedly, without your team having to rework the whole plan.

Keep complete records

Keeping a record of your plan and the decisions behind it gives you concrete data to measure the next cycle against. Without it, each cycle starts from memory, and you can repeat forecasting mistakes. Detailed records also help you track forecast accuracy and plan adherence.

Shopify’s built-in inventory management keeps a full history of inventory changes and automatically tracks transfers and adjustments, so you don’t need a separate system to view that information. Store owners can enter reasons to explain inventory adjustments so the adjustment history shows why each change happened.

*Based on a November 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.