Proactively and reactively managing risks through sales & operations planning

Abstract

Purpose: Risks can easily disrupt the demand–supply match targeted by sales and operations planning (S&OP). As surprisingly little is known of how organizations identify, assess, treat and monitor risks through tactical planning processes, this paper zooms in on the S&OP set-up and process parameters to explore how risks are managed through S&OP. Design/methodology/approach: A multiple case study analyzes the S&OP processes of seven organizations in the process industry, drawing on 17 in-depth interviews with high-ranking representatives, internal and external documents, and a group meeting with participating organizations. Findings: The study finds that organizations proactively design their S&OP based on their main risk focus stemming from the planning environment. In turn, such designs proactively support organizations' risk identification, assessment, treatment and monitoring through their S&OP execution. Reactively, a crisis S&OP meeting – making use of the structure of S&OP – can be used as a risk-treatment tool, and S&OP design can be temporarily adapted to deal with emerging risks. Originality/value: This study is among the first to empirically elucidate risk management through S&OP. S&OP design, execution and adaption are identified as three interconnected strategies that allow organizations to manage risks. The design enables risk management activities in the monthly execution of S&OP. The reactive role of S&OP in risk management is particularly novel.