Antecedents to effective sales and operations planning

Purpose - Sales and Operations Planning (S&OP) serves as the essential cross-functional process for organizations to match supply in the form of production, inventory, and procurement with customer demand. Given recent studies revealing that S&OP is ineffective for most firms, the purpose of this paper is to investigate the critical antecedents of effective S&OP. Design/methodology/approach - Drawing on agency theory and stewardship theory, the authors develop and test a conceptual model that includes organizational integration, organizational priorities, standardized processes, and organizational engagement. The authors apply partial least squares structural equation modeling of survey data from S&OP practitioners to test the model. Findings - The results confirm the relationships among S&OP antecedents. Organizational integration positively influences a standardized S&OP process, and both the S&OP process and prioritization lead to stronger organizational S&OP engagement. Ultimately, organizational S&OP engagement is positively linked to enhanced operational, market, and profitability outcomes. Practical implications - The findings create a strong practical foundation for executing S&OP. The results also reveal a formal process for operationalizing the link between organizational integration and firm performance that is espoused but not detailed in existing literature. Originality/value - Existing research supports the potential performance impacts of S&OP but has yet to validate how to specifically operationalize S&OP.