S&OP and Integrated Tactical Planning (ITP)

Sales and Operations Planning (S&OP) and Integrated Tactical Planning (ITP) are corporate planning processes that focus on balancing supply and demand and managing resources effectively. Although both processes aim to optimise operations, they differ in scope, time horizon, teams involved and approach to strategic and operational decisions.

1. Scope and purpose

• S&OP (Sales and Operations Planning): S&OP is a planning process that aims to synchronise sales, production, logistics and finance activities to ensure balanced demand and supply. S&OP usually covers a horizon of 1 to 18 months and aims to achieve a balance between demand and supply on a medium-term level. The process integrates all functions of the company and the results of S&OP influence decisions on sales, production, inventory and finance.
• Integrated Tactical Planning (ITP): ITP focuses on a more tactical level of planning, covering a shorter time horizon (typically a few weeks to a few months). The aim of ITP is to precisely manage resources and optimise operations to meet sales plans in the short term. The ITP process integrates the planning of production, inventory, logistics and operations, but with a focus on achieving the business plan objectives in the medium term (e.g. one week to six months). ITP is more detailed than S&OP and operates at a more operational level, adapting plans to current market and production conditions.

2. Horizon time

• S&OP has a medium-term horizon (1 to 18 months), focusing on forecasts and plans that relate to future periods. The process is geared towards strategically aligning production and demand plans with anticipated demand.
• ITP is more tactical and covers a shorter period of time (usually a few weeks to a few months). ITP focuses on the implementation of operational plans in the short term, with an emphasis on operational efficiency and ongoing adaptation to changing market conditions.

3. Level of detail

• S&OP is a medium-term process that takes into account sales forecasts, production plans, inventories and future resource availability. It is a more global approach that aims to create an overall operational framework and long-term plans.
• ITP is more detailed and operational. It focuses on precise activities related to production, inventory, logistics and other operational aspects in the short term. ITP strives to meet S&OP objectives through more precise management and optimisation of resources at the level of daily operations.

4. Departments involved

• S&OP involves a wider group of stakeholders, including sales, production, logistics, finance and management departments. The process is more strategic and requires collaboration between different functions in the organisation to create plans that balance supply and demand in the medium term.
• ITP focuses on more operational teams, although it also involves different functions, it mainly involves departments responsible for the implementation of operational plans in the short term, and decisions are made at operational level.

5. Decision making

• S&OP focuses on strategic decision-making, such as aligning production with anticipated demand, setting financial targets and monitoring long-term trends. S&OP helps with investment decisions, inventory planning and medium-term production, based on market analysis and forecasts.
• ITP makes more detailed operational decisions, focusing on the day-to-day management of production, inventory and supply chain. The process is geared to quickly adapt to current operational conditions, such as changes in raw material availability, logistical problems or changes in product demand in the short term.

6. Flexibility and adaptation to changing conditions

• S&OP is more rigid in its structure, as it is based on forecasts and long-term plans, its aim being the long-term alignment of the company’s strategy with the market and demand.
• ITP is more flexible and agile. ITP implementations need to react quickly to changing operational conditions, such as changes in resource availability, production delays or changes in demand that occur in the short term.

Summary

The main differences between S&OP and Integrated Tactical Planning (ITP) are:

• Scope and time horizon – S&OP is more strategic and medium-term (1-18 months), while ITP is more operational and short-term (a few weeks to a few months).
• Level of detail – the S&OP focuses on global plans with long-term forecasts, while the ITP focuses on the precise implementation of plans in the short term.
• Departments involved – S&OP involves the wider functions in the organisation, while ITP focuses on operational departments such as production and logistics.
• Decision making – S&OP is concerned with strategic decisions, while ITP focuses on operational objectives and flexible adaptation to changing conditions in the short term.

Although the two processes are related and often work together, S&OP and ITP have different objectives and focus on different aspects of business management, making them complementary tools in operational and strategic planning.

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