Sales and Operations Planning (S&OP) is a cross-functional process that aligns demand plans with inventory, supply, and financial constraints. In ecommerce operations, it ensures sales expectations, inventory investment, and operational capacity are coordinated into a single, executable plan.

1. What it is (Definition)

Sales and Operations Planning (S&OP) is a cross-functional planning process that aligns demand expectations with inventory, supply, and financial constraints over a medium-term horizon. In ecommerce operations, S&OP connects sales plans, demand forecasts, inventory positions, and operational capacity into a single, shared plan.

S&OP is not a forecast and not an inventory report. It is a decision-making framework. Its purpose is to ensure that sales goals, inventory investments, and operational capabilities are internally consistent before execution begins. When done well, S&OP creates a realistic plan that the business can actually deliver.

For ecommerce brands, S&OP typically operates at a monthly cadence and looks several months ahead. It translates demand planning outputs into inventory purchasing plans, cash requirements, and service-level expectations. The outcome is alignment: sales, operations, and finance agree on what will be sold, what will be stocked, and what trade-offs are acceptable.

S&OP does not eliminate uncertainty. Instead, it provides structured visibility into risks and constraints so decisions are intentional rather than reactive.

2.Who it’s for

S&OP is most valuable for mid-market ecommerce brands and aggregators operating between $5M and $100M in annual revenue. At this stage, teams are large enough that decisions are distributed, but not yet standardized without a formal process.

Shopify-based ecommerce businesses benefit from S&OP as SKU counts grow and promotions become more frequent. Without alignment, marketing can drive demand that operations cannot support, leading to stockouts or expedited costs.

Amazon and Walmart third-party sellers face additional pressure because marketplace performance depends on inventory availability and fulfillment consistency. S&OP helps these teams balance growth ambitions with inventory and capacity realities.

Multichannel ecommerce teams managing shared inventory pools rely on S&OP to coordinate inventory allocation across direct-to-consumer and marketplace channels. Without a shared plan, each channel tends to optimize locally, creating global inefficiencies.

S&OP is less critical for early-stage brands with limited complexity, but becomes essential once inventory decisions materially impact cash flow and customer experience.

3. How it works

The S&OP process typically starts with demand planning. Historical sales data and forward-looking assumptions produce a demand outlook for the coming months. This forecast represents what the business expects to sell, not what it hopes to sell.

Operations then evaluates whether current inventory levels, supplier lead times, and fulfillment capacity can support that demand. Constraints such as long lead times, minimum order quantities, or warehouse limits are surfaced.

Finance reviews the implications of these plans on cash flow and inventory investment. This step ensures that proposed inventory buys align with financial constraints and working capital availability.

Trade-offs are discussed explicitly. If demand exceeds supply or budget limits, the team decides whether to adjust sales plans, phase promotions, accept lower fill rates, or increase inventory risk. These decisions are made intentionally rather than discovered after the fact.

The output of S&OP is a single, agreed-upon plan that guides purchasing, replenishment, and execution. As the month progresses, actual performance is tracked against the plan, and variances inform the next planning cycle.

S&OP is most effective when it is repeatable and disciplined. The value comes from the cadence and alignment, not from perfect forecasts.

4. Key metrics

Inventory turnover reflects how well S&OP balances demand and inventory investment over time. Stable or improving turnover suggests that inventory buys are aligned with realistic sales expectations rather than reactive corrections.

Sell-through rate helps evaluate whether inventory purchased under the S&OP plan is selling as intended. Consistent sell-through indicates alignment between planned demand and actual customer behavior.

Weeks of supply is a core planning input and output in S&OP. Demand plans determine expected coverage, and deviations signal misalignment between sales expectations and purchasing decisions.

Fill rate represents the service-level outcome of S&OP decisions. When S&OP properly anticipates demand and constraints, fill rates are more stable. Poor S&OP execution often leads to surprise stockouts or uneven availability.

Together, these metrics provide feedback on whether S&OP decisions are producing predictable, balanced outcomes across inventory, service, and cash flow.

5. FAQ

Is S&OP the same as demand planning?
No. Demand planning is an input to S&OP. S&OP aligns demand with supply and financial constraints to produce an executable plan.

How often should S&OP run?
Most ecommerce teams run S&OP monthly, with weekly monitoring to track variances and risks.

Does S&OP require enterprise systems?
No. The process matters more than the tools, though software helps as SKU counts and channels increase.

Who should be involved in S&OP?
Sales, operations, and finance should all participate to ensure plans are realistic and aligned.

What happens if S&OP is skipped?
Decisions become reactive, misaligned, and financially risky, often resulting in stockouts, excess inventory, or cash surprises.