Why Sales and Operations Planning Still Struggles in E-Commerce and Retail Companies

Sustainability Sales and Operations Planning (S and OP) is a vital business process, linking strategy with day-to-day operations and aligning the company around delivering a great customer experience. In many organisations, it is the backbone process that successfully connects commercial and operational teams. When it works, S and OP enables excellent customer experience, through transparency, collaboration, and balancing ambition with capability. In fact, Amazon’s robust and data-driven S and OP is a key reason for their ability to relentlessly deliver outstanding customer experience, independent of customer order volume upswings.

Yet in my 20 years  as supply chain practitioner, I have seen S and OP often being a pro-forma process without meaningful outputs, denying the possibility of delivering a successful peak season. The “OP” in S and OP in retailing stands for “managing the capacity required to move inventory through the supply chain to the customer”. Below are the four recurring issues that explain why the S and the OP are unconnected.

1. The challenge with Capacity Management             

Retailing capacity management is about a deep understanding of mechanical and labour capacity at different process steps and points in time. This discipline was adopted from manufacturing, where capacity management is a distinctive capability and the cornerstone of all operations. In contrast, the historical strength of retail lies in managing people, not equipment. Even in today’s increasingly automated retailing landscape, labour management skill still dominates core capacity planning capabilities.

This asymmetry becomes especially visible in processes like S and OP, where many retailers have yet to master building a robust, data-driven capacity plan. Yet delivering the sales plan is only possible if actual capacity is known and planned against.

So, what’s the issue? In my experience, retailers tend to apply two main methods: they either rely on rough estimation, or they project from historical data. Rarely do they “engineer” the process output - by analysing and tweaking input drivers to understand different outcome scenarios. Amazon famously applies manufacturing standards to warehousing operations – which is one of the reasons behind its (almost) never failing customer promise.

Why has this approach not become standard in retailing? From my perspective, there are two main reasons:

a)      Workforce complexity: The sheer number of people in the system – for example, hiring and training hundreds of pickers and packers during peak season – makes it harder to generate reliable, standardised output.

b)      Numerical capability: Deep quantitative skills are less common in retail supply chain operations than in manufacturing.

2. In e-commerce, flexibility frequently translates into variability of execution

In e-commerce, plans are more susceptible to erosion under real-time demand pressures. Commercial teams can (and at times must!) move promotion start times at very short notice in response to shifting demand or competitor behaviour. Unlike in traditional retail, there is no need to prepare stores, print leaflets, signage, or alter a physical environment. If stock is available in a central location, the website can change overnight. This challenges supply chain teams, who must adjust their workforce capacity up or down at short notice.

3. Customer experience is treated as a KPI rather than a cultural imperative

A great customer experience should be the foundation from which all else flows. In many organisations, however, customer experience lacks clear ownership. Commercial teams focus on sales and reporting on customer experience, operations manage throughput, and service teams address complaints. Yet S and OP should serve as the forum where conditions are created for consistently shaping the environment for excellent customer experience. From junior to senior management, maintaining vigilance around customer experience is essential; without it, the process risks being reduced to a numbers exercise.

4. S and OP is reduced to a sales forecast meeting

S and OP should never be treated as a one-sided forum where commercial teams present demand forecasts. If the process doesn’t lead to tangible follow-up  actions, across both commercial and operational functions, it can’t be considered true S and OP. Its core purpose is to align demand and capacity in support of the customer promise. Without this alignment, S and OP risks becoming little more than a reporting exercise. The key word is align: does Operations need to uplift capacity, or should Marketing adjust the customer promise and shape the demand curve to the available maximum capacity?

Towards a Better S and OP

So, what’s the way forward? The answer lies in differentiating clearly between the pre-S and OP process and the S and OP meeting itself.

The pre-S and OP process 

This phase requires discipline on both commercial and operational sides:

• Commercial teams must provide a forecast that converts a monthly top-down forecast   into daily unit demand. Crucially, it should move from dollars into units, and from monthly to daily volumes as only units and daily demand can be matched against operational capacity. The one shared “currency” of S and OP must be daily unit demand.
• Operations teams must plan bottom-up, translating mechanical  capacity, labour availability, and productivity rates into daily unit output over time. This provides a clear picture of what can realistically be delivered.

When these two views are compared – unit demand per day versus unit  output per day – the company can visualise the emerging unit backlog. Translated into backlog days, which is Customer Demand / Available output capacity, it is in effect the only metric Operations Executives should track to know whether the company is in the position to serve their customers well.

The S and OP meeting

The meeting itself should be a decision-making forum, orchestrated by supply chain, rather than Warehousing or Commercial Planning - to avoid biases. The focus should be on clarifying assumptions, demand uncertainties, and expected backlogs, and then deciding on whether to increase or decrease capacity or alter the customer promise. This will in essence decrease or increase the demand.

The meeting should answer three key questions:
1. What are the expected backlogs, and how will they affect customer promises?
2. At what additionalcost to serve can we reduce these backlogs, and is this justified by theprobability that demand will materialise?
3. Do we have to alterour customer promise or can we keep it?

Final thoughts

S and OP is too important to be reduced to a sales forecast meeting or a ritual of PowerPoint slides. Done properly - by bringing the demand and capacity into one view and expressing it as backlog days - it helps the executive team understand whether “the company is on track for a successful peak sales season or not”.

Yet the solution is quite simple: rigorous data-driven pre-work, a shared unit-based language, and a meeting that makes decisions rather than shares information.

When organisations embrace this discipline, S and OP becomes what it was always meant to be: the process that allows a business to keep its promises to customers, sustainably and profitably.