Who must provide raw materials, component parts, and packaging. The S&OP process provides a “junction box” where information can flow between the demand side and the supply side of an enterprise.
As shown in Figure 5.4, critical input to the S&OP process is the sales forecast, which is, as defined above, the projection into the future of expected demand. The sales forecast should originate in the demand side of the enterprise, since it is the demand side of the enterprise (i.e., sales and marketing) that is responsible for gen- erating demand, and who should have the best perspective on what future demand will be. In addition to the sales forecast, which originates in the demand side of the company, another critical input to the S&OP process is a capacity plan. A capacity plan is a projection into the future about what supply capabilities will be, given a set of environmental assumptions. This input is provided by the supply side of the enterprise, and documents both long- and short-term supply capabilities. The process that occurs inside the S&OP process—the junction box—is the matching of future demand projections (i.e., the sales forecast) with future supply projections (i.e., the capacity plan).