OPERATIONAL SALES PLANNING

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Requirement

Task 1: An operational sales plan
Task 2: Preparation of a presentation to directors
Task 3: A brief report for the sales & marketing director

Solution

Task 1

Introduction

It is necessary for the business organization to align operational sales planning with the overall corporate strategy and marketing strategy of the organization. Sales are considered as the revenue generated function for the organization to achieving predetermined profitability targets in the corporate strategy. So, it is necessary for the organization to establish alignment between marketing strategy, corporate targets, and operational sales planning. The management of the organizations should break down the corporate objectives and should assign specific territories to ensure the development of the organization (Hulthen, 2016). However, it can be said that the planned activities of the organization need to be aligned, and the objectives of different plans should be integrated with each other.

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1.1    How Organization’s Business and Marketing activities inform Operational Sales Planning

Planning and Decision-making activities are considered the key activities of a business organization which takes place different levels of the organization. In an organization, planning is done on three levels which are strategic, tactical and operational level. Strategic level planning is done for the long term and conducted by the senior management. Tactical level planning is done for the medium-term resource by the middle-level managers and operational level planning is done for performing day to day activities of procedures and processes. Sales operational planning is considered as an important process that enables the organization to generate high revenue. So, it is necessary that sales planning should consider the marketing tactical plan and corporate level strategic plan. Planning of both the levels helps operational planning to determine sales targets, territories priorities, etc. The process of implementation plan involves a high degree of iterative communications. Depending upon the degree of fit, the sales plan may be accepted or amended as required.
Sales Forecasting Techniques
Predicting the accurate sales is considered a complex task for the management of the organization. Sales forecasts are mainly done for aid planning across the organization such as cash flow planning, production procurement, and scheduling. Sales forecasting is very useful in making more detailed sales plans.

2.1 How Historical Data Informs Sales Forecasts

Prediction of future sales is considered the most challenging task for the sales manager. Sales forecasting is also a very important task because it not only feed into sales and marketing activities but is also depend on other parts of the organization. Strategically sales forecasts are considered very important because it helps the management in plan expansion and product development of the organization (Tuomikangas, 2014). Historical sales are considered the key input for the management to forecast future sales. Historical sales provide an indication of future sales. In addition to it, the management also has to be aware of any changing circumstance that could directly affect sales of the organization. Sales forecast assumptions can be following:

  • Sales force size compared to previous year

  • Expenses on advertisement

  • Shrinkage/Market growth

  • Introduction of New Product

  • Sales Decline

  • Promotional activities

The management should ask the marketing and sales team of the organization to ensure the realistic of future predictions (Thomé, 2014).

2.2 Range of Sales Forecasting Techniques

Sales forecasting techniques are two types: Qualitative and Quantitative.
Quantitative forecasting mainly depends on historical data of the past demands and uses mathematical formulas to calculate the forecasted future demand. The organization can use excel or other software’s to calculate the quantitative sales forecasting. 
Qualitative forecasting mainly depends on estimates. Conducting qualitative forecasting is necessary when there is the absence of past demand, or the product is new in the market.
Sales forecasting can be done by using following statistical tools:

  • Time Series Analysis

  • Casual Methods

  • Market Research

  • Delphi Method

  • Sales Force Planning

2.3 How Sales Forecasts are used to set Sales Objectives and Targets

Prediction of sales is considered a useful input for the sales planning process make it easier to set specific sales targets. Sales forecasting is also considered necessary for the other business operations activities like production, budgeting, and scheduling. It helps the management in understanding the cash flow into the organization which will be helpful in avoiding cash flow problems (Megahed, 2016). Efficient sales planning can be done through sales forecasts. So, proactive business plans are formulated by the management rather than just being reactive. Sales forecasts enable the management to focus on planning how the forecasts are going to be reached in future.
Set Targets and Objectives in a Sales Plan
Sales plan of an organization should be efficient and effective to achieve successful sales. The forecasts help the sales team managers to effectively plan how they are going to organize the team to obtain predetermined targets.

3.1 Time plan for the Establishment of Objectives and Targets for Sales Plans

The structure of sales planning process mainly depends on the way the organization organizes its planning cycles. This time, the period can be the fiscal year. However, the financial year of every organization can be over any twelve-month period. The organization can also formulate a plan for a shorter period of 3 months, and for a longer period of 5 years. During the formulation of the time period, the organization should focus on the set of activities. Sales planning a cycle of the organization maps its overall cycle. Most of the organizations subdivided their time periods into weekly or even daily time period. The time period should be framed by the granularity of the activities and decisions that need to be taken over similar time slots.

3.2 Sales forecasts to set Objectives and Targets for a Sales Plan

The sales forecast is considered as an important input for developing focused and realistic sales plan (Thorogood, 2013). The forecast enables the sales manager to understand the sales clearly that need to be obtained over the planning period. Sales plan mainly focuses on:

  • Recognizing all important territories and segments

  • Measuring sales team skills

  • Measuring 

Sales plan of an organization should have clear objectives for each area. To formulating the effective sales plan, the sales manager should build performance targets that make it clear to the team what they need to do.
Operational Sales Plan

4.1 Operational sales plan to meet Objectives and Targets

Operational sales plan structure is following:

  • Objectives: These should be SMART and take heed of the business objectives as well as those of other functional departments.

  • Strategy: It is considered as an overall approach which states how objectives of the organization will be achieved. The strategy may be like target market segmentation, differentiation, new customer acquisition, etc.

  • Tactics: This considers the particular customer types that the organization will sell to, and in what way. Tactics determine who will do the selling, the selling products, sales tools and aids that will assist the sales process.

  • Actions: It involves the details of who will do what, by when. In other words, it is the implementation plan of the tactics.

  • Controls: It is the process of monitoring the actual implementation of the system. 

4.2 Sales Territories

Designing the sales territories is considered a complex process for the sales team manager. Sales territory design is based on historical approaches to how it has been structured (Lei, 2015). The sales territories is mainly designed for:

  • Minimize traveling costs and time

  • Enable the salesperson to get to their customers

  • Motivation of salespeople by providing freedom

  • Keep administration and organization simple

4.3 Business case to obtain the resources to achieve the Operational Sales Plan’s Objectives and Targets

The main motive behind formulating a business case is to measure the potential; affordability, value for money and achievability of the sales plan objectives. Structure of the business case is following:

  • Strategic Context: This demonstrates how the resource will contribute towards the strategic performance of the sales team (Tuomikangas, 2014).

  • Investment Objectives: This is the combination of different objectives that will be achieved.

  • Existing Arrangements: This comprises a snapshot of the present approach in the absence of the specific resource for attaining the goals.

  • Business needs: These can be current and future.

  • Benefits Criteria: It will show the main benefits achieved through investment in resources.

  • Risks: It determines the availability of risk in investing the resources.

  • Options: It is a list of options that should have considered to provide the resource

  • Timescales: It includes different stages in securing the resources.

  • Appendices: It comprises risk analysis, cash flow calculations, financial analysis, and any non-financial data.

Manage the Implementation of the Operational Sales Plan through the Sales Team

5.1 How to communicate the Operational Sales Plan to all Stakeholders and define Individual Roles and targets in the sales activity plan

Sales plan is communicated by:

  • Sales staff

  • Financial Management

  • Product Management

  • Directors of Organization

  • Sales Management

  • Marketing Management and Planners.

The sales plan communication process include a feedback loop. This means that the document to the stakeholder should be provided electronically or in hard copy. The most appropriate method for deciding individual sales target is a bottom-up approach (Gallego, 2014). It means that the performance of individuals is judged on the basis of their past performance.

5.2 How to monitor and control the Operational Sales Plan using agreed Key Performance Indicators

Key Performance Indicator is known as a measure of performance. KPI helps the organization in measuring their success in the market (Hemingway, 2013). KPIs are considered quantifiable measurement that shows the success factors of the organization. Some KPIs that would be evaluated as part of the sales plan are:

  • Margins

  • New customers gained 

  • Customer Lost

  • Sales level

The data for measuring the performance of such KPIs is collected through IT system. The main fact is that the collected data should be useful in the decision-making process.
How to deal with Variances to the Operational Sales Plan

6.1 Variances that may occur in the Implementation of the Operational Sales Plan

KPIs are considered quantitative measures and therefore variances are going to be numerical. The first decision that should be formulated is what an allowable tolerance is? The organization can select to accept + or -5% as a performance band. Above 5%, in excess of the target and the organization risk having the insufficient capacity or another resource to accomplish the business. Below 5%, under the target and the organization run the risk of financial losses or cash shortages. 

6.2 Contingency plan to address Variances

Formulating a contingency plan needs the organizations to think about what actions they could undertake that are diverse to those planned (MT Thomé, 2014). It wants a degree of lateral thinking to come up with feasible solutions should the under-performance occur.

6.3 The organization’s procedure for dealing with Unforeseen Variances

For each KPI's of the organization first need to understand the consequence of not achieving the desired performance. The organization can increase the resource like time, or people for saving itself from unforeseen variances and also can evaluate KPIs concerned with new customer acquisition or conversion rates.

Conclusion

After studying all this, it can be concluded that operational sale planning should align carefully by the sales manager to ensure the high performance in future. Sales functions are considered the main important functions upon which the whole profitability of the organization depends on. So, it is the responsibility of the sales manager to plan the marketing activities ensure high growth in future efficiently.

Task 2

Marketing strategies play an important role in operational sales planning. For achieving the profitability, the marketing strategies of the organization is divided into segments which help the sales manager in effectively targeting the requirements of each segment. For achieving the objective the sales manager of the organization is formulated a plan on the basis of the strategic, tactical and operational level. This helps the sales manager in enhancing their knowledge regarding day to sales activity and sales order achievement of the organization. If the Sales manager wants to formulate efficient business plans, they should forecast the estimated sales on the basis of past data (Thorogood, 2013). It can be concluded by following any techniques, but the main thing is that collected data should be realistic which helps in the formulating accurate decision. While formulating the sales plan of the organization sales manager should effectively utilize the available data to achieve successful sales. The sales manager should formulate SMART objectives for the sales plan which helps in determining the targets. The most important thing sales manager should efficiently plan the activities require for fulfilling the predetermined objectives of the organization. Operation sales plan should be developed as per the determined standards to ensure its profitability in future. In addition, the sales manager should efficiently manage the implementation of the operational sales plan which helps in performing functions efficiently. If the sales manager is facing any variance during the implementation of sales plan, an efficient way should be a plan to tackle with such variances. 

Task 3

Stakeholders are known as the person interested in the performance of the organization. Sales plan of the organization is communicated to stakeholders through:

  • Product Management

  • Financial Management

  • Marketing Management 

  • Operational Management

  • Company Director

  • Personnel supports the Sales function.

The role of every individual are different in sales plan like the financial staff will require numbers, ideally information, and volume that would allow them to formulate a cash flow budget as well profit and loss statement. On the other hand, operational management requires information that allows them to plan personal and capacity requirements. The marketing team of the organization should understand every activity related to the sales function. This will enable them to create a new market for their products. The process of communicating the sales plan should ideally include a feedback loop (Lee, 2012). Therefore, for the optimum inclusion of all functions within the business, each area should have an opportunity to contribute to the plan prior to it being finalized. The most important thing is that the sales management should continuously control and measure information from the sales plan. This will help them in drawing necessary information which is useful for the management in formulating decisions.

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References 

  • Hulthen, H., Näslund, D., & Norrman, A. (2016). Framework for measuring performance of the sales and operations planning process. International Journal of Physical Distribution & Logistics Management, 46(9).

  • Tuomikangas, N., & Kaipia, R. (2014). A coordination framework for sales and operations planning (S&OP): Synthesis from the literature. International Journal of Production Economics, 154, 243-262.

  • MT Thomé, A., Soucasaux Sousa, R., & FRRS do Carmo, L. (2014). Complexity as contingency in sales and operations planning. Industrial Management & Data Systems, 114(5), 678-695.

  • Lee, W. I., Shih, B. Y., & Chen, C. Y. (2012). A hybrid artificial intelligence sales?forecasting system in the convenience store industry. Human Factors and Ergonomics in Manufacturing & Service Industries, 22(3), 188-196.

  • Megahed, A., Yin, P., & Nezhad, H. R. M. (2016, June). An optimization approach to services sales forecasting in a multi-staged sales pipeline. InServices Computing (SCC), 2016 IEEE International Conference on (pp. 713-719). IEEE.

  • Gallego, G., & Talebian, M. (2014). Commissions and sales targets under competition. Management Science, 60(9), 2180-2197.

  • Lei, H., Laporte, G., Liu, Y., & Zhang, T. (2015). Dynamic design of sales territories. Computers & Operations Research, 56, 84-92.

  • Hemingway, J., Vontas, J., Poupardin, R., Raman, J., Lines, J., Schwabe, C., . & Kleinschmidt, I. (2013). Country-level operational implementation of the Global Plan for Insecticide Resistance Management. Proceedings of the National Academy of Sciences, 110(23), 9397-9402.

  • Thomé, A. M. T., Sousa, R. S., & Scavarda do Carmo, L. F. R. R. (2014). The impact of sales and operations planning practices on manufacturing operational performance. International Journal of Production Research, 52(7), 2108-2121.

  • Thorogood, J. L., & Crichton, M. T. (2013, March). Operational control and managing change: The integration of non-technical skills with workplace procedures. In SPE/IADC Drilling Conference. Society of Petroleum Engineers.

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