S&OP Process for CPG Brands: Why Inventory Decisions Cannot Be Made in Isolation

Summary: What Growing Companies Need to Know

•       Most CPG brands between $5M and $50M in revenue make inventory, sales, and financial decisions in separate conversations. The result is misaligned stock levels, cash flow surprises, and teams that are always reacting.

•       A Sales and Operations Planning (S&OP) process connects those conversations. It is not a reporting cadence or a status meeting. It is a decision-making system that keeps purchasing, selling, and planning aligned in one direction.

•       When sales, operations, and finance operate in silos, the cost shows up in excess inventory, stockouts, blown budgets, and missed retail commitments. These are execution failures rooted in a planning failure.

•       The S&OP process for CPG brands does not need to be complex. A monthly cross-functional review built on clean data and clear ownership is enough to shift a brand from reactive to intentional.

•       Demand planning is the engine that makes S&OP useful. Without a reliable forecast feeding the process, the meetings become opinion contests rather than decision forums.

•       Founders who build S&OP early, before the operation gets too complex to coordinate informally, tend to scale with fewer cash crises, fewer team conflicts, and far less rework.

At some point in the growth of a CPG brand, coordination stops being free.

When you are doing $2M in revenue, the founder knows the inventory position, the sales pipeline, and the cash balance. The plan lives in one person's head, and that works. But by $10M or $20M, you have a head of sales with a growth forecast, an ops manager ordering product against a different number, and a finance lead looking at a cash model that does not quite reconcile with either. Everyone is working hard. Nobody is working from the same plan.

That is the problem the S&OP process for CPG brands is designed to solve. Not with more meetings or bigger systems, but with a disciplined structure that forces alignment between the functions that share responsibility for business outcomes.

This article walks through why siloed decision-making breaks down at scale, how a practical S&OP process works for growth-stage brands, where it most commonly fails, and how it connects directly to cash flow and working capital. If you are a founder or operator who has felt the friction of functions pulling in different directions, this is the framework that addresses the root cause.

What Breaks When Sales, Operations, and Finance Stop Talking

The failure mode is predictable, and most founders have experienced some version of it.

Sales closes a new retail account and promises a ship date. Operations finds out two weeks later and realizes the lead time to produce is longer than the window allows. Finance is not looped in until the inventory purchase hits the bank account and blows through the cash forecast. The account launches late, the relationship starts on rocky footing, and the team spends a month firefighting instead of executing.

That is not a people problem. It is a planning problem. And it gets worse as the business grows, because every new SKU, every new channel, and every new customer adds surface area for the same breakdown to happen again.

The Three Silos and What Each Gets Wrong Alone

Sales, left to its own devices, tends to be optimistic. That is their job. They are incented to close and grow, and their forecasts often reflect aspiration more than operational reality. When ops buys to a sales forecast that is 30% too high, the brand ends up over-inventoried with capital tied up in product that will not move for months.

Operations, without a demand signal from sales, tends to buy defensively. Buffer stock gets added to cover uncertainty. Lead time assumptions are padded. The result is the same: excess inventory, higher carrying costs, and cash tied up longer than necessary.

Finance, disconnected from the real operational plan, is essentially modeling a business that does not exist. The cash forecast is built on assumptions about when inventory will be purchased, when it will sell, and when cash will come back in. Without alignment with sales and ops, those assumptions are guesses. And when reality diverges from the model, the brand is almost always caught short.

The pattern across all three: each function optimizes for its own version of success, and the business pays for the gaps in between.

FAQ: Why do CPG brands struggle with siloed planning as they grow?

At small scale, one person often holds enough context to keep the business coordinated informally. As headcount grows and functions specialize, that informal coordination breaks down. Without a structured process to align sales, operations, and finance on a shared plan, each team optimizes for its own metrics and the business absorbs the cost of misalignment.

What S&OP Actually Is (and What It Is Not)

S&OP stands for Sales and Operations Planning. In enterprise companies, it is often a multi-week, multi-step process involving large teams, sophisticated software, and detailed statistical modeling. That version is not what growth-stage CPG brands need.

At its core, the S&OP process for CPG brands is a structured monthly conversation between sales, operations, and finance, built on a shared view of demand, supply, and financial position, with the purpose of making decisions and resolving tradeoffs before they become emergencies.

That is it. The sophistication can grow with the business. What matters at the $5M to $50M stage is the discipline of holding the conversation at all, with the right people in the room, on a consistent cadence, and with enough data to make real decisions.

What S&OP Is Not

•       It is not a status update meeting. The goal is not to report what happened. It is to decide what happens next.

•       It is not owned by ops alone. Sales and finance have to be present and accountable. An S&OP process that ops runs in isolation becomes an inventory planning meeting. That is valuable but not sufficient.

•       It is not a once-a-quarter planning session. Monthly is the minimum effective frequency for most CPG brands. Weekly check-ins on key metrics in between are common as the business grows.

•       It is not dependent on a specific tool or software platform. Brands run effective S&OP on a well-structured spreadsheet. The process creates value. The tool enables it.

FAQ: What does S&OP mean for a small or mid-sized CPG brand?

For a brand between $5M and $50M in revenue, S&OP is a monthly cross-functional meeting built on shared data, where sales, operations, and finance align on the demand plan, surface supply or cash constraints, and make decisions together. The goal is a single agreed-upon operating plan that every function executes against.

The Role of Demand Planning in S&OP

If S&OP is the decision-making process, demand planning is what makes those decisions possible.

Demand planning is the practice of building a forward-looking view of what the business expects to sell, by SKU and channel, over a defined planning horizon. For most CPG brands, that horizon is 12 months with rolling updates every month. The demand plan becomes the input that drives everything else: what to produce, when to order, how much cash will be needed, and when.

Without a reliable demand plan, S&OP devolves into opinion. Sales thinks demand will be higher. Ops is not sure. Finance wants a conservative number for the cash model. Nothing gets resolved because there is no agreed-upon baseline to work from.

What a Useful Demand Plan Contains

A demand plan at the growth stage does not need to be statistically perfect. It needs to be credible, documented, and agreed upon by sales and operations before the S&OP meeting begins. The core inputs include:

•       Rolling 12-month sales history by SKU and channel, adjusted for any known anomalies such as stockouts or one-time spikes

•       Confirmed retailer promotional events and their expected lift, by account

•       New distribution wins with agreed ship dates and expected velocity

•       Known losses: delistings, discontinued accounts, or SKUs being phased out

•       Any planned price changes that could affect near-term demand patterns

With these inputs, the demand planner or ops lead builds a baseline forecast that sales reviews and either endorses or adjusts. That agreed-upon number is what enters the S&OP meeting as the demand plan. Everything else, supply positioning, purchase orders, cash requirements, is built from there.

The Forecast Is Never Perfect, and That Is Fine

Founders sometimes resist demand planning because they feel they do not have enough data, or because past forecasts have been wrong. Both concerns are understandable and neither is a reason to avoid the process.

An imperfect, documented forecast is significantly more useful than an undocumented gut feeling. It creates a baseline you can learn from. When actual results diverge from plan, you can study why, improve the assumptions, and build accuracy over time. That compound improvement in forecast quality is one of the most valuable operational assets a growing CPG brand can build.

FAQ: How does demand planning connect to the S&OP process?

Demand planning provides the forecast that the S&OP process is built around. Before the monthly S&OP meeting, the demand plan is finalized by reconciling sales input with historical data. That agreed-upon forecast then drives supply decisions, inventory purchasing, and the financial plan for the period ahead. Without a shared demand plan, S&OP has no reliable foundation.

Common S&OP Failure Modes at the Growth Stage

Building an S&OP process is not hard. Sustaining one that actually drives decisions is. Most growth-stage brands that attempt S&OP fall into one of a few predictable failure patterns.

Failure Mode 1: The Meeting Without a Decision

The most common failure is an S&OP meeting that runs through a slide deck or a spreadsheet, surfaces every problem, and ends without resolving any of them. Everyone leaves feeling informed but nothing changes. The meeting becomes a reporting ritual rather than a decision forum.

Strong S&OP meetings have a decision log. Every meeting produces a list of what was agreed, who owns it, and by when. If there is nothing on the decision log, the meeting did not accomplish its purpose.

Failure Mode 2: Finance Is Not in the Room

Many CPG brands run what they call S&OP but it is really just a demand and supply review. Sales and ops are there, but the financial implications of the plan are not surfaced until the CFO or finance lead sees the cash forecast two weeks later and raises concerns.

Finance needs to be in the S&OP meeting, not to approve decisions but to surface the cash implications of what is being proposed in real time. When ops wants to build safety stock ahead of a promotional period, finance needs to show what that does to cash flow that month. That conversation needs to happen in the room, not after the fact.

Failure Mode 3: The Forecast Is Owned by One Person

When demand planning is done by a single person, often an ops lead or a planner, without meaningful input from sales, the forecast reflects operational caution more than commercial reality. Sales ends up with a plan they did not contribute to and feel no accountability for. When they beat the plan or miss it significantly, the response is a shrug rather than a learning conversation.

The demand plan needs to be co-owned. Sales provides the commercial intelligence: the account pipeline, the promotional calendar, the new distribution activity. Operations provides the historical baseline and the supply constraints. The plan that results reflects both.

Failure Mode 4: The Cadence Breaks Down Under Pressure

Growth-stage brands are busy. When a major launch is underway, or a retailer issue flares up, or the founder needs to focus on fundraising, the S&OP meeting is often the first thing to get pushed. Then it gets pushed again. Within two months the process has gone dormant, and the organization has reverted to ad hoc coordination.

The cadence is the process. An S&OP meeting held consistently at reduced fidelity is more valuable than a perfect process that only runs when things are calm. Protect the cadence even when the content is thin. The discipline of meeting is what keeps alignment from degrading.

FAQ: Why do S&OP processes fail at growing CPG brands?

The most common causes are meetings that produce no decisions, finance being excluded from the planning conversation, demand forecasts that sales does not own or trust, and a cadence that breaks down under growth pressure. Each of these is a structural problem, not a team problem, and each is fixable with clear process design and ownership.

How S&OP Connects to Cash Flow and Working Capital

For most founders, S&OP sounds like an operational discipline. The cash flow implications are not always obvious until they are not. Connecting the two is one of the highest-leverage things a leadership team can do.

Every inventory decision is a cash flow decision. When you decide to build six weeks of safety stock ahead of a promotional period, you are deciding to deploy working capital now in exchange for service level protection later. When you decide to run lean into a slow season, you are preserving cash at the cost of flexibility. S&OP is where those decisions get made deliberately, rather than by default.

The Cash Conversion Cycle Lives Inside S&OP

The cash conversion cycle measures how long it takes for a dollar spent on inventory to come back as cash from a customer. For most CPG brands selling through retail, that cycle runs 60 to 120 days when you account for production lead times, warehouse time, retailer payment terms, and distributor float.

Every decision made in S&OP affects that cycle. A purchasing decision made four weeks too early extends it. A demand plan that is 20% too optimistic leads to inventory that sits longer than expected, extending it further. A promotional build that does not sell through extends it most of all.

When S&OP is working well, the financial plan is built on the same assumptions as the operating plan. Finance knows what is being purchased, when it will ship, when it is expected to sell, and when cash will be collected. That alignment is the difference between a cash forecast that is useful and one that is fiction.

S&OP Is Where You Catch Problems Before They Cost You

One of the clearest benefits of a functioning S&OP process is the ability to see problems coming. If the demand plan shows a 40% increase in volume in Q4, and the supply review reveals a supplier with a 10-week lead time, the S&OP meeting in August is where you resolve that tension. Not in October, when it is too late.

That same visibility applies to cash. If the operating plan requires a $300,000 inventory build in November, and the cash forecast shows the business at $180,000 in October, those two facts need to be in the same room at the same time so a decision can be made. S&OP is that room.

FAQ: How does the S&OP process affect cash flow for a CPG brand?

S&OP is where inventory purchasing decisions are made, and every inventory purchase decision is a cash flow decision. A well-run S&OP process ensures the financial implications of the operating plan are visible and deliberate, rather than discovered after the fact. Brands with functioning S&OP processes have fewer cash flow surprises because the plan that drives purchasing decisions is the same plan that drives the cash forecast.

Running S&OP at the Growth Stage Without Overbuilding It

The version of S&OP described in supply chain textbooks was designed for companies with hundreds of millions in revenue and dedicated planning teams. Growth-stage CPG brands need the same outcome: a shared, executable plan. They do not need the same infrastructure to get there.

Here is what a right-sized S&OP process looks like at $5M to $30M in revenue.

The Monthly Meeting Structure

One meeting per month. 60 to 90 minutes. The same participants every time: whoever owns sales (founder, VP Sales, or account manager), whoever owns operations, and whoever owns finance. For most brands at this stage, that is three to four people.

The agenda has three parts. First, a review of last month: what the demand plan called for versus what actually happened, and what the variance tells you about your forecasting assumptions. Second, an update to the demand plan for the next three months, incorporating new information from sales. Third, the decisions: what needs to be purchased, when, and what that does to cash. Any tradeoffs that cannot be resolved by the participants get escalated to the founder in the meeting, not afterward.

The Data That Needs to Exist Before the Meeting

The S&OP meeting is only as good as the data that enters it. At minimum, the team needs to walk in with:

•       Actual sales by SKU and channel for the prior month, compared to the plan

•       Current on-hand inventory and in-transit by SKU

•       A rolling 12-week demand forecast by SKU, updated by sales in the prior week

•       Open purchase orders and their expected receipt dates

•       A cash position update and 90-day cash forecast from finance

This does not require enterprise software. A well-maintained spreadsheet with clean inputs serves most brands at this stage. The discipline of keeping it current is more important than the sophistication of the tool.

What Clear Ownership Looks Like

Every element of the S&OP process needs a named owner. The demand plan has an owner who is responsible for publishing it before the meeting. The supply review has an owner. The decision log has an owner who distributes it within 24 hours of the meeting. Without named ownership, accountability diffuses and the process degrades.

The founder's role in a mature S&OP process is to participate in the monthly meeting, resolve escalated tradeoffs, and protect the cadence. The process should not require the founder to run it. If it does, it is not yet a process.

FAQ: How do you run S&OP without a large planning team?

At the growth stage, S&OP is a monthly 60 to 90-minute meeting with three to four people, built on a shared spreadsheet updated weekly. The value comes from the discipline of the cadence and the quality of the decision-making, not the size of the team or the complexity of the tools. Most brands between $5M and $30M can run an effective S&OP process with existing staff if ownership is clear and the data inputs are maintained.

People Also Ask

1. What is the S&OP process and why does it matter for CPG brands?

   S&OP is a monthly cross-functional planning process that aligns sales, operations, and finance on a shared demand plan and operating plan. For CPG brands, it matters because inventory decisions, sales commitments, and financial planning are deeply interdependent. When they are made separately, the business absorbs the cost through excess inventory, stockouts, and cash flow surprises.

2. How often should a growing CPG brand run S&OP?

   Monthly is the right starting cadence for most brands between $5M and $50M in revenue. At this frequency, the team stays aligned on demand changes, supply constraints, and financial position without the overhead of more frequent formal reviews. As the business grows and the plan becomes more complex, supplementing with weekly operational check-ins becomes valuable.

3. Who should be in the S&OP meeting for a growth-stage CPG brand?

   At minimum: whoever owns sales, whoever owns operations, and whoever owns finance or the cash plan. For most brands at the $5M to $30M stage, that is three to four people. The founder should participate, particularly when the meeting surfaces tradeoffs that require leadership decisions. The meeting should not be a large group review. It should be a small decision-making forum.

4. What is the difference between S&OP and demand planning?

   Demand planning is the forecasting process that feeds into S&OP. It produces the agreed-upon view of what the business expects to sell, by SKU and channel, over the planning horizon. S&OP is the broader process that takes that demand plan and reconciles it with supply capacity, inventory position, and financial constraints to produce an aligned operating plan. You need demand planning to run S&OP well, but S&OP encompasses more than forecasting.

5. What are the signs that a CPG brand needs a formal S&OP process?

   The clearest signals are: inventory that consistently does not match what the sales team expected to need, cash flow surprises tied to unplanned purchasing decisions, retail commitments that operations learns about too late, and recurring team friction between sales and ops over who is responsible for a missed shipment or stockout. These are symptoms of a coordination problem that S&OP is designed to solve.

6. Can a CPG brand run S&OP without specialized software?

   Yes. Most CPG brands at the growth stage run effective S&OP processes using spreadsheets, provided the data inputs are clean and consistently updated. The value of S&OP comes from the discipline of the process and the quality of the decisions made, not the sophistication of the tools. Investing in planning software before the process is stable is a common mistake that creates complexity before it creates value.

Conclusion: The S&OP Process Is How You Stop Running the Business Day to Day

Every founder who has built a CPG brand past $5M in revenue has felt the moment when the business became too complex to coordinate through informal conversation. Deals are being made that ops does not know about. Inventory is being purchased that finance did not plan for. The team is working hard in different directions, and the friction is real.

The S&OP process for CPG brands is not a reporting layer or a management ceremony. It is the mechanism by which the business makes decisions deliberately rather than reactively. It is how sales, operations, and finance stop operating as separate departments and start operating as a coordinated leadership team.

Building it does not require a large team, enterprise software, or months of preparation. It requires a consistent cadence, clean data, clear ownership, and the discipline to protect the meeting even when things get busy. For most growth-stage brands, those four things are fully within reach.

The brands that build S&OP early tend to scale with more control, fewer surprises, and far less rework. That is not a coincidence. It is what alignment between functions produces when it is maintained over time.

Found this useful? Share it with a founder or operator who is trying to get their teams moving in the same direction.

If you want help building or strengthening the S&OP process inside your business, reach out to Kedia Consultants. We work alongside growth-stage CPG brands to design planning systems that are right-sized, executable, and built to last through scale.