Planning reference
S&OP and supply planning glossary
Clear definitions for the language teams use when they build and review a supply plan.
Common terms
- Capacity
- The amount of work a resource or group of resources can handle in a defined period. For example, a production line has a limit on how much it can make in a shift.
- Constraint
- A limit that restricts a plan, such as unavailable material, production time, labor, supplier output, or storage space.
- Demand planning
- The work of estimating and reviewing future demand using relevant inputs, such as past sales, customer information, and commercial assumptions. A forecast is an estimate, not a promise.
- Forecast
- An estimate of future demand or another planning value for a product, place, or period. It can change when new information or assumptions become available.
- Inventory position
- A planning view of stock that may combine what is on hand with expected receipts and demand commitments. The exact components depend on the company’s definition.
- Lead time
- The elapsed time between the start and completion of an activity, such as placing an order and receiving it. The chosen start and end points should be clear.
- Planning horizon
- The future span covered by a plan, measured from its starting point to its last planned period.
- Safety stock
- Extra inventory kept as a buffer against uncertainty, such as changes in demand, supply, or lead time. It can reduce exposure to shortages while adding inventory to manage.
- S&OP
- Sales and operations planning: a cross-functional process for reviewing demand and supply plans, surfacing trade-offs, and aligning decisions with business objectives.
- Service level
- A measure or target for how reliably demand is met from available stock. It can mean different things, such as the share of units filled or the chance of avoiding a stockout during a replenishment cycle.
- Supply planning
- The work of translating expected demand into plans for sourcing, production, and movement of goods, while accounting for known material and capacity limits.
- Time bucket
- The interval used to group planning data, such as a day, week, or month. The interval affects how much detail a plan shows.
Companies may define measures, planning intervals, and process steps differently. When comparing plans, check the assumptions and calculation behind each term.