Advanced sales and operations planning based on integration of physical and financial flows

Traditional sales and operations planning (S&OP) focus on balancing between supply and demand in a company. It is utilized to ensure the alignment of plans supporting the business strategic goal. An obvious drawback of past decision models is lacking in considering financial planning. The paper proposes a new global S&OP planning model integrating financial flows and physical flows in a company supply chain to evaluate the benefit with various scenarios. The feasibility of the proposed model to the financial issue is demonstrated with a case study. We discuss the sensitivity of cash flow to the changes of payment terms and credit limits. The significance of this study is to adopt the integrated model as a decision support tool thereby enhancing the coordination between financial and physical activities.