The monthly S&OP cycle usually consists of five stages that can happen sequentially or concurrently, depending on your planning capabilities: Data gathering: Gathering information on variables such as inventory, sales and cash on hand to create a baseline forecast (which includes any plans for new product introductions and sales opportunities). Demand planning: Creating a demand plan based on forecasts and any demand-shaping activities (e.g., promotions, price incentives). Supply planning: Creating a supply plan based on production and distribution capacity. Supply/demand balancing: Reconciling and aligning supply and demand plans to ensure they can overcome any potential constraints with machinery, people or suppliers. Executive review: Planning for revenue, margin and profitability, followed by approval of the final supply and demand plans by senior management.