SIOP/Integrated Business Planning

July 7th, 2015
siop helps put the planning puzzle together

Manufacturing and distributing product to meet customer demand can be like a puzzle unless you start using SIOP as a core process to run your business.

SIOP (sales, inventory, & operations planning) taken to the best practice degree is often associated with integrated business planning. In some circles, they are seen as interchangeable. In others, it is seen as the “next step” for SIOP. It is nomenclature to me as I see fully leveraging SIOP as common sense.

Substantial results will follow. For example, several of my clients have achieved one or several of the following with SIOP/Integrated Business Planning: 1) successfully supported dramatic growth; 2) improved service levels; 3) slashed lead times; 4) improved margins; 5) accelerated cash flow; and 6) increased productivity.

Why not use SIOP as a core process to running the business? Wouldn’t that be a common sense approach to success? As the famous William Occam said, “The simplest solution is often the best”. This also syncs up with what I’ve found to be the most successful philosophy – start with the simple and expand with what will provide the most value to your organization.

So, what are the common keys to success?

  1. Start with demand: It is always appropriate to start with demand. Focus in on your customers. What do you expect your customers to buy? Which products are most popular? What else can you offer your customers to go the extra mile? Getting a solid handle on demand is a great place to start.
  2. Forecast accuracy: The more predictable your sales, the less inventory you’ll need to carry to meet customer expectations. How volatile are your customers’ ordering patterns?
  3. Rolling # of months or years: As each month goes by, you’ll want to add a month to the end of your planning cycle. In essence, the concept of a rolling plan is essential to ensure you take the long-term, continually reviewed and updated view. I love the way one of my manufacturing clients describes this concept – it’s like a conveyor system where one month drops off and the next one gets added on.
  4. Inventory strategy: Your inventory strategy is one of the factors that will be used in the development of the master schedule. How many turns are achievable for your industry and in supporting your company strategy? Inventory is used to cover volatility and lead time. What is needed?
  5. Service level plans: What are your customer expectations? Where do you stand in the market? Should you shoot to be competitive, distinct or breakthrough on service and lead times? These factors will affect your resulting inventory expectations.
  6. Master schedule: Translate the demand into supply requirements. Combine demand, inventory strategy, level loading, and lot sizing into a master production schedule.
  7. Purchase plans: Translate your master schedule into a purchase plan. Similar to the master schedule, combine the master schedule, inventory strategy, level loading and lot sizing into a purchase plan.
  8. Inventory plan: Once you know your demand plan, master schedule and purchase plans, the resulting inventory plan will follow.
  9. Capacity plans: How do your staffing and machine capacity plans align with your master schedule? Will you need to ramp up? Cross-train? Purchase machinery and equipment?
  10. Cost & margin plans: It only makes imminent sense to sync these plans with your cost improvement plans. Assuming you have a good handle on your pricing and mix, a margin plan will emerge.
  11. Cash flow plans: Once your inventory plan is known, it is achievable to estimate cash flow requirements and plan accordingly. Will you need financing? Can you support your growth and investment objectives with your inventory strategy?
  12. Make vs. buy decisions: Strategic decisions including make vs. buy options will arise through the SIOP process. The right people are together to evaluate what will provide the most value for the business.
  13. Capital plans: Certainly, capital plans will be a by-product of the SIOP process.
  14. Collaboration plans: How do your integrated business plans align with your customer and supplier programs? Share critical information and collaborate for success.
  15. Communication & alignment: One of the key advantages of a SIOP process is to align ALL functions, customers and suppliers on one plan. Clarification rules!
  16. One plan: The concept of one plan is paramount to SIOP success as the 80/20 is in alignment, collaboration and execution with clarity.
  17. Action items: Let’s not forget action items. Without solid execution and follow-up, no process will thrive. 

If you follow these key factors for success, your monthly SIOP process will align resources and result in a rolling forecast that integrates with your financial plans and operational plans. In essence, you’ll have the 80/20 of running a successful business in one place.  

Continue reading on how to strengthen your Eagle Eye:

The Benefits of SIOP  

Are You Working on the Right Priorities?


Do You Have Specific, Short-term Challenges to Address?

July 2nd, 2015
LMA Consulting Group Advisory Services

LMA Consulting Group now offers 3 types of advisory services to quickly help solve supply chain and manufacturing issues.

Now that half the year is over, it is a good time to take stock.  Are you on track for your full year plans?  Do you need to accelerate progress?  Have bottlenecks or roadblocks appeared?  I’d be surprised if they haven’t!  If there is one thing every client has in common is that complications arise, even with the best laid plans.

Have you reviewed your core metrics lately?  Do they align with how you think the organization is doing?  If not, why not?  Have you talked with your key employees lately?  What are they seeing?  Is there specific, short-term challenges they are struggling to overcome?

Growth is a hot topic in today’s environment.  Are you prepared?  Although far more pleasant than layoffs, it is far less clear how to be successful with growth?  Do you know what to look for?  Which people, culture, process, systems, and strategy upgrades are needed to achieve these aggressive growth plans?  Remember, as my mentor says, if you aren’t growing, you are declining.  Which position would you rather be in?

As I have started receiving more and more calls asking for advice, expertise and/or requesting assistance in overcoming a specific challenge, it has become obvious that there is a vast need for RAPID, specific short-term expertise and advice.  Thus, I’m thrilled to offer a new line of advisory services to address these requests.  For these specific, short term challenges related to supply chain and operations management, processes, and systems and/or requests for advice, I offer three options.  Please check out my new advisory services webpage to learn more about them.

Did you like this article? Continue reading on how to Profit Through People:

Summer Priorities for the Most Successful Executives

Are You Prepared for Success?

The Power of Passion

July 1st, 2015

supply chainI just got back from a 3-day weekend in Catalina with great friends – a beautiful and relaxing spot (see below for one of my favorite shots). We took the inland tour to the airport and heard quite a bit of Catalina’s history. Certainly, William Wrigley Jr. was instrumental in Catalina’s history. He clearly had a passion for bringing the island to life.  He brought movie stars, the Avalon casino, herds of bison, the Chicago Cubs (my favorite from when I was a child), and much more to ensure the island would be vibrant and could be shared with tourists for generations to come.

One of the stories the tour guide told us was when Catalina shut down during World War II. The military used Catalina for many purposes during the war; however, Wrigley lost countless dollars of tourism during that time. Thus, he was handed a blank check to be made out for what would have been fair compensation.  Instead, he wrote the check for $4 for 4 years. Now that takes passion.

catalina island

William Wrigley Jr. clearly had a passion for bringing Catalina Island to life.

One tip to implement this week:

Find your passion. Think about what you enjoy doing. Don’t despair if you think it isn’t related to work.  If you think back over the last few weeks, consider which activities you liked better than the rest. What do they have in common? Was it when you were crunching numbers? Talking with people? Negotiating a deal? If you aren’t sure, ask your friends and colleagues what they see as your strengths. You might be reminded of things you’ve forgotten. Once you find your passion, leverage it!

If you can’t think of anything related to work, think about other activities. You will find something. Once you find an activity that you enjoyed more than others, think about how you can do more of that in your work life. Talk with your manager to see how you can further leverage this passion. Be willing to do more of whatever will provide value to your manager so that you can also do additional items related to your passion. Build upon this area in your spare time. Research. Go to classes. Success will follow.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”