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Can SIOP Replace Budgeting?

September 4th, 2015
Budget concept

SIOP can do the heavy lifting of the budgeting process by filling in the blanks on operations and inventory line items.

SIOP (sales, inventory & operations planning) can easily replace a good portion of the budgeting process – with better results! Why? Well, SIOP is a monthly process of reviewing and agreeing upon the latest sales forecast/demand plan for the next 12-72 months and the resulting master schedule (production plan). When you compare the master schedule vs. capacity and staffing levels, the required staffing needs will become clear. Options are reviewed as these gaps could be filled through promotions, temps, full-time hires, contractors, consultants or via off-load. Machine requirements will also emerge – upgrades, new machines, etc. Skill development needs will be unveiled. Based upon the demand and supply plan, an inventory plan will also be created. And the list goes on.

When you have a monthly executive review of this type of information, it becomes a great way to align the areas of the organization on the same page.  It also captures the same type of data that is the basis for a budget. Thus, the SIOP demand plan can be the basis of the budget. It could be tweaked from there with Board of Directors or other additions. The information captured as to the required staffing and capital needs will be captured in the budget. The inventory plan will provide a good basis for cash forecasting.

The areas that will have to be added into the mix will be those not directly related to operations. Thus, overhead rates might be affected by SIOP in that the need for additional support could arise, the specific budgets will need to be developed in additional detail. SIOP can also bring up the need for additional buildings or off-site storage; however, those specifics will need to be added in later. There will be other details which have to be developed separately; however, the budget basis could easily be 60-80% of the way to the desired state. Wouldn’t that be a great advantage! If you are interested in learning how to implement SIOP, email or call. 

Continue reading on how to strengthen your Eagle Eye:

SIOP/Integrated Business Planning

Do You Need Systems to Have a Successful SIOP Rollout?

 



Why Strategic Planning Is an Oxymoron

September 2nd, 2015
strategicplanning

Strategic planning has long been hailed the business cornerstone for projecting profit and growth. Oftentimes, the strategy, “what”, gets mixed up with the tactics, or the “how”, which leads to failure.

Although almost everyone uses the term strategic planning, it doesn’t make sense. Setting strategy is clear; however, you shouldn’t be thinking about how to plan when looking to the future. In essence, strategy is the “what” whereas tactics are the “how”. Another way to think about strategy is to think about where you’ll end up. Do not think about how you’ll get there and mix it up with where you should end up!

Planning or tactics relates more to the implementation or the “how”. Where strategy is working on the “right things”, tactics is “doing things right”. Another way to think about this is to determine how to translate the conceptualization of the strategy into operational realities for your manufacturing or distribution company. Thus, do strategies fail in formulation or execution?  90%+ of the time it fails in execution.

Strategy implementation should consider how the organization will have to change and evolve to support the strategy. Do you have the people, skills and capabilities required to meet the strategy? If not, there are many options to evaluate. Are the processes and systems set up to achieve the strategy?  It is unlikely. There is always some sort of tweak, upgrade or new process required. Do the culture and communication systems support the strategy? There are countless items to consider to ensure success. I put together my 5P Accelerator (SM) process to bridge the gap and transition between strategy and implementation. If you are interested in learning more about how to leverage it, give me a call.   

Continue reading on how to strengthen your Eagle Eye:

Strategy: It Doesn’t Fail in Formulation; It Fails in Execution 

The Collaboration Platform

 



What We Can Learn from our Dogs

September 1st, 2015

supply chainI was thinking about my dog, Abby (see below) – no matter whether I leave the house for 2 minutes or 2 weeks, she is absolutely thrilled to see me. Do your customers feel like that as well? Who doesn’t like to be greeted like a long lost friend every time?

Also, if you have seen those funnies about dogs and open gates, it makes you think. In essence if a dog sees an open gate, he doesn’t stop to think about whether he should go through or not. He runs through with his hair in the wind. I’m not suggesting we do things that we know will have negative consequences but we should take more risk to jump on opportunities – and believe we’ll succeed (which means we’ll get through the open gate before someone closes it). You might be surprised by what you can achieve.

we can learn from dogs

One tip to implement this week:

Think about treating your customers (both internal and external) like you are thrilled to be doing business with them and/or working with them. How can you make sure they feel special?

And keep your eyes open for open gates. Don’t think too long and do an analysis; instead, RUN through the open gate to leverage opportunities. Why let any pass you by?

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…”