Tag Archive: benefits

SIOP/ S&OP and Bottom Line Benefits

July 27th, 2019

According to a Hackett group study, the benefits of SIOP (Sales, Inventory & Operations Planning) can be dramatic.

First, let’s back up to describe SIOP: It is an integrated business process that aligns demand with supply through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization.

In our experience with over 20 SIOP projects, our clients have experienced these same results (and often even better ones), no matter the industry, company size or priority. Simply put, when done well, you’ll have more cash, profit and revenue. What’s not to like!

The types of results fall into three buckets:

  1. Working capital – Undoubtedly, freeing up inventory to increase cash flow is becoming a greater priority as executives realize just how much cash is tied up in servicing customers’ Amazon-like expectations with global supply considerations. Therefore, it is not surprising that we’ve received a serious uptick in requests to increase inventory turns. SIOP is always a part of the solution. Hackett research says 20-30% improvement is to be expected. We have certainly found this to be true.
  2. Cost reduction – Whether we term this cost reduction or margin improvement, 5-10% improvement is what the Hackett study shows. We have seen these results, even by default (when the SIOP program was focused on improving service). Thus, if they can be achieved by default, they certainly can be achieved with focus! Items that fall into this category include material cost reduction, freight cost reduction, labor productivity improvement, and fixed cost optimization.
  3. Sales growth – According to the study, a 2-4% improvement is not uncommon. We have experienced dramatic results in this area with lead time reduction, on-time delivery performance improvement, customer scorecard wins and strengthened partnerships that lead to new and expanded sales opportunities.

For example, in a significant metals-related aerospace business, we started the SIOP journey to reduce inventory levels to free up debt. By partnering with sales to better understand customer requirements and by better aligning the sites on a single plan and set of priorities, we were able to align demand with supply. It was truly about alignment as the performance measurements couldn’t be completely changed (and they often didn’t support the same decisions as SIOP). Yet, we gained executive alignment and focus. This led to our ability to align the various functional areas on a single objective while still recognizing the site level objectives. Therefore, we were able to reduce the inventory in the core product line by 30% while ensuring customer satisfaction levels were maintained or improved.

The question isn’t whether you’ll benefit from implementing SIOP. The only question relates to what you’ll achieve based on your priority focus. Will it lean in the direction of margins, cash flow or customer loyalty and revenue growth? If you’d like to learn more about how to benefit from SIOP, read about it in our blog, explore our proprietary process for SIOP, 4 Excel or contact us to discuss an assessment.

 

Did you like this article?  Continue reading on this topic:

The Strategic Benefit of SIOP
Have you Thought about Increasing Demand??



My 5-City Cross-Country Trip & the Value of Collecting Good People

November 4th, 2018

 

When I was young, I had a doll collection of the nationalities of my family.  I no longer collect dolls, cats or mystery novels but I have upgraded to collecting “good people”.  Luckily, I have always appreciated “good people” and I’ve stayed in touch.

Over the years, I was amazed and thrilled how many benefits came from this way of looking at life and career.  Last week, I was on an 8-night, 5-stop, cross-country journey where I interacted with some of these “good people” and it made me think…..

 

 

 

 

 

 

 

 

 

 

I started in:
1) Arizona to see my Mom and family
2) Chicago for the Association for Supply Chain Management where I collaborated with
LMA Associates, clients, APICS Inland Empire global student case competition finalists from Harvey Mudd, a CSUSB professor and contingent of transportation-related business owners from China and met several new colleagues
3) New York to lead the
Society for Advancement of Consulting annual meeting with my business partner, Linda Popky
4) Atlanta to meet with Georgia Tech and
IEEP colleagues
5) Palm Springs to meet with Renaissance Executive Forums CEOs  

Although exhausted, it did make me think about this concept of “collecting good people”.  Do you collect good people?

One tip to implement this week:
FAR more important than collecting industry trends, company history, technical skills and anything else, GOOD PEOPLE are the most valuable.  You meet people in all walks of life from college to colleagues at a job to customers and suppliers you might interact with along the way to industry and trade groups you participate with and much more.  I’ve found that there are “good people” all along the way. Sometimes, it just takes recognizing them. As life changes, keep in touch. It is easier today than ever before with social media.

When I first started on Linked In, I found the daughter of my first boss from Coca-Cola in order to re-connect with my first boss as well as her daughter (as we worked together briefly near the end).  I am really glad I did as they are definitely in the “good people” category. Other “good people” have become LMA Associates. Others have become clients.  And, others have become trusted colleagues and so on.  

No matter what happens in the future, wouldn’t you rather keep in touch with the “good people” throughout your life? It certainly makes it richer!