Tag Archive: budgeting

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?

 



A Planning Mindset Is Invaluable to the Supply Chain

October 14th, 2014
planning mindset

Planning is essential for business management, but by really embracing it and getting into a planning mindset you can figure out innovative, improved strategies across all segments of your company.

Developing a planning mindset can be invaluable to not only planners but also to any supply chain management employee/leader. When I refer to planning, I mean planning from multiple perspectives:  production planning, raw material planning, project planning, SIOP (sales, inventory, and operations planning), financial planning, and budgeting, etc.

I find that developing a plan is more than half the battle. If you are part of a team, it provides a way for everyone to be on the same page. Who should do what and when? What sequence should we follow? Are there dependencies?

It also allows for the optimizing of several variables. For example, a production plan should minimize inventory levels, maximize service levels, and provide the best opportunity for increased efficiencies and reduced cost. Most plans optimize resources, costs, and risks.

Even if you are developing a plan for only you to follow, it can be vital to success. It requires putting thought in upfront.  Do not overanalyze; however, put in appropriate thought for the criticality of the topic. Have you thought through potential roadblocks that could arise?

Have you heard of the PDCA model? (Plan, do, check, act) The most successful put time in upfront – it yields significant results. 

Read more on how you can become the Strongest Link: 

The Million Dollar Planner

Speed is King: How Do We Leverage for Project Management?