Tag Archive: process

Why SIOP is Critical to Thriving During & Post COVID

August 12th, 2020

COVID-19 has disrupted every business. Some are growing far faster than supply can keep up, while others have dropped like a rocket. Still, others have almost identical dollar volume yet double the number of orders at half the order size, creating significant disruption in warehousing, shipping and transportation. And yet others might have less severe changes in volume with certain customers thriving and others dormant – all creating mix disruption.

The supply side is no different. Previously reliable suppliers can be suspect at best. Previously high-quality, low-cost suppliers have skyrocketing costs as airfreight is required to keep customers’ satisfied. Risks have increased dramatically with the uncertainty of cash flow and long-term ‘institutions’ of the industry are disappearing overnight. With this high level of disruption across both demand and supply, misalignment has run rampant, costs are increasing and customers are frustrated.

SIOP (Sales, Inventory Operations Planning) Cuts through the Disruption
You know the story. The busier we get, the less we have time for improvement yet we spend double or triple the time to achieve the same outcome because we can’t set aside the time required to start or maintain an improved process. I’ve been there and am familiar with the excuses! With that said, STOP and look around you. You are on a hamster wheel with no end in sight. Implementing SIOP, even if simplified to what is achievable under current conditions, cuts through the disruption to stabilize your supply chain.

What is SIOP?
Quite simply, SIOP is about finding a way within your environment to realign demand with supply. You have to start with demand or you will forever chase your tail. To simplify the best practices across industries (aerospace and defense, building and construction products, food and beverage, healthcare products), geographies, company sizes that apply to manufacturing, supply chain, logistics and service organizations with supplies, you should focus on these keys:

  1. Proactive management of demand: Talk with customers.  Find out about your customers’ customers and every customer type within your channel until you get to the end customer (consumer, business using your product, patient). Ask about and observe evolving customer needs. Review historical trends.  And, put a stake in the ground with a starting point forecast. Outcome: typically 12-18 month rolling forecast
  2. Proactive management of internal supply: Talk with your internal teams. Understand changing capacity and staffing levels (manufacturing, warehousing). Realign temporary and contract assistance.  Understand your resiliency to changing demand (overtime, increasing staffing, efficiency improvements, maintenance and engineering support, etc.). Realign with R&D/product development requirements and your support resources. Outcome: typically a capacity plan (production, storage), high-level staffing plan and key decision plan (make versus buy, product/customer transitions, machinery and equipment plans) for at least as long as your longest lead item – 12-18 months.
  3. Proactive management of supply partners: Talk with suppliers. Find out about your suppliers’ suppliers capabilities, their likelihood to meet schedules, ability to meet cash flow needs and risk of shutdown (whether temporary due to COVID-19 or another disruption or permanent (going out of business)). Outcome: typically a sourcing and supply plan by key suppliers/ commodities for at least as long as your longest lead item – 12-18 months.
  4. Proactive management of your logistics network partners: Talk with transportation partners, brokers, 3PL/ 4PL partners and understand the extended supply chain, potential risks, possible options as disruptions occur, etc. Outcome: typically a logistics network and goods movement plan for at least as long as your longest lead item – 12-18 months.
  5. Take stock of inventory: Do you have strategic stock of critical items? Items without a robust backup supplier? Items in countries of higher risk of shutdown? Are you so busy running in circles that your slow moving and obsolete is expiring under your nose? Outcome: typically an inventory investment plan for 12-18 months.

Pre-COVID-19, clients went through a SIOP cycle with a monthly cadence. The typical processes included:

  1. Demand review meeting
  2. Supply review meeting
  3. Alignment of demand and supply (not always requiring a meeting)
  4. Inventory review meeting (often incorporated into the supply meeting)
  5. Executive SIOP review meeting (in some cases, quarterly made sense)

During COVID-19, we have taken these same concepts and adjusted to changing conditions. No two clients are alike in what makes sense to rapidly realign demand and supply and maintain this alignment.  Yet, there is one item in common across the board:

A weekly alignment on just the critical customers, internal resources, suppliers, logistics network partners and review of inventory

Read more about SIOP and related concepts in our eBook, Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you’d like a rapid assessment and recommendations for your situation, please contact us.

 

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Why Blame Doesn’t Work

September 19th, 2016

supply chain

I’ve been spending the majority of my time this week with two clients: one is preparing to go live on a new ERP system and the other is working to improve service levels by implementing improved planning and order flow processes. Although these specific objectives are nothing alike, they have much in common. Both have countless numbers of small issues arise on a daily basis — and some quite large ones thrown into the mix. It is just the nature of the beast in manufacturing environments. And so we need to uncover the root cause of the preponderance of the issues instead of playing the blame game!

Unfortunately, many of my clients are hard wired to worry about the blame game and related politics. Imagine how much quicker and better progress could be made if we focused on the root cause. Rarely if ever is that root cause due to a specific person. Instead, the likely categories include (in lean terms): method (process), machines, manpower (resource shortage, skills shortage, etc.), and material. If we think about our issues from this point-of-view, suddenly, we aren’t attacking each other; we are attacking the problem jointly.

And, I’d like to state boldly that it makes no difference if you are in a lean environment or whether you agree with lean principles. It is just common sense to just think of categories of causes unrelated to blaming specific people!

One tip to implement this week:

The good news is that there is VAST progress that can be made in a week. Simply stop blaming people. Instead, think about the root cause. Even if you think it comes back to a person, look for every other potential cause that could help that person be successful. If they had a new process and were trained on the new process, could they perform the job? If they were overloaded, would he/she have made the mistake?

Practice talking in these terms. Instead of complaining about Mary or Steve, how could you re-phrase your concern into a productive conversation? Hold off until you’ve thought about it. At a minimum, I bet you’ll waste less time.

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…”



Cross-Functional Success

September 15th, 2016
cross-functional coordination

Cross-functional coordination is vital to business success. Agreement on simple coordination techniques starts with clear and frequent communication.

Although working cross-functionally is a basic tenet in every organization we’ve ever seen, it remains elusive to many. Certainly the topic arises frequently no matter what product or service is offered as coordination is required to conduct business.

For example, we are working with a company to prepare for go-live, and the most challenging aspect lately has been to get every functional area to work in concert with each other within the order fulfillment process. Unfortunately, it requires more than simple coordination, although that alone would be a start in many organizations. In our case, as errors arise (which is a common occurrence as you work through go-live complications and education), the level of coordination must increase. In order to problem-solve across several functions, the level of coordination and communication must increase. As soon as we all get in the same room, the system miraculously starts working again. Obviously, no company has every employee sitting in the same room; therefore, cross-functional coordination is vital to success.

Simple communication and coordination techniques can go a long way. Listen. Ask clarifying questions. Overcommunicate. Typically, varying communication methods can be helpful. Not everyone absorbs the same way and so using different mediums can be helpful. Repeat back and confirm. Be open to suggestions. Think about the most effective communication for the other person; not for you. Start with these simple techniques and you’ll build a base. Then, advanced techniques will be required to go further. For example, aligning goals might be needed to achieve success.

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Resurrecting a Struggling System Implementation

August 16th, 2016
struggling system implementation

Take the necessary steps and dedicate resources to review processes and think more broadly about specific steps and functions before the purchase of a new ERP system.

We received a call this week from another frustrated CEO who is struggling with a system implementation. What we hear frequently from executives is the following: “It took more time and more money than I ever imagined!” And, worse, sometimes we hear that customers are being lost or are in danger of slipping away. Enough said as we can’t imagine anything worse!

 

Over the years, we have helped several clients with these types of situations. We are not experts in any particular software (although we know most of the popular ones) yet we are able to help clients with these issues. Little has to do with being an expert in the particular system. Instead, based on our experience with these types of projects, several of the pitfalls to avoid include:

1.  Lack of process understanding – just understanding system steps is not enough. What if those system steps don’t add up with the daily processes? What if we know all the system steps but have no idea how to perform our job function? This is one of the most common causes of mass frustration and ERP system issues.

2. Thinking in a silo – almost everything “works” if you are in a silo. If you are thinking about what you need the system to do and not aware of impacts on anyone else, it can appear that the system is functioning just fine when it isn’t. For example, if you enter production and are able to move the inventory to the next step in the production process, all seems good. However, we’ve seen that two steps further in the process, the last production step cannot be performed or the item cannot be shipped if certain fields were not checked or steps followed. Unfortunately it creates havoc later on, and it might not be caught until it is too late. Unscrambling this mess can be tricky.

3.  Lack of education – notice I did NOT say lack of training. 99% of my clients start by telling me the issue is a lack of training. Although additional training might be required, it is rarely the issue. Instead the lack of education can be a problem. Education includes training on specific steps and functions but it is a broader topic. Do you understand WHY you are performing these steps and what they mean?  

 

Upgrading or implementing a new system can be a significant undertaking that will greatly impact your business and your resources — in a positive or a negative way. It is your choice. Don’t underestimate the importance and complexity of this process. Dedicate the appropriate resources and focus to the undertaking, and success will follow.  

 

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Forget About Cost Savings: Look for Process Opportunities

July 19th, 2016
process profits

Have you ever thought about how easy it is to uncover process opportunities? Most executives tell me ‘no’ as it seems much harder than it is most of the time yet they are very interested in these opportunities to improve their business.

As interested as they are in these opportunities, they seem to always ask their teams to look specifically for cost savings – although there is much to be said for good cost savings projects, they can miss the boat.

Certainly, when I was a VP of Operations and Supply Chain for a mid-market manufacturer, the Board of Directors could not get enough cost savings. It made no sense as growing the business and improving margins is what achieved a significant return on investment yet they always asked about cost savings. With the CEO’s support, we prevailed and looked at the bigger picture of results vs. cost alone; however, these demands are not uncommon. Our clients, especially those from large multi-national companies talk non-stop about cost savings. “Corporate demands we find 10% savings.” Have you ever heard that before?

What would you say? How would you go about it? Well, first, let us caution against blind cost savings. Push back. If margin improvement is the true objective, the same priorities might not be pursued. If cash flow is more important, there’s no doubt the same priorities wouldn’t be pursued in most cases. If growing the business is #1, perhaps priorities related to growth should be pursued which might or might not relate to the same cost savings projects. Dig into the request so you work on the right priorities.

Next, follow the easy path – don’t wait for some sort of mandate. Doesn’t it make sense to always be on the lookout for what makes sense for your company? Whether that is finding ways to support business growth or reducing costs, there is no reason to wait for someone to ask!

The great news is that there are several ways to uncover process opportunities:

ASK – simple yet effective. Of course it is not simple unless you care and are interested in the responses. The people closest to the processes will know how to improve them.
Look around you – it doesn’t have to be complex; merely take a look at what seems to be working around you. Have you toured facilities like yours? What did they do? Find the best of customers, suppliers, facilities from other types of industries. Undoubtedly, there are more ideas than you can implement at your fingertips.
Read – read the newspaper, the Wall Street Journal, trade magazines and the like. You’re bound to gain ideas.

The best process opportunities come from the easiest of places. We are frequently called in to resolve issues or raise the bar, and we gain 80%+ of the ideas from the people at the company. We are yet to go into a company and not see untapped potential…have you asked about process opportunities? If you’d like help in rattling these cages to shake ideas loose and speeding up the identification and implementation of process opportunities, contact us.

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