Tag Archive: Sales

The Value of Alignment: Sales, Operations & Finance

May 30th, 2019

Alignment might sound like a fluffy concept, but it delivers bottom line results. Our most successful clients have achieved the most substantial results from alignment. Although SIOP (Sales, Inventory, Operations Planning) gets a wrap as a technical topic, in our experience, it is the alignment portion of SIOP that delivers the bacon!

For example, in one client project, the Sales Leader was concerned about service levels. He knew that service was the differentiator in the marketplace, and if they didn’t have quick lead times and responsive customer service, it would negatively impact his ability to grow the business. On the other hand, planning knew that sales tended to come in dramatic spikes which were hard to predict in advance and so strategic inventory could make sense. Operations wasn’t too keen on inventory since they had a lean mentality with the view that inventory was ‘bad’, and they were concerned about capacity and staffing. Accounting set rules on overhead rates as a percentage of sales on a monthly basis which caused HR and Operations to hire and fire temps continually (and sometimes full-time resources). Overtime wasn’t used as a rule of thumb and was seen as costly by management, In fact, it was the only client we’ve ever worked with that didn’t use at least some percentage of overtime on a continual basis. And, of course, R&D created new products and had no idea about the volume and the impact on capacity and staffing. In essence, no one was on the same page!

We created a demand plan based on historical forecasts with sales input, confirmed the capacity and staffing levels required to meet that forecast and determined that if we level loaded the forecast over a quarter, we could create a win-win: improved service during the sales spikes with improved margins (lower temp turnover, improved efficiencies etc.). But it didn’t matter if we didn’t align the team. That was the 80/20 to creating success (and is ALWAYS the hardest part). Fast-forward 3-6 months down-the-road: We shortened service dips from the sales spikes, increased the service levels and reduced costs.

These types of client results are commonplace with alignment no matter your position in the supply chain or the world. Have you considered whether your teams are saying they are aligned or whether they are truly using the same playbook? It often will make the difference between a happy customer and a disgruntled one (which isn’t something anyone wants in today’s on-line era), let alone the profit impacts. If you are interested in an alignment assessment, please contact us.

 

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Forecasting: How Far Should You Look into the Future?

July 3rd, 2017
SIOP S&OP

Setting strategy or designing a sales, inventory and operations planning (SIOP) process requires forecasting. How far into the future do you look and why?

Whether setting strategy or designing a SIOP (sales, inventory and operations planning) process, one of the most important questions to consider in forecasting is how far into the future will you look? And why?

As we think about whether the answer should be 1 month, 1 quarter or 1 year, check your thinking. When assessing the future it is important to think through the elements that may impact your forecast.

10 Questions to Ask When Forecasting and Designing SIOP

1. Do you have customer contracts in your business/ industry? If so, how far out do they go?

2. Regardless of the commitment level, how far out do you have information that is somewhat reliable? If it changes substantially from month-to-month, is it of any value?

3. How reliable is your forecast by product or customer grouping? Forget about items and sku-level forecasts. How about product category forecasts?

4. Do you have access to demand data into your supply chain?

5. Are you asking questions about what is coming down the pike? If not, why not?

6. How much cushion do you have? Do you have inventory or capacity availability?

7. How prepared is your supply chain? Can they handle volume spikes?

8. Are you willing to dedicate people to gain a view into the future? Why or why not?

9. Have you considered a strategic sprint? Why are you setting arbitrary time frames when customers don’t care what you do? They want what they need when they need it.

10. Are there downsides to looking too far into the future? What are they?

 

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SIOP is Not a Supply Chain Project

June 10th, 2016
SIOP is organization-wide

The full benefits of SIOP blossom when its treated like an organization-wide strategic initiative instead of a narrower supply chain project.

Although the supply chain and operations resources typically coordinate the SIOP process as their skills align best with the majority of the processes, the reason for its success is that it is an organizational priority. The two areas of sales, inventory and operations planning focus include:

  • Aligning demand with supply
  • Aligning the functions related to or impacted by demand and supply on the same page

Thus, the reason it cannot be successful as a supply chain resource project should be apparent. The participants include the following:

  • Resources related to demand – sales, marketing, customer service, R&D, new product development, customers, etc.
  • Resources related to supply – manufacturing operations, outside processing production processes, planning, procurement, logistics, quality, suppliers, etc.
  • Resources impacted by demand and supply – those interested in profit, cash flow, inventory levels, customer service, etc., such as Finance, executives, Boards, etc.

Who else is there? I cannot think of any! Now, imagine the challenge in aligning them on the same page with one plan – the “secret sauce” to SIOP success. If you are interested in learning more about partnering with us to use our proven method (4 EXCEL) for driving results, contact us.

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SIOP Success is a Straight Line to People

 



SIOP Success is a Straight Line to People

May 26th, 2016
SIOP success

The technical aspects of SIOP still have to filter through people. Success happens when everyone in an organization is operating from a single integrated plan.

As with everything in business success, SIOP (sales, inventory and operations planning) success is a straight line back to people. Thus, it is the reason I started my business with the “Profit through People” brand and continue with it as one of our service lines and for our newsletter. In the last 5 years, we have completed many SIOP projects and have found the keys to delivering rapid, bottom line results – exceptional customer service, significant growth, improved margins, accelerated cash flow and high morale. These keys to success are built into our proprietary process for SIOP, 4 EXCEL, which drives exponential results.

Even though SIOP is all about aligning demand with supply and has many technical components ranging from demand planning to master scheduling to inventory strategy and cash flow planning, we have gained the most significant results by aligning ALL areas of the organization on one page – the PEOPLE! There is no coincidence that the first of the 4 E’s of EXCEL is ENGAGE.

Some of the most challenging issues we’ve faced while implementing SIOP had nothing to do with the technical components. For example:
• How do we get sales and production on the same page?
• Can R&D and production work to one integrated plan?
• How can we align our customers and suppliers on the same page?
• How can we get finance, sales and operations on the same page?
• And so on…

We find that becoming expert in culture change and collaboration is important to success. Clearly, communication is at the crux of this equation as well. If you are thinking about how to get each of these parties to see how SIOP will benefit them to align on one page, give us a call to learn more about 4 EXCEL.

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Involve Your Supply Chain for SIOP Success

May 18th, 2016
Involve your supply chain for SIOP success

For greater success with your SIOP process reach out to your extended supply chain for collaborative ordering, product development opportunities, and logistics improvements.

The best SIOP (Sales, Inventory & Operations Planning) processes that deliver significant returns on investment involve the extended supply chain. Since SIOP is about how to align demand with supply – and align all the process owners and executives on one page, it has far reaching implications beyond any one project, person or result.

I find the most successful SIOP processes deliver the optimal combination of:

  • Business growth backed by operational readiness
  • Improved customer service levels
  • Accelerated cash flow
  • Increased margins

Thus, it is a worth-while endeavor for any business as not only a way to stay competitive but it is also a strategic process to grow the business and rise above your competitors with elevated business performance.

Although a certain level of success can be achieved within the “walls” of your company, far greater success will be achieved by involving your supply chain. Talk with your customers about demand. Consider collaborative ordering processes with them as you’ll gain a greater insight into your supply chain that can be utilized to achieve a win-win!  Find out which products are strategic and think through pricing and costing. Partner with suppliers to develop improved materials, to design products, to collaborate on inventory and ordering and more.  Go beyond the norm and tie your customers and suppliers together in a win-win-win endeavor. And, consider other supply chain and business partners – transportation providers, trusted advisors and the like.  Find a way to make 1+1=16.

If you’d like to learn more about how to implement these types of advanced SIOP techniques in your organization, our proprietary model, 4 EXCEL has proven effective.  Contact me to discuss further.

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Customer Collaboration on Orders = RESULTS