Tag Archive: sales inventory and operations planning

Do You Know Your Demand?

October 23rd, 2019

This has been emerging as a hot topic. As clients are interested in meeting ever increasing and changing customer expectations while managing long supply chains, changing rules and regulations (including tariffs), and concerns over the cash flow implications of high inventory levels have resulted in discussion around the critical importance of demand. Do you have a handle on your demand plan over the next 12 months?

According to Gartner, every 1% improvement in forecast accuracy will result in 7% less finished goods inventory and 9% reduction in inventory obsolescence. A 1% improvement is imminently doable! Also, according to the experts, a 15% improvement in forecast accuracy will drive a 3%+ increase in pre-tax performance. Last but not least, in our experience, it is one of the best ways to drive a simultaneous improvement in customer service, cash flow and profit.

Every client we talk with says the same thing: Our sales are unpredictable. We have a custom business. We follow lean principles and produce in concert with customer demand. Or, our sales team is on top of it and are already doing everything they can to give us a heads up on demand. We don’t doubt that. However, we have also never come across a situation that couldn’t be improved. With the dramatic results that follow, it proves well-worth the effort.

Instead of brushing off the idea of focusing attention on demand, just think about what could be improved. It isn’t an exercise to beat up sales or planning. In the end, if that is what happens, there is no doubt that is part of the issue. The forecast must be collaborative with input from sales, marketing, customers, planning and anyone who interacts with customers or has input relevant to future demand. With that said, the best forecasts start with a simple statistical base. What do you do?

I’d be remiss if I didn’t point out that you should use your forecasts in your S&OP/SIOP process (sales, inventory, and operations planning) to align your demand with your supply so you can maximize your customer value and your bottom line. If you’d like to discuss your situation further, please contact us.

 

What bottlenecks exist in your organization?



Manufacturing Expert, Lisa Anderson, Sees Impacts of Artificial Intelligence on Manufacturing Profit, Inventory Levels and Cash

September 20th, 2019

Manufacturing Expert, Lisa Anderson, Sees Impacts of
Artificial Intelligence on Manufacturing Profit, Inventory Levels and Cash

CLAREMONT, CALIFORNIA – September 19, 2019 –  Manufacturing and Supply Chain Expert,  Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc., predicts that artificial intelligence (AI) and human learning will impact most aspects of manufacturing resulting in improved profits, inventory levels and cash.

“Our manufacturing clients have really embraced the power of AI since the first of the year.  From improved forecast accuracy impacting inventory levels to more openly working with changing customer needs and the overall customer experience, manufacturers are seeing the effects of using this data,” Ms. Anderson commented. LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth.

“Despite the fact that manufacturing, especially in Inland Southern California continues to be strong, manufacturers need to be smart. By integrating AI with tried and true techniques such as SIOP (Sales, Inventory and Operations Planning) and taking advantage of predictive analytics and other human learning technologies in conjunction with ERP systems, manufacturers can become better at forecasting and exceeding customer expectations.  In fact, for every one percent improvement in forecast accuracy, there can be a seven percent improvement in inventory levels and therefore cashflow,” she said.

In an effort to support clients, Ms. Anderson is active with the Board of Directors of the Inland Empire Economic Partnership, where she represents the Logistics Council whose initiative is developing a consortium for logistics, supply chain and advanced manufacturing success. “AI and other forms of technology are transforming manufacturing as we know it. From reevaluating sourcing and enabling robots to predictive maintenance and shortened design times, AI offers up vast potential. Successful manufacturers are strengthening their hold. Supply chain and other manufacturing professionals are sharpening their skills to take advantage of these resources. It takes work, smart management and a strong team to be successful. A perfect storm for manufacturing success. The evidence is in the growth we see in Inland Southern California (also known as the Inland Empire),” she concluded.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation.  She focuses on maximizing the customer experience and enabling profitable, scalable, dramatic business growth. Ms. Anderson is a recognized Supply Chain thought leader by SelectHub, named a Top 40 B2B Tech Influencer by arketi group, 50 ERP Influencer by Washington-Frank, a top 46 most influential in Supply Chain by SAP and named a top woman influencer by Solutions Review. She recently published, I’ve Been Thinking, 101 strategies for creating bold customer promises and profits. A regular content contributor on topics including a superior customer experience with SIOP, advancing innovation and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, tED magazine and the Wall Street Journal.  For information, to sign up for her Profit Through PeopleTM Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.
                                                                         # # #
Media Contact
Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com   
                                                        



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??



SIOP as a Win-Win-Win-Win

June 14th, 2016
4excel-logo-web

LMA Consulting Group offers clients an opportunity to align demand with supply to drive exponential results through our 4Excel proprietary process.

Our favorite end-to-end supply chain project supported a SIOP (sales, inventory and operations planning) project for growth. Although we enjoy SIOP projects as they are one of the best ways to achieve a win-win-win-win of growth, service, margins and cash, this particular client had some complex data and dramatic growth to consider.

SIOP is all about aligning demand with supply — AND the different functional areas of the organization on one page. Accomplish the second, and all else will fall into place. This particular SIOP project was no different.

First, we had to get everyone on the same page with why we were embarking on this project — how would it help the company? And each individual?

Next, we had to get a handle on demand. What were the growth projections? Were we able to “add up” from the details to the same numbers the executives knew to be accurate at the high level? If not, how would we reconcile these matters? There is no need to get lost in details yet we had to be in the same ballpark. Unfortunately it is quite hard to execute a plan if we don’t understand the plan in the first place!

Then, we had to crunch the numbers at a high enough level to not get stuck in the weeds yet at a low-enough level that it would still be meaningful to the people who knew what it took to succeed. We had to get past imperfect data and make sure we were concerned with being directionally-correct. How could we estimate the number of machines, types of machines, number of people, skills of the people — and even buildings required? Should we be off-loading, moving volume within the facility or outsourcing to other facilities within the system? What could we do rapidly while focusing on customer service and customer expectations including margins and cost?

In essence, we brought the best ideas together with SIOP. When it came together into one process and one document, the answers became clear. We had a plan and clarity on how to triple and quadruple the business — and, now we could execute the plan!

Did you like this article? Continue reading on how to be the Strongest Link in your supply chain:

SIOP/ Integrated Business Planning 

How to Accelerate Cash Flow through Supply Chain Innovations