Tag Archive: S&OP

The Strategic Benefit of SIOP

June 26th, 2019

SIOP (Sales, Inventory, Operations Planning) should not be relegated to the Planning Department. Although the planning group is a key participant and might lead the process, SIOP touches upon several strategic issues while creating alignment with Sales, Operations, R&D/ New Product Development, Finance, Purchasing, and others. As a CEO, you must become interested!

We have worked on countless SIOP projects with clients across industries as diverse as building products, food and beverage, healthcare, and aerospace.  It has proven to be the most effective at achieving the win-win-win of enabling growth while maximizing service, cash flow (inventory) and profit. For example, at one aerospace client, we put the fundamentals in place to support SIOP (scheduling, planning systems MRP/MPS, forecasting) and then rolled out a SIOP process involving all key aspects of the organization. Although our objective was to bring service levels from the 60%’s to the high 90%s, we not only accomplished that metric but we also improved margins by 5% and increased morale and engagement. What’s not to like with these results!

Critical Aspects of SIOP
Let’s start with just those elements that are most important to achieving results:

  • Can you get executives involved? Of course, it is better to gain executive involvement upfront.  However, I have found that it is quite doable to gain the involvement over time as well. For example, in one client situation, a key executive was not on board at any level at the start.  So, as we rolled out a pilot process, we convinced him to give the process a try. Once he sat in on the executive SIOP meeting, he became more interested because strategic issues arise such as make vs. buy, changes in sourcing, impacts to sales strategies and more.
  • What do you have to do to get directionally-correct information for making decisions? By NO means do you need perfect information.  In fact, if you wait for perfect information, your decision will be long past. Yet directionally correct information is imperative so that you can make fact-based decisions and/or gain approval from corporate or your Board for what you know must be done to succeed. I cannot think of a client situation where I couldn’t gain access to at least directionally correct information after an assessment, no matter how ancient their ERP system.
  • Will you involve all relevant departments in the SIOP process? If you focus on data and not the people, you will not succeed. The 80/20 of success is to bring typically disparate groups together to align on 1 plan/ path forward. It is much easier to say than to accomplish, and so those clients that do this well have a far higher success rate than the rest. You should involve Planning, Purchasing, Operations, Logistics, Customer Service, Sales, Finance, New Product Development, and any key area of your operation.

SIOP is not a quick resolution.  However, you can make quick interim progress . Similar to safety, it must become part of your day-to-day culture. As business conditions change, roadblocks naturally arise through the process. We’ve found that they have a FAR higher chance of being averted or minimized when they arise as part of the process instead of related to one person or department who typically is seen as the “problem”. Strategic issues also arise naturally through the process so that they are proactively addressed instead of resulting in a reactionary panic.

You can start the SIOP journey with an assessment of readiness with recommendations for improvement. Several clients have started with this approach so that they knew which building blocks to put in place and whether the benefits would drive a substantial return on investment at this juncture. If you are interested in this type of assessment, contact us.

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The Calm After the Storm

January 23rd, 2017


While driving up the street to my house on the way back from driving both directions to the port of San Pedro for a port tour in a horrific storm (for Southern California), I see the calm after the storm. Southern Californians know just how challenging the rush hour freeways can be in a rain shower, and so it is especially significant to see the beautiful effects that can come from such havoc.

How many times do we get caught up in some sort of storm at work (ERP implementations, merger or acquisition, a major change project such as a lean transformation or SIOP initiative) and fail to appreciate the calm after the storm – and celebrate the results?

 

One tip to implement this week:

Unfortunately, we all can probably think of many, many storms in our work life without prompting. If we keep our eyes on the goal even in the worst of it, we’ll see the sun shine through as we complete a milestone or as we drive it home.

While in the midst of a storm this week, remember to keep focused on the goals. Provide a visual of those goals to your team, colleagues and partners. Create a visual if you don’t have one. Generate some excitement about the next milestone. Soon, you’ll emerge on the other side and you’ll see the skies open up and your end results shine through.

 

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…”

 



People Remain “In”

December 27th, 2016
people first

If you want to achieve profitable business growth apply the people plus initiative equation and see how your bottom line transforms.

No matter how many conversations go on about technology and the latest and greatest processes to drive results in manufacturing and distribution companies (including robots and automation taking over lower-skill positions), people remain “in”. Without exception, our best clients consider people their #1 asset.

Who develops the programs for the robots? Who figures out how to utilize business analysis tools and predictive analysis/artificial intelligence concepts? And who implements best practice processes such as lean manufacturing, SIOP/S&OP and the like? People!

There is zero doubt that the best employees with mediocre machines, technologies and less-than-desirable systems will outperform mediocre employees with the best machines, technologies and systems — every time! We cannot count the times a facility turned around with a new, exceptional leader. On the other hand, we have also seen large complex organizations change out General Managers like singers change clothes in concerts (for example, Reba used to change clothes 15 times in one concert!) — with NO better results (and often worse results) repeatedly. Eventually, a strong leader arrives with largely the same team and transformation begins. Since we pride ourselves on our successful track record of achieving tangible results in partnership with our clients, it is obvious how important people are in achieving this goal. Our initiatives can turn from tough challenges that will take longer to achieve success into fun, exciting rapid-change projects that deliver bottom line results based on the leader we partner with on the project. 

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The Power of Databases

July 27th, 2015

supply chainI’ve been working with a client recently on a SIOP (sales, inventory and operations planning) program. We are gaining access to powerful information that will help them hire at the “right” time (not too early – and, more importantly, not too late when considering growth & ramp up curves), train/cross-train at the right time (as growth requires new skills), upgrade and purchase machines at the “right” time (certainly, who wants to spend millions in capital too soon – or worse, too late as customers will be up in arms), buy new buildings at the “right” time and so on.

Databases can have great power if you set up the “right” categories and access the “right” information at the “right” time! In essence, in SIOP, databases help us automate and access critical demand and supply information to make key decisions and visualize the current state/future state. At my client, although we are in the design stage of the process, we are using what makes sense immediately and have already received positive feedback from their #1 customer. Nice way to end my week!

One tip to implement this week:

Databases are powerful for countless business decisions and programs. You could be trying to determine pricing, where to focus your sales force, where to focus efforts in manufacturing, how to eliminate waste and so on. Think about what data is important to your company – and your role.

If data is being tracked, gain access to it and think about how you could analyze the data. If it isn’t being tracked, start by tracking a few key metrics. The nice thing about data and trends is that you’ll have a trend after two days of tracking data. Eventually you’ll be able to look at not only yesterday vs. today but last week vs. this week and last month vs. this month and last year vs. this year. Once you look at it this way, new ideas, opportunities and potential bottlenecks will naturally emerge.

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…”

 



Business Growth: ‘I’ve Run Out of Space’

June 9th, 2015
teamwork

The quickest, most practical inventory solutions happen with teamwork.

One of those frequent and frustrating problems with growth can be space. Who has heard, “I’ve run out of space! What should we do?” Unfortunately it is not uncommon.

The problem with this situation is that there are numerous causes and solutions – including this is exactly the problem I wanted to create. Recently I’ve been working with a few highly seasonal clients. Space can be a dilemma in planning how to navigate these seasonal patterns. Additionally, running out of space is always a concern for growing clients. So, what should we do?

Make it a part of your planning process. For example, planning for space is one of the outputs of a SIOP (sales, inventory and operations planning) process. When you implement this best practice process, it is absorbed into the monthly process flow and trade-offs are continually evaluated. You’ll find countless articles on SIOP by searching my blog.

A few items to think about when space arises as a topic include:

1. Warehouse space optimization with existing equipment – Have you considered how to optimize the space you already have? I’ve yet to run across a company without an opportunity to maximize already-existing space utilizing already-existing equipment. Think about flow, layout, storage strategies, etc.

2. Warehouse space utilization with value-add purchases – Have you brought in an expert to review your warehouse layout to look for opportunities for additional racking and creative approaches to maximizing space? Can you add an aisle? How about store above the dock doors?

3. Flow – At its simplest, think about whether you are storing high-volume items closest to the dock doors and lower volume items in the hard-to-reach, inconvenient places. There are many flow considerations beyond these but it’s a great place to start….

4. Omni-channel strategy – If you support more than one channel (such as retail/e-commerce and distribution), it is likely you need multiple storage and handling strategies.

5. Leveraging systems – Have you optimized the use of your current system? Are you scanning? Utilizing WMS functionality? There are many potential solutions without investing significant resources. Often times, WMS light capabilities can be a dramatic boost to productivity.

It isn’t a bad idea to start with common sense. My best clients might not be warehousing gurus yet they think about this from a common sense perspective, ask questions and gain inputs from the entire team. Beyond common sense, a few simple yet effective warehouse strategies might be in order. Certainly, none of us wants warehouse space to be the limiting factor for growth! 

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