We are in a new era with more opportunity to grow than ever before. COVID is largely in the rear-view mirror, and the strong companies are getting stronger. Consumers have returned to the scene and are robust purchasers of products, homes and services. Are you ready to grow and scale? Have you taken control of your end-to-end supply chain so that you can take advantage of the opportunities?
Taking Control of Your End-to-End Supply Chain
To support customer needs and be prepared to pursue revenue opportunities, the smart are taking control. They aren’t waiting for the supply chain to straighten itself out. Read my recent article in Brushware about how the global supply chain will not realign anytime soon. Instead, we must take control! Answer a few questions to determine if you have control of your supply chain.
- If a supplier to your critical material or component is disrupted, do you have a solution to carry on without noteworthy interruption.
- If your customer changes product needs on the fly, are your manufacturing operations and supply chain agile enough to change on the fly?
- If your customer or supplier reconfigures its supply chain, is your supply chain resilient to accommodate successfully to changing conditions?
- If your product, ingredients or raw materials get caught up in global conflict, protestor delays or weather-related events, will you be able to serve your customers?
- If you gain new customers, will you be able to adjust your manufacturing schedules to accommodate for the new requirements?
- If your revenue grows by 50-100%, can you scale up successfully?
How are Clients Taking Control of the Supply Chain?
Our most successful clients are taking control of their end-to-end supply chain. As customers needs evolve, you will need to make the appropriate changes (operationally, financially, R&D/ new products, supply chain, etc.) to meet these changing customer needs and support revenue growth while meeting profit/ EBITDA objectives. How are the best clients pivoting to take control of their supply chain?
Certainly, it depends on your particular industry, company strengths and position, and so it could take many forms. For example, a client supplying the building products industry has been vertically integrating manufacturing capabilities to quickly pivot to changing customer needs and to grow market share. Another client has been sourcing new manufacturing partners both regionally and around the world to build offload capabilities to meet increasing revenue opportunities. Other clients are expanding key manufacturing capabilities, purchasing equipment, and hiring people to grow inhouse capabilities whereas others are proactively expanding their footprint to provide greater flexibility in the future. Other clients are rationalizing skus and prioritizing strategic and profitable customers. Last but not least, another client is evaluating its supply chain network of outside distribution centers to reposition, consolidate and/or expand to meet changing customer conditions while continuing to manage working capital closely.
Taking Control With SIOP (S&OP/ IBP)
Our most successful clients are utilizing customized and collaborative SIOP (sales, inventory and operations planning) processes to understand customers’ needs, create revenue predictability, and, most importantly, to define what’s required to be able to deliver these needs successfully, predictably and profitably. Our most successful clients are definitely taking control to meet significant revenue opportunities whereas the mediocre continue to hope the supply chain will straighten out on its own.
During the monthly SIOP process, the potential and probable revenue opportunities are highlighted with enough clarity so that the executive team can take control over the strategic decisions required to support profitable growth. For example, a life sciences manufacturing client took control over the supply chain by building an additional facility to support growth. However, you don’t build a facility and gain customer approval for the new process quickly, and so they had to take control and develop an interim solution as well.
They knew they had to get a better handle on their forecast so they could carefully navigate how to increase interim production and meet customer orders. After reviewing historical growth rates by customer and product line, incorporating quotes with high probabilities of success, reviewing inventory agreements, monitoring new growth channels, and reviewing with sales and product teams, we defined a base forecast to launch the SIOP process. This enabled manufacturing to see into the future and define the specific proteins required to support the growth trajectory prior to the expanded facility availability. This allowed the manufacturing leader to take control and scale these specific proteins, reallocate space, build skills, purchase equipment, and order long lead-time materials to support growth, and it enabled the quality and bottling leaders to plan capacity accordingly to meet the interim demand. Additionally, modifications could be made to the frequency, volume and manner in which the manufacturing facility replenished its European and Pacific Rim locations to ensure customers’ needs were met. You’ll find more examples of how to grow and take control of your business by being directionally correct with sales and operations planning in our blog.
Customer Success with SIOP
SIOP is not a magical off-the-shelf solution. It is tailored to each client and the unique circumstances, strategies, differentiators, people, processes, systems, and data. As you get a directionally-correct monthly cadence going with cross-functional and potentially cross-organizational engagement, strategic issues and related roadblocks will emerge. These issues become the focus to create customer success. Whether success is created by improving OTD/ OTIF (on-time-in-full), reducing lead-times, or simply scaling production and logistics to meet increasing and evolving customer demand, SIOP will provide a framework for success.
Refer to our blog for many articles on SIOP. Also, read more about these types of strategies in our book, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth. If you are interested in talking about what it would take to purse the SIOP journey in your business, contact us.
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Prescient Strategy & Manufacturing Resilience Using SIOP (S&OP)