As end-user behavior and demand continue to shift rapidly, unified and dynamic operations, with favorable financial outcomes are essential for achieving supply chain resilience.
Supply chain planning can no longer remain isolated within organizations. Successful production planning must also consider demand, production capacity and supply.
The rise of Sales, Inventory, and Operations Planning (SIOP)
Sales, inventory and operations planning (SIOP) means succinctly integrating sales, marketing, supply chain, operations, product management, procurement, pricing, and financial data with the executive team’s effective decision-making capabilities.
In many organizations, key executive roles operate separately or don’t communicate regularly, and supply chain planning may be managed by two separate teams. Finance creates budgets and outlines capital requirements. The operations team balances supply and demand by calculating future capacity and supply requirements. However, in times of crisis, the operations team focuses on risk management and unexpected opportunities, causing the financial and operations planning to diverge dramatically. Integrated SIOP can help companies adapt to dramatic shifts in the business environment, and remain flexible. It enables also stakeholders to coordinate material and information flow across the entire logistics network to make the need for agility a reality.
Integrated SIOP enables the Five-step process, of S&OP/IBP; driven by supply chain management
- Gathering Data
- Sales/Demand Planning
- Production and Supply Planning
- Review Meeting
- S&OP Executive Approval Meeting
More than ever, organizations need to keep up with rapidly changing markets and shifting end-user behavior.
Depending on the industry, supply chain planning goes by many different names. Some companies refer to this process as sales and operations planning (S&OP) or sales, inventory and operations planning (SIOP). Others refer to this process as integrated planning or integrated business planning (IBP). In retail, this process is often called merchandising, inventory and operations execution (MIOE).
Regardless of how you label the process, implementing an integrated approach to supply chain planning may help organizations increase agility, lower costs, improve customer relations and boost profits.
Benefits of an Integrated Supply Chain Planning Process
1. Balance supply and demand by providing better visibility into sales, marketing, operations and finance data.
2. Identify the most profitable strategies from many different scenarios.
3. Align business functions to a company’s short, medium, and long-term goals.
4. Refine long-range strategic plans and annual business plans.
which leads to outcomes such as:
- Reduced total landed costs
- Increased Revenue
- Increased Service Levels
- Improved Forecast accuracy
- Improved customer loyalty and satisfaction
- Faster market uptake of product launches
- Improved supplier coordination
- Better Freight Delivery Times
Unfortunately, historic spreadsheet data does not provide the functionality needed to assess the demand and supply disruptions on a daily or weekly basis.
As demand continues to rapidly shift in response to the pandemic, and as hidden vulnerabilities are further exposed, a recent survey by Supply Chain 24/7 found that 54% of supply chain professionals are now looking to either reduce their dependence on spreadsheets or they are already using different tools for supply chain planning.
S&OP and inventory optimization software can now help automate the process, shorten planning cycles, reduce labor costs, and boost productivity because employees no longer have to plan and prepare forecasts manually.