One of the major barriers to a company’s performance is the lack of a robust and routine SIOP process. SIOP (or S&OP as it’s sometimes referred to) can be the make or break process for an efficient, effective and importantly agile business. But a SIOP process is only as good as the senior support it receives.
We’ve covered SIOP here before, but if you’re new and want to get up to speed you can check out this excellent SIOP process on slideshare http://www.slideshare.net/anandsubramaniam/sop-process. The goal of a SIOP process is to figure out how a company meets it’s demand for goods (in both the short and long term) through applying it’s resources.
Importantly, SIOP isn’t a make shift or temporary process it should be rigorous in it’s approach, follow a set scheduled plan (with appropriate meeting cadence). It relies heavily on data and information but without senior support it’ll whither and die.
SIOP Senior buy-in or die
For SIOP to be effective it must have senior buy in and support for the process. It requires a number of processes and steps to be effective each of which need the appropriate levels of governance. As we stated in our previous article what you don’t have a SIOP process the need for close collaboration within the business can, without support from the top, often end in tears.
Senior sponsorship from within the business should aim to guarantee:
1/ Collaboration – all key functions within a business need to work together (for a common aim) to a set cadence.
2/ Buy in of result – whether or not you individually like the result – the business buy’s off the plan, this may require some tough choices but once agreed it needs to be stuck to.
3/ Monitoring of execution – the plan gets executed, teams need to be held accountable for doing their part.
As you can see these 3 functions, without senior support could be fraught with challenge. Unfortunately, getting people (especially execs!) excited about a process that’s unfamiliar can be hard (check out this link for some ideas) http://nexviewconsulting.com/five-ways-to-excite-your-executive-team-about-sop/
Many organizations choose to delegate some of the responsibility down via a SIOP manager/leader (sometimes full time others not). They typically act as the link between leadership and the business here, the roles primary function is to direct and drive the process. But this should not completely remove the need for exec support.
EXECUTIVES STILL HAVE RESPONSIBILITIES!
Whether or not your organization sees directing SIOP process as a full time function whomever leads SIOP is a conduit (not god!), the business needs to ensure he not only has direct access to the organizations senior leadership they also offer their support and buy in.
But what would happen if you didn’t have senior support?
Usually one domineering function (let’s call them Finance J) will drive the process, without leadership from the top it’s likely to be characterised by:
1/ Weak buy in to plan (No big stick to drive people)
2/ Lack of adherence to process
3/ Process improvements not being driven
4/ Risk / Reward not being managed effectively
5/ Deviations from the plan considered the norm
Don’t just sit there and nod – get involved
SIOP doesn’t just require strong sponsorship of the process but also active participation and support for a data driven fact based approach. All too often you might find leadership swayed by an important customer without understanding the impact, SIOP attempts to plug that gap and provides a route that needs to be followed.
The best SIOP’s are the ones that are integrated throughout the business with leadership actively involved.
Executive support for continuous improvement
The other area that leadership can help drive is that of process improvement. SIOP should be seen as a machine, one that can have its weaknesses. Leadership should routinely survey the SIOP process this helps prove out the effectiveness of what’s being done. SIOP often finds itself in a position where after time some of the required steps don’t get executed effectively of even more commonly collaboration between competing functions fails.
When it’s successful SIOP is like a well oiled machine. A process that facilitates the sharing of knowledge to support a common view of the supply chain. Its capabilities, its strengths, the risks all joined up into one effective coherent (bought off) plan.
Managing the varied elements within your supply chain can be an extremely complex if not daunting task. Without the right KPI’s and metrics in place this is can be even more of a challenge.
Most businesses usually have some form of Supply Chain KPI metric in place but as the function can be so diverse, covering various operational impacts, which are the right metrics and how should they be used?
Firstly it’s useful to think of metrics as a form of compass, they describe a narrative of where your business is going and how it is getting there (note this Implies a target for the KPI, you have one don’t you? ?)
I know it’s stating the obvious but KPI’s work best when they are simple and provide clarity, you should be able to communicate them easily. I really like the article over at Geckoboard.com which describes KPI’s succinctly,
• Important (don’t waste your time tracking things that are irrelevant),
• Trackable (readily accessible data that means something) and
• Explainable (something you can take action from).
When you zoom in on supply chain can it can be a bit daunting as it’s a large concept to get to grips with, you have various functions within it:
Usually each function has specific metrics (which can normally form part of a broader KPI portfolio).
Halobi has an interesting take in terms of differing KPI’s depending on the form of business you’re operating (product focused, customer focused etc). The article talks about utilizing methods such as the SCOR (https://en.wikipedia.org/wiki/Supply-chain_operations_reference>Link to Wiki) method to help derive the metrics. This is not an uncommon route and offers a proven methodology.
One thing is for sure metrics should be used to drive improvement – they are not just there to look at each week/month. Every one should have a target and derive a set of actions that helps push the results towards the goal. Targets require hard work you know!
KPI’s work best when they are not just charts Visualworkplace.co.uk (other suppliers are available) show how KPI’s can be used in the context of action tracker that look at results, understand the gap between results and targets and then drive actions to close that gap.
The key with KPI’s is to derive the ones that are relevant to your business and the journey you want to undertake. Just because other organizations use a metric doesn’t always mean you should as well (note: you should review the KPI selection regularly to ensure they are relevant and don’t become stale).
KPI’s are always great aren’t they?
KPI’s are not without their problems. There are of course examples of using the wrong KPI’s (driving the business against the route it wants to be travelling on) and more commonly using rubbish data (everything looks rosy when it’s not). Data is a usually the number one concern and you should be asking:
• Is it easily obtainable
• Does it require cleansing
• Is it accurate
• Can it be easily interpreted
I’ve lost count of how many times I’ve seen a flashy chart built upon data that no-one really understands.
Also as Allaboutlean points out peoples careers can depend upon results and it can be very tempting for results to be massaged. KPI’s work best in an environment of no blame, performance improvement.
While there I am sure are 100’s if not 1000’s of KPI’s to chose from, most will fall into a few categories,
On time delivery performance
Right first time /Quality
However these are not the be all and end all, for example your business may be looking to source it’s products from low cost countries and you may have set yourself a target of how much of your procurement spend is in that area, this may not be a typical KPI but it will be relevant to you.
The moral of this tale is make sure your KPI’s work for you.
Do you co-ordinate KPI’s for your supply chain team? We’d love to hear your stories using the comments section below.