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As part of SIOPFriday we thought this week we’d take a look at those issues that exist in organizations who haven’t implemented SIOP in their organization. This can often be a good method of putting the business case together for implementing the process.

Firstly what is SIOP (or S&OP as it’s often referred to as)?

SIOP stands for Sales, Inventory & Operational Planning.

SIOP brings many things together in an organization under a shared plan that the business executes. SIOP attempts to fix a set of fragmented processes (planning & execution) by joining different parts of the business who may have varied and often competing objectives.

Many businesses operate in departmental SILO’s, in a planning and execution context this can cause various challenges exacerbated by poor cross departmental communications.

Let’s take a look at how these might impact the business, for example:

• Finance pulling for High Sales revenues and Low production costs
• Operations pulling for Long production runs and high stock levels
• Sales team pulling for he who shouts loudest not necessary the sales making the right financial or operation sense.

So what are the implications of this? Usually there are two guaranteed losers in a non joined up approach, both the customer and the finance team.

But this is merely the tip of the iceberg, a lack of SIOP is often typified by:

• Fragmented unstructured planning
• The wrong metrics
• Sponsorship diluted
• Unmitigated risks
• Poor execution
• Lack of collaboration & teamwork
• Lots of firefighting caused by lots of firefighting
• Poor communication
• Short term planning horizons
• Multiple sets of numbers / versions of the truth

Of course that’s not to say that a lack of SIOP means a business fails, and a lot depends on the size of the business and the mix/complexity of it’s products and customers but a lack of SIOP sure makes it harder with a business finding itself in “fire-fighting” mode for much of the time often moving to satisfy near-term problems rather than work to a settled plan.

So does this sound familiar? Does your organization operate without SIOP? What issues do you come across? We’d love to hear from you in the comments section below.

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