product placement

product placement

In this article, Andrew Seay offers a solution to silo’d supply chains.

Recently put an item on promotion and quickly stocked out?  Frustrated by the pile of aging inventory sitting in the annex warehouse?  Trying to determine whether a plant shutdown is the right choice?  At some point in every company’s growth, it will eventually confront challenges similar to these.  A Sales, Inventory and Operations Planning process is often what’s needed to overcome them.

In this article, we’ll define the Sales, Inventory and Operations Planning process.  We’ll discuss how it can reduce “silo’d” behavior in the supply chain through identifying opportunities to stimulate demand and surfacing signals to increase supply.  Finally, we’ll review how to stand up the process at your company.

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Is your “silo’d” supply chain costing your company money?

What is SIOP?

Sales, Inventory and Operations Planning (SIOP) is a core element of integrated business planning in which a cross-functional team is convened to make strategic decisions to more closely match company supply and customer demand.  Generally attended by Sales, Marketing, Supply Chain and Production functions, the goal of a SIOP process is to ensure that a company’s purchasing, production plan and inventory positions are closely aligned with confirmed and forecasted sales activity. 

SIOP identifies opportunities to stimulate demand

As a company operates, some SKUs will begin to age in the finished goods warehouse.  This is a natural, and generally unavoidable outcome of holding inventory.  In and of itself, this is not necessarily a problem.  The issues begin when accumulation of aged inventory is not effectively communicated (or acted upon) to other areas of the organization.  The SIOP process is designed to regularly and systematically create a dialogue between sales, marketing and supply chain.  Performed correctly, this dialogue turns into an action plan to stimulate demand.

 

Key points include:

  • Price reductions
  • Product placement
  • Promotional activity

 

Read the full article, The SIOP Process is the Solution to Your “Silo’d” Supply Chain, on SeayAssociates.com.