Expert Insight: Guest Contribution
  By: Akhil Oltikar, Senior Director, SimFlex Group  
  September 27 , 2007  

Next-Generation SIOP


Supply Chain Leaders are Embracing New Paradigms for Success

Oltikar Says:
Software solutions are now enabling next-generation SIOP, driving value for the ‘Extended Enterprise.'

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The complexity associated with managing the value chain has grown to a level previously unheard of due to numerous macro and micro factors including global demand and supply, material price erosion, increasing customer sophistication, shorter product life-cycles, and unexpected events.

Fragmented, spreadsheet-based approaches with fixed planning cycles are incapable of responding to these challenges. Sales Inventory & Operations Planning (SIOP) is a structured planning process designed to gain consensus between sales, finance, procurement, manufacturing and logistics, allowing them to efficiently utilize assets, maintain high levels of service and avoid lost sales. Software solutions are now enabling next-generation SIOP, driving value for the ‘Extended Enterprise.'

Shortcomings of Existing Planning Methodologies

For many companies, a number of shortcoming in current planning methodologies and technologies exist. These include:

  • Confined knowledge
  • Sluggish response times
  • Inflexibility to changing conditions
  • Sub-optimal business performance

Next-Generation SIOP Process

Supply chain leaders are moving to new paradigms that embrace Sales, Inventory and Operations Planning. Key characteristics of the processes of these leaders include:

  • Multi-criteria planning and multi-dimensional analytics: Multi-criteria planning, enabling a concurrent focus on costs, assets, inventory, service levels and financial indicators are critical for profitable growth.
  • Cross-functional and “Extended Enterprise” synchronization: Traditionally, and even today, functional groups work in silos, leading to the creation of sub-optimal plans. Sharing information creates visibility and provides a clear understanding of how different elements within each area impact the performance of others.
  • Constant review and proactive management: Next-generation SIOP is a continuous process rather than a fixed planning cycle. Changes in various aspects of the value chain drive the process, and proactive management ‘what ifs’ search for problem areas before they occur.
  • Advanced scenario planning and optimization: Value Chain disruptions or certain triggers may throw an operating plan off-track. In such cases, scenario planning and advanced optimization technologies should be employed to determine a set of new plans that best meet the business objectives.

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