Sales, Inventory &
Operations Planning (SIOP)#
Sales, Inventory & Operations Planning (SIOP) is a structured, recurring process that is designed to bring various stakeholders within an organization to agree on a single plan that can be used to drive the entire business.
It is the function of setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity and competitive customer lead times, as expressed in the overall business plan. It must extend through a planning horizon sufficient to plan the labor, equipment, facilities, material, and finances required to accomplish the production plan. This planning horizon is typically 12 months, but can stretch as far as 24months.
- How does actual performance compare against planned?
- Where could material shortages occur and how can they be avoided?
- What capacity should be in place, looking forward 3 to 18 months?
- How much freight expediting would be required to meet service levels during peak periods, and what would be the impact on logistics costs?
- What actions should be taken if customer requirements change, a new product is introduced, a new market is entered, or an alternative supplier emerges?
- Given the changes in the supply chain, what is the optimal production, procurement, delivery and resulting inventory & financial plan?
SimFlex SIOP solution#
SimFlex enables SIOP process in an organization. It facilitates organizational alignment between business goals and plan while enabling rapid responses to ever changing business conditions. SimFlex optimally balances supply and demand on a recurring basis, projecting future performance, efficiently utilizing assets, and maintaining high levels of service. In other words, when to procure, when to manufacture, how to deliver to customers on time, and at the lowest cost, and what the financial impacts are.Participants of the SIOP teams can apply scenario planning using a combination of both solvers and 'what-if' analyses, using the scorecards to analyze the projected business performance of their actions. This creates a platform for consensus on how to optimally respond to the changing conditions in order to best meet business objectives. The agreed-upon SIOP plan is then rolled out by communicating the optimized production, capacity, procurement, inventory, delivery plans to the execution teams.