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    Sales Inventory and Operations Planning

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    emba2015
    SIOP (Sales Inventory and Operations Planning) is a process that balances demand and supply through coordinated planning. It operates at both the volume and mix level over a 6-12 month horizon. Demand is represented by sales forecasts while supply is represented by capacity planning. SIOP is conducted monthly and involves top management to align strategic plans with operational plans. It provides overall production and inventory targets but is not a scheduling or replenishment tool. Effective startup of SIOP requires defining metrics, plans, product families, demand forecasts, capacity plans, roles, and a formal process.

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    Sales Inventory and Operations Planning

    Uploaded by

    emba2015
    141 views2 pages
    SIOP (Sales Inventory and Operations Planning) is a process that balances demand and supply through coordinated planning. It operates at both the volume and mix level over a 6-12 month horizon. Demand is represented by sales forecasts while supply is represented by capacity planning. SIOP is conducted monthly and involves top management to align strategic plans with operational plans. It provides overall production and inventory targets but is not a scheduling or replenishment tool. Effective startup of SIOP requires defining metrics, plans, product families, demand forecasts, capacity plans, roles, and a formal process.

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    Sales Inventory and Operations Planning

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    SIOP (Sales Inventory and Operations Planning) is a process that balances demand and supply through coordinated planning. It operates at both the volume and mix level over a 6-12 month horizon. Demand is represented by sales forecasts while supply is represented by capacity planning. SIOP is conducted monthly and involves top management to align strategic plans with operational plans. It provides overall production and inventory targets but is not a scheduling or replenishment tool. Effective startup of SIOP requires defining metrics, plans, product families, demand forecasts, capacity plans, roles, and a formal process.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    141 views2 pages

    Sales Inventory and Operations Planning

    Uploaded by

    emba2015
    SIOP (Sales Inventory and Operations Planning) is a process that balances demand and supply through coordinated planning. It operates at both the volume and mix level over a 6-12 month horizon. Demand is represented by sales forecasts while supply is represented by capacity planning. SIOP is conducted monthly and involves top management to align strategic plans with operational plans. It provides overall production and inventory targets but is not a scheduling or replenishment tool. Effective startup of SIOP requires defining metrics, plans, product families, demand forecasts, capacity plans, roles, and a formal process.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    What is SIOP (Sales Inventory and Operations Planning)?

    SIOP is enhanced coordination. If a companys environment product, processes,


    customer base, and so forth is extremely simple and, if things hardly ever change, then they
    probably dont need much in the way of a SIOP process. Seen many companies like that lately?

    Lets look at the mix/volume chart:




    High Volume

    Low Mix

    High Volume

    High Mix

    Low Volume

    Low Mix

    Low Volume

    High Mix




    Where do you as a company fall into this chart? To run a business well, demand and
    supply must be in balance at both the volume and mix level. In reality this balance does not exist.
    Thus management must step up to understand this relationship. SIOP is a set of tools to balance
    demand and supply. SIOP operates at the volume level; it deals with rates of sales and
    production, and aggregate inventories and backlog. Then how does the mix come into play? The
    Master Schedulers task is to balance demand and supply at the mix level. Its concern with which
    individual products to run first, second, third and which customer orders will ship when.

    These words are saying that SIOP and Master Scheduling are not the same thing.
    Theyre different tools for different purposes.

    Now we must come to the two more fundamentals of the SIOP process and that is
    demand and supply. How are they represented in the SIOP process? Demand is represented by
    the Sales Forecast. Capacity Planning represents Supply. These tie in with mix and volume to
    give us the four components of SIOP. Their relationship looks like the following chart:
















    Mix
    V
    o
    l
    u
    m
    e

    SIOP
    Master Scheduling
    Sales
    Forecasting
    Capacity
    Planning
    v
    o
    l
    u
    m
    e

    m
    i
    x

    demand supply
    Thus SIOP is a monthly formal balancing of supply and demand through a six to twelve
    month planning horizon by aggregate product families. It generally includes incoming orders
    (bookings), backlog, shipments, forecast, finished goods inventory production and capacity
    projections is a monthly time buckets. It is conducted in a very prescribed format by the top
    management team. This is a critical point: Top Management. Any company, which embraces this
    process, must engage the general manager and direct reports. Otherwise, there will be a
    disconnect between there wishes and the information on the formal SIOP document.

    SIOP is not a scheduling tool! It is not an inventory replenishment tool! It is, however, a
    top level planning technique to provide overall rates of sales and production, and backlog and
    finished goods inventory positions. In a cellular or flow-line based operation, SIOP provides the
    daily run rates for these product families.

    SIOP is the key business process that derives from the strategic plan, and from which
    scheduling, order promising, material, shop floor control, and many other processes derive.

    How do we start this process? What are the keys to start-up? They are as follows:

    Define strategic initiatives and business metrics
    Define measurements for business metrics
    Define business plan
    Define planning families
    Define demand planning (sales forecast)
    Define capacity planning (rough or detail capacity planning)
    Define the format
    Prepare measurement data
    Prepare inventory data
    Determine who is accountable (who speaks to what)
    Preliminary SIOP
    Formal SIOP

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