If you’ve implemented a sales, inventory, and operations planning (SIOP) process in your business, congratulations on a shrewd strategy. Now your team faces the most challenging phase: sustaining it indefinitely.
Your new business process provides senior managers with shared data on sales projections, resources, and current inventory. You can more accurately balance supply and demand and maintain a sound operating plan. If the process is so powerful, why do so many businesses give up on it?
In a nutshell: It’s hard to adopt. SIOP requires a cultural as well as a process commitment. It’s with you for the long haul. In an era of quick-fix promises, it’s the engine that demands your daily loyalty and grit.
When the initial excitement wears off, businesses often struggle with the five challenges below. Plan for them now, and you can head off trouble. The benefits of a unified SIOP process are worth safeguarding.
Treating the Plan as a Done Deal
Once they have formally documented and approved the SIOP process, top management may leave implementation to others. However, good intentions will languish in a leadership vacuum. The process needs active stewardship.
The executive team should meet at least monthly and use sales, inventory, and operations data to evaluate whether the company’s business plan is on track. Participants should identify supply and demand imbalances, risks, and anomalies. At least yearly, they should determine whether to update the plan to account for changes inside and outside of the organization.
A dynamic process will help you:
- Refine your strategic roadmap. Your long-term strategy may contain assumptions that current data questions.
- Refine your yearly business plan. Are sales and operations aligned? Rather than firefight when faced with surprises, you can plan agile responses.
- Provide direction to department managers on resource planning. Thus, they can replace the educated guess with decisions based on sound information.
- Build a strong leadership team by engaging senior managers in the process.
- Revisit performance metrics. Do they provide the data your business needs now?
- Keep the right level of inventory. Too much wastes money. Too little derails customer satisfaction.
- Plan manufacturing resources more effectively.
Not Committing the Right Resources
A company may not realize how messy overhauling processes will be. No matter how well planned, significant changes affect every employee’s workflow. Businesses often balk at the cost of training employees on new tools and procedures. Also, even in-house programs require resource dedication that challenges smaller companies.
However, you want your entire team to understand SIOP at a high level and embrace it. Using better business tools means they can do their jobs more effectively and take more ownership. They win big.
Most growing businesses know their processes must evolve. Managers may rush to solutions when they should be spending more time understanding root issues and planning the new business process. They may purchase a new software application or make staff changes when the real solution is a comprehensive plan.
Sometimes the move to a new business process is heralded by preemptively cleaning house. Leadership may lay off employees before quality data can provide an accurate snapshot of company performance. This move lowers employee morale and paints the new process in a bad light. Instead, leadership should focus resources on balancing inventory supply and sales demand.
Not Making Top Leadership the Process Owner
Businesses sometimes overlook choosing a single process owner. Ideally, the CEO or general manager should own the process and hold senior managers accountable for department implementation. Generally, each manager should be actively engaged in ongoing process activities, including regular data walkthroughs and business plan updates.
Sometimes a company appoints a process owner who is essentially a figurehead. This person’s role may not be senior enough to direct top leadership. For example, a business may put a program manager in charge instead of the general manager. The program manager may excel at managing an IT project portfolio but does not have the muscle to push the executive team.
The right process owner:
- Champions across organizational levels and departments
- Helps harden the new process into company culture
- Follows the data and tells hard truths
- Models honesty and transparency
- Respects different points of view
If you think this person sounds like a superhero, you’re correct that some businesses need one. Sustaining the process is tough. Undoubtedly, the wise executive delegates execution to direct reports. Each manager is formally accountable for measurable performance around process milestones.
Department or Functional Silos
In many companies, departments operate in communication and data silos. Inventory planning doesn’t align well with sales data. The finance team doesn’t learn about application outages in time to finish daily reports. Technology managers aren’t aware of new marketing claims. As a business grows, stumbling blocks such as these become roadblocks to success.
Having a SIOP process means the walls come down. Teams share data, and managers analyze and plan together. For this process to work, each manager must commit wholeheartedly to the process.
Another thing, sometimes senior managers feel threatened by the new process, afraid that it will erode their control. They are reluctant to share information, thinking doing so will diminish their value to the company. On the contrary, managers will have a larger mandate to run their departments more effectively. They will be critical players in ongoing company planning and business process refinement.
Another issue is that departments differ in their priorities. They often compete for corporate resources and champion their group accordingly. Their workflow cycles and deadlines vary. Even their culture and management styles might be worlds apart. In this environment, managers may be wary of potentially undermining their department with a new process.
A frequent scenario is that a department pays lip service to the new process but clings to old habits. A sales team continues to overpromise new products without adequately considering inventory constraints. Also, interdepartmental communication stays inconsistent and email-driven. Each group fights adopting shared, standardized metrics and reporting.
Top management can mitigate this NIMBY culture by ensuring all managers understand the process, its benefits, and their role in its success. Additionally, senior managers should be involved in all phases, from initial planning through ongoing monthly commitments. The CEO should set clear and formal expectations and treat the leadership team as partners.
Keeping Multiple Data Sources and Metrics
A SIOP process needs a single data and reporting source for consistency across the organization. Once managers agree on the standard set of metrics, they are more likely to work cross-functionally and share data. They cooperate more as they see how leveraging shared data yields progress month over month.
Long-established smaller businesses often have entrenched legacy systems. They might still rely on spreadsheets for sales projections. Meanwhile, they track inventory using a standalone application instead of a dynamic system such as Zoho Inventory that integrates sales and inventory information. Product Development uses a team collaboration platform no one else accesses, and Customer Service relies on an old database as a glorified address book. None of these systems integrate, and Finance must cobble together the outputs into useable information.
Teams also interpret financials differently. What Sales considers a projection, Finance might call wishful thinking. Also, a single data source helps translate numbers into information all partners understand. Senior managers must speak the same language to work as a team.
The Bottom Line
The right applications will help your sales, inventory, and operations run smoothly. Do you have your inventory and sales process under control? Zoho Inventory offers complete inventory management throughout the customer lifecycle. Having accurate, actionable data at your fingertips frees you to manage with vision and confidence.