Where Does Your SIOP Process Stand Right Now?

Recently, we introduced a new sales, inventory, and operations planning (SIOP) maturity model that focuses on outcomes. It can be challenging to understand how this fits into your organization — and even more so where your business fits into the new model. Here, we’ll explore the symptoms that are often experienced in each stage of the new model to help you understand where you’re at now and what should be focused on to move forward.

Recapping the SIOP Maturity Model

The new SIOP maturity model we recently proposed stands in stark contrast to traditional maturity models, which focus on what teams are doing, but not what is actually being accomplished. In addition to changing the focus, the model creates additional benefits:

  • It changes how team members think about SIOP maturity (task-focused to outcome-focused) and what’s needed to actually call the function “mature”
  • SIOP processes become stickier in team thinking and in execution
  • It keeps executive leadership involved and focused on outcomes
  • Value becomes easier to measure and share, internally and externally

Whether you’re already using a SIOP maturity model, or you’re considering adopting one to assess current efforts, it’s important to know where you’re at now. Below are indicators of where your SIOP function may be based on the issues experienced.

Understanding Maturity by Symptoms Experienced

Stage 0: Ground Zero

Stage zero is exactly what it implies: no synchronized efforts have been made in SIOP or sales and operations execution (S&OE). Everyone is a firefighter, and the culture of firefighting is both recognized and rewarded. There is no proactive work being done to get ahead of fires springing up or to mitigate their impact. Some key symptoms here include:

  • Customer service is poor, and it’s unclear why that’s the case
  • Orders are consistently being expedited to improve customer service
  • Levels of raw material, “work in process,” and finished goods inventory are high — but out of balance with what is actually needed
  • Customer churn is high — especially below your top few customers
  • Significant blaming between functions and escalations, resulting in knee-jerk responses/solutions.
  • Undefined “white space” between organizational roles and responsibilities
  • Each function is telling the other how to behave and/or do their role
  • No or limited business metrics to understand business decision trade-offs
  • Numerous initiatives with few making progress, and many become “flavor of the month” in which resources hold their breath to outwait management attention

Stage 1: Service Function: Tamping Down The Volume of Nonsense

In the first SIOP maturity stage, the organization has recognized that a problem exists and that work must be done to resolve it. Efforts are launching in order to help prevent issues, but it’s still early days. Internally, teams are beginning to understand one another’s roles and responsibilities, but there may be little to no actual value experienced.

  • Finger pointing, complaining, and knee-jerk responses are reduced or dropping
  • Customer service is improving, but expediting and wrong-mix inventory persist
  • Resources are better at staying in their respective lanes
  • Trust between internal organizations is improving (but still weak)
  • RACI systems are beginning to be adopted

Stage 2: Customer Service Provider: Customers Becoming Aware Something is Changing

In stage two, the work that has been initiated in stage one is beginning to pay off — not only internally, but also externally. Customers are beginning to take notice that the organization is living up to its promises. However, all is not as it seems.

  • Customer on-time, in-full (OTIF) metrics are improving
  • Reliable performance is becoming an advantage
  • However, operations are calm above the water but working hard beneath
  • Customer service performance is tracked, revealing opportunities for improvement rather than one-off initiatives
  • Wrong-mix inventory, expediting, and firefighting persist in order to achieve OTIF
  • Executives are becoming more selective on operational improvement projects that align with objectives

Stage 3: Efficiency Driver: Still Better, but with Less

In the third SIOP maturity stage, “less” is the name of the game. The organization has made progress on its metrics and navigating the behind-the-scenes complexity, resulting in less overall inventory, less expediting, and less panic-driven decisions/efforts.

  • Internal organizations are staying in their lane
  • Organizational roles and responsibilities are becoming more defined and stable
  • Stage two initiatives are paying off, and new initiatives are building upon that base of organizational and process improvements
  • More metrics are able to be tracked, with growing attention to the need for balanced metrics to avoid unintentional consequences and finger pointing
  • Customer churn is reduced
  • Margin has improved and working capital is freed up

Stage 4: Revenue Generator

Improvements made in the SIOP maturity stages thus far have brought the organization to a position where those improvements are now able to generate more positive momentum and results. Customers are responding to this new stability and improved focus, resulting in increased revenue and a better internal and external experience of value.

  • Sales is now able to shape demand based on supply insights (e.g., over abundance of specific inventory)
  • Sales is also now working with key customers on inter-company improvements
  • Customers beginning to value the company as a “trusted partner” and/or “lead” vendor in your category because:
    • Prices can be lower or very competitive
    • Informative answers to questions / requests are readily available
    • “Promises” are kept
  • Customer stickiness to the organization’s brand has improved

Stage 5: Competitive Advantage

With time and the consistent implementation of improvements, as well as learning from the results of those improvements, the organization achieves stage five maturity. Here, the perception of the company is that it is becoming a leader in its selected markets. This helps to drive new opportunities for growth, expansions of customer accounts, new partnerships, and even M&A opportunities.

Where Does Your SIOP Maturity Level Stand?

The symptoms explored above are built upon decades of learning and experience with organizations spanning numerous industries and geographies. At River Rock Advisors, we’ve helped these companies navigate the complexities of SIOP to mature in thought, process, and execution — and we can do the same for you. Connect with us today to learn more about our capabilities, and be sure to stay tuned for future thinking in Outcomes Based SIOP Maturity.