Tag Archives: Integrated Business Planning


There are a lot of terms used by organizations to describe their mid to long range strategic planning discipline.  Whether your organization calls it Integrated Business Planning (IBP), Sales and Operations Planning (S&OP), Sales, Inventory and Operations Planning (SIOP) or something else, the key message is that abbreviations are not important – results are. Strong strategic planning discipline orchestrates sales plans, operations constraints, and financial objectives while giving guidance to short-term scheduling for execution. At USC, we call this discipline SIOP due to the strategic importance of inventory to smooth supply and demand fluctuations to maintain customer service levels.

Survey Says!

Businesses find S&OP beneficial because it helps balance supply and demand, it improves communication between sales and other departments, leads to better decision-making with everyone on the same page, and it ultimately results in better efficiency. Most organizations refer to their planning process as S&OP, but we think it’s incomplete. Inventory needs to be part of this process to unlock greater levels of operational efficiency and customer service rates.

Planning Process Name Chart

Most companies have less than five years of experience utilizing a SIOP discipline and significantly, fewer than 50% of all companies integrate financial objectives into their monthly planning process. The result is the organization’s annual plans are disconnected from the monthly “replanning” SIOP process. Managers are typically held accountable to their annual plans which are increasingly out of date as the year progresses and better plans are known resulting in sub-optimal decision making based on old assumptions.

Annual Operating Plan Chart

Furthermore, since most companies rely on static models such as Excel and Access to as their primary analytical tools, the planning process can be labor intensive, time consuming and more prone to human error. Integrating decision support systems with operations data, procurement data, inventory data, and customer demand improves simulation and scenario analysis capabilities. Integrating with advanced predictive analytics can further augment planning knowledge.

Primary Data Analytics Chart

Sales, Inventory and Operations Planning

We tell our clients that SIOP is making sure you’re having the right conversations about the right things at the right time.

SOP vs SIOP Chart

Sales, Inventory, and Operations Planning is a holistic process that integrates customer-focused demand plans with production, sourcing and inventory plans and results in improved tactical and long-term business decision making capability.

Keys to Implementing a Successful SIOP Process

But Why the Added Focus on Inventory?

Inventory tells a story about a business’ operational efficiency. Inventory accounts pool the collective decisions and market forces affecting the company, telling stories of sales forecasting accuracy, manufacturing efficiency, planning effectiveness, supply chain disruptions, and quality control. Lean inventories reveal robust planning systems and culture, integrated ERP systems, and good governance. Excess inventories can be a short-term benefit to sustain high customer service levels during times of uncertainty, however they come with high obsolescence and carrying costs.  Inventory is a strategic lever to smooth operations, procurement, and sales fluctuations. The right level of inventory is different for each company, and changes based on current consumer demand, supply chain disruptions, and strategic decisions.

Benefits of SIOP

Interested to learn more about how adding inventory to your planning can make you more efficient? For more information on how SIOP can help your business read our eBook, “Sales, Inventory and Operations Planning: It’s About Time.”

David Newman

David Newman

*This article is written by USC Consulting Group’s Supply Chain Practice Leader, David Newman.

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