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Most manufacturers running SIOP use tools designed to help them manage supply chain volatility. Despite heavy investments in forecasting and planning systems, companies find that their fill rates disappoint and inventory targets are missed. Monthly review meetings result in more firefighting than decision-making. Rather than blaming the tools and platforms, the fault often lies in the lack of a strong process architecture that connects them.
As we explored in Navigating Supply Chain and Tariff Turbulence, building the data foundation is the required first step. It consists of clean demand data, accurate bills of material, clear supply signals, and an integrated ERP. But no matter how well the data is managed, it’s the process architecture that puts it all to work effectively.
Companies getting ahead in turbulent times are those that have combined the key ingredients: connected data and processes, data-driven inventory targets, real-time visibility, and leadership teams that use SIOP as a management system rather than a planning exercise.
Functioning at this level requires more than a technology upgrade. Don Garrett, former SVP of Supply Chain at a leading multinational manufacturer, has been on the inside of a transformation and shared with us the challenges his company faced in creating a connected, digitized SIOP capability that provides visibility, supports real-time decision-making, and ultimately improves the P&L.
Process, data, and tools – co-existing, but not connected
A common trap in SIOP maturity is that tools and processes coexist without talking to each other. Addressing this challenge is a foundational element of an SIOP transformation.
"Our company had an SIOP process in place, but the team was very new and inexperienced. They had a tool to develop a statistical demand forecast, but no real way to tie that to a production plan and inventory targets."
Problem-solving can begin once the team recognizes the disconnect caused by a demand forecast that does not reflect customers' true requirements. This first step is a top-to-bottom review of the required inputs, translating the sales team’s financial forecast into actual unit volumes and requiring collaboration across sales, product groups, operations, and supply chain. Getting the data foundation right comes first. Then the business processes required to support the data flow to the tool can be reconfigured.
"Involving the right functions in the SIOP cycle and getting their input on the front end of the cycle — then developing a manufacturing plan that tied the projected demand, new business wins, business losses, fill rate targets, and inventory goals — was critical. We improved from a novice SIOP process to one that was a key role in the success of the business."
Moving from a novice to an effective contributor didn’t require a technology fix. The key was structural: getting the right inputs, in the right sequence, from the right functions.
Finding the balance – lean inventory versus high fill rates
Getting the process architecture in place solved one of Don’s challenges, but another hurdle remained. This involved managing the inherent tension between aggressive, costly inventory targets and the need to maintain customer service through high fill rates.
"We have a very complex planning system and really aggressive inventory targets. This required close monitoring of inventory targets to avoid significant customer delivery issues. The critical step toward solving this issue came from the introduction of tools to accurately determine the supply chain challenges based on data — variation of supply, variation of demand, manufacturing lead times — that allowed us to focus on the key parts that were critical to keeping our fill rate high while meeting reasonable inventory targets."
Rather than seeking a broad compromise unlikely to meet either objective, the answer lies in the data itself. An analysis of supply and demand variability, along with lead time data, can yield a more granular response, enabling planners to set differentiated safety stock levels by item. They can more confidently protect fill rates where the risk of stockouts is real and reduce inventory where it isn’t. This level of visibility means that both metrics can move in the right direction.
The visibility layer – an early warning system with answers
Now that systems are connected and tuned to effectively manage inventory levels and finished goods, moving to the next level requires real-time operational visibility designed to help planners make the right decision when problems arise.
"We can see at a glance which parts are below the required safety stock levels in both finished goods and components. Further, we can better track our supply planning performance as the system allows us to flag any PO issued that would drive the component inventory above the max target."
A dashboard that flags both understocked and overstocked items is rare but highly valuable. More often, supply chain tools excel at identifying shortage risks rather than excess inventory, leading to what looks like lean targets in reporting but overfilled warehouses in reality. A system that can flag a PO that would put the inventory ceiling at risk is as valuable to the operation as the ability to flag an order that’s needed to protect the fill rate. Planners who cannot see both types of signals are disadvantaged. Real-time visibility can have an immediate impact on the bottom line.
Leadership acting in lock step converts visibility into action
The final step in the transformation involves bringing the right people into the room, with a focus on cross-functional collaboration. Leadership accountability in support of the process is a critical enabler that cannot be overlooked. Don and his team recognized that even the best technology and a fully functioning system couldn’t keep the transformation on the rails without fully committed leaders.
"SIOP became an integral tool to help us manage our business in just about every aspect. Having Sales, Manufacturing, Product Management, and the SIOP team meeting every month on a regular basis and then presenting the plan to management, including the CEO, COO, and CFO, ensured we were all aligned and moving in the same direction."
The monthly meeting cadence with the C-suite is the key mechanism for converting SIOP from a supply chain function to a company-wide management system. Senior leaders who are accountable for the plan, rather than just informed, provide the incentive for cross-functional collaboration. When variances inevitably arise, functional leaders are armed with data-backed recommendations that enable them to solve problems and make informed, effective decisions.
Bringing it all together
Don’s transformation story rests on a four-part formula that can be applied to any organization looking to ensure their SIOP functions effectively.
Connected data and processes: Integrated tools and processes are key to ensuring demand data flows into production plans to support inventory targets.
Data-driven inventory targets: A granular, multi-dimensional variability-based model that effectively keeps inventory levels and finished goods in balance provides visibility and metric monitoring.
Real-time visibility: Early-warning models that flag risks of excess inventory or product shortages allow planners to act before costly problems develop, such as excess inventory or disappointed customers.
Leadership accountability and cross-functional collaboration: C-suite engagement turns a planning process into a management system, enabling issues to be solved before variance problems develop.
The result: An improved P&L and balance sheet
Don’s team put in the work required to achieve a successful outcome:
"Improved fill rates to our customers with lower inventory was the biggest impact. We also had fewer emergency POs and expedites, which saved us money as well."
Better fill rates improve revenue; tighter inventory management frees working capital; fewer expedited or emergency POs reduce costs; and better alignment between demand forecasts and production plans positively impacts capex.
As disruptive challenges continue to push supply chains to the limits of their current capabilities, digital tools alone are not the answer. Pairing them with robust processes, clean data, and leadership accountability will build a modernized SIOP process that unlocks value and supports financial stability.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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