Streamline your operations with the siop process for operations

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foreign [Music] I'm the president and principal of dbm systems Welcome to our snop video series the topic for today's session is a follow-up to our previous video on what snop is not today I'm going to cover what snop is you may argue I should have started here but well my previous video I really wanted to debunk some of the myths about snop before actually diving into what snop is I'd like to approach this by first starting with a definition of snop and then digging into the important nuggets of that definition then I'd like to look at where the process is positioned in the planning cycle and what are those critical linkages between the different steps of the planning cycle and finally I'd like to wrap up with what you should expect out of the process or the outcomes hopefully by the end of this if you were unsure of what snop is or where it fits you have a good understanding of these key points so let's start with the definition the following is a slightly paraphrased definition from the Apex or ascm dictionary snop is a management decision-making process that provides management with the ability to strategically achieve a competitive advantage on a continuous basis the first important takeaway from this definition is the use of the word management snop is a management decision-making process what does this mean it means it's a process for Senior Management think your president CEO CEO or general manager in order for them to direct the business therefore the process needs to work for them and provide them a picture or a story of what's going on in the business so that they can direct resources and hold these resources accountable for setting and achieving plan simply put if your management is not running the process snop is falling short the second important takeaway is the use of the word or the phrase strategically Direct in some definitions you will also see the phrase develop tactical plans and strategically direct but both of these are important since snop should be the process where these two concepts come together strategic direction is important as it involves higher level strategies such as product development Market penetration product rationalization and market growth but we also want to ensure that the execution strategies for demand fulfillment think make to stock versus make to order or lead time reduction and how you're actually producing product are all aligned strategies should be defined and documented and the execution aligned with the strategy so out of those definitions our first Takeaway on what snop is is that it's a management process and secondly that it links strategy and execution well how does this work in order to look at that let's take a look at where snop fits in the planning process you can see the basic planning diagram one that I've covered in other videos but it's worth touching on again if we start at the top we have the Strategic plan this is typically a three to five year plan that is covers the overall Financial objectives growth and product strategy and it's often at a fairly high level but it may be broken down into individual families in fact it actually should be broken down into those individual families in order to link it to the snop plan which really is at the center of this diagram and that's what we talk about is how does that plan out of the Strategic plan come into snop well this is where the strategy becomes more specific The Horizon will not be as long but it should be at a minimum a rolling 12-month plan and it needs to be at a product family level I I won't get into defining product family here but there's a good article on our website on product family design you can follow the link below to read more about this the other important part about snop versus the Strategic plan is that it is updated monthly typically you're not doing that with your strategic plan but for snop you put a plan together then you work to execute the plan the following month you evaluate how did you do you check your assumptions you adjust the plan and then you execute in the following month that brings us to the two important linkages coming out of the snop process which are the demand plan and the production plan or master schedule now I use the term coming out of the snlp process but the astute Observer will note that the arrows on these processes are two-way arrows that means that snop both informs and is informed by the demand plan and the production plan and master schedule this is a very important characteristic of the process snop is a decision-making process and it relies on the input from the demand plan but the process also in turn evaluates the accuracy and the effectiveness of the demand plan and provides input back to that demand plan so the demand plan which is the sum of the unconstrained demand for the product family is evaluated as part of the process the sales organization is typically accountable for this plan and it will include a forecast as an element of that but it may also include other inputs such as calculated demand from other sources the supply plan in turn is generated in the snop in order to balance to this demand plan and it's represented by the arrow pointing to the master schedule the snop process should highlight if there's an imbalance between demand and capability in either the short or the long term if demand exceeds capability buffers such as lead time the ability to extend lead time and therefore increase backlog or inventory the ability to meet excess Demand by using up some of that inventory buffer or even upside Flex for the per for production can all be used to manage that imbalances these are strategies yes back to the idea of snop as a strategic process that are managed as part of snop by managed I mean they are documented understood and monitored as part of the process one final note on this diagram there's an important link between the budget or financial measurements and snop the snop family plan should be in units however by converting them to dollars they provide important feedback to the budget process but hey once again you'll notice that the arrow is two ways between the budget or financial plan and snop the budget process provides important directional input to the snop process to validate the current year plans are in line with your financial expectations and the snop process which should extend beyond the annual budget cycle remember it's a 12-month rolling plan we'll also inform the budgeting process for the following year if you want to read more about this the link below will bring you to a great article on linking these two plans the financial plan and the snop plan ly to wrap up our discussion on what snop is I'd like to focus on the outcomes of the process by outcomes I don't mean the business metrics I'm going to save that for another video but rather if the process is working well what should you expect or more correctly what should your senior executive expect to get out of the process in order to explore this I like to put my own executive hat on what do I get as a business leader I really like how Richard Lange who is one of the original thought leaders in snop put it snop is a management handle on the business this is a great summary of snop as a management process run by and for your senior executive working for them to manage the business so if I'm engaged in the process what am I expecting as outcomes well there's really five that you can look for I'm going to look at them pretty quickly first I'm using the process as a place to set the flow rate for the business I already talked about this earlier in the balancing between demand and constrained Supply and how I'm using my buffers but I should know how I'm strategically planning on using those buffers lead time upside flex and inventory to manage imbalances and fluctuations and the difference between Supply lead times and expected customer lead times decisions around changing any of these variables and how the business is managed and our capability should be highlighted monitored and driven out by the process as we set the flow rate for the business or the family this dovetails nicely into my second point if the process is working well it should provide a clear link between strategy and execution I've covered this earlier when I talked about this during the in the planning diagram but we could extend this further including new product introductions product rationalization and even expanding to New Markets as an executive I would expect my snop plans to be balanced against my long-term strategies but then also the process will provide feedback on the actions we're taking to get there are they working do they need to be adjusted it should also provide feedback on the Family's strategies around production and demand fulfillment are they working or should those be adjusted a great example of this is we expect that reducing lead time will positively impact our demand the snop process should show if we are in fact reducing our lead time first of all and if we are is it having the desired impact strategy link to execution and informed by feedback third the snop process establishes clear accountabilities for your plans out of the process as an executive I should be able to see whether or not we're meeting our plans as such that important part of the process is that look back at the previous month seeing how we did compare to the plan I should know then who I'm holding accountable for each part of the plan bookings shipments and production and who then is also responsible for developing and delivering that part of the plan by establishing these accountabilities and responsibilities I can better ensure that the organization is aligned to deliver the objectives for the family and ultimately the business and if it's not happening I know where to turn fourth I would expect snop to be a regular and repeatable management process regular in that it should happen monthly there's a process that leads up to the monthly executive meeting and people should come prepared to the executive meeting knowing what is expected and what their role in the process is the work of running the business happens every day snop is that step back from the phrase so to speak to evaluate whether we're delivering on what we say we were going to do and is it working to move us to our longer objectives and then finally I would expect measurable results from the process ultimately I'm driving for Better Business results such as improved customer service reduced inventory levels or reduced expedited freight costs but I'm also expecting the process to improve the effectiveness of the organization and this also should be measurable again this comes back to measuring our performance against our plans start one month out can we put a plan together for production and deliver on that plan by the end of the month if not why not use this look back to drive improvements into our ability to put a plan together for both demand and Supply accounting for all the variability that may be involved in that how do we improve our assumptions and ultimately our risk management there's so much more I could cover on this topic of what snop is but this is probably a good place to wrap up hopefully you found this informative you learned something new about snop and helped you frame this in the right spot if you like this video give it a thumbs up you can subscribe to our channel to be notified when our next video is available and you can stay up to date on our weekly snop videos comment below on what you'd like us to cover next thanks for watching and we'll see you in the next video thanks for watching today's video subscribe to our channel for more on implementing snop you can learn more about how dbm can take your process to the next level by visiting our website .dbmsys.com [Music] thank you and take care