Definition
A cross-functional cadence that lines up sales, inventory, and operations plans on one page through four monthly meetings; same family as PSI but a different layer — PSI runs execution, SIOP runs cross-functional alignment. It is a common S&OP practice, not part of the Danaher curriculum.
In detail
Sales, Inventory, and Operations Planning (SIOP) is a cross-functional process that aligns sales, inventory, and operations plans through four monthly meetings. It addresses the problem of inconsistent planning across departments, ensuring that demand, supply, and inventory decisions are based on the same data set. The difference from PSI (Production, Sales, and Inventory management) is that PSI focuses more on material balance at the execution level, while SIOP focuses on plan coordination at the strategic level. Typical outputs include a unified production and sales plan, inventory targets, and risk mitigation measures.
Example in practice
At the end of the quarter, sales forecasts deviated from production plans, causing stockouts for some products. The company initiated the SIOP process, convening sales, production, procurement, and finance departments. Through four meetings, data was gradually aligned, ultimately forming a unified plan for the next three months, clarifying product priorities and inventory strategies, and reducing stockout risk.