The role of SIOP: how to improve the integration of EssilorLuxottica's business units and the potential benefits of a demand planning tool

In today's intensely competitive global markets, the evolution of supply chain management (SCM) has become pivotal to gain a strategic edge, fostering value creation and distinguishing companies from their rivals. SCM works as a crucial backbone, orchestrating various business operations throughout the supply chain, amplifying a company's competitive advantage. Key to this advantage is the focus on customer satisfaction, driving a shift toward collaborative relationships over mass market share. The collaboration needs agility and flexibility across the supply chain, requiring efficient and effective coordination among various domains like marketing, sales, production, and purchasing. Challenges persist due to divergent organizational interests, the complexity of modern business landscapes, and the need for transparent coordination among numerous SKUs and customers. The lack of synchrony can lead to inventory issues, delays, and fluctuations in demand and supply. While strategies like Vendor Managed Inventory (VMI) and Collaborative Planning, Forecasting, and Replenishment (CPFR) offer collaborative opportunities, they're often limited to specific chain segments, contributing to fragmented information exchange and increased costs. Closing the planning gaps demands an integrated approach, notably through the Sales, Inventory, and Operations Planning process (SIOP). SIOP allows for the alignment of operational plans with business strategies and financial objectives, synchronizing demand, supply, and inventory. The collaboration is further enhanced by advanced planning and scheduling systems (APS), incorporating SIOP modules, statistical forecasts, and what-if simulations to improve decision-making and reduce uncertainty. However, applying SIOP is not straightforward. Each organization must adapt the process to its unique context. This paper conducts an in-depth analysis of how EssilorLuxottica implements its method to shed light on this critical practice.