W.M.S. Russell (1925-2006) and R.L. Burch (1926-1996) originated the concepts of replacement, reduction, and refinement, which they published in their 1959 book, The Principles of Humane Experimental Technique (Principles)1. The Principles was presented not as the final word of this science, but as a foundation for future developments. The 3Rs, as Russell and Burch first called them, were put forward not just to assist investigators in finding and using currently available techniques but also to encourage the development of as-yet unknown tools and methodologies.
Preclinical drug discovery researchers continue developing new tools and methodologies in alignment with the 3Rs. Unbeknownst to Russell and Burch, "SIOP" has provided significant contributions to the 3Rs.
What is “SIOP”?
Sales, Inventory and Operations Planning (SIOP) is an integrated business management process, developed in 1983 by Oliver Wight, through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization. As depicted in the cartoon, many times organizations work in silos and have differing interpretations of the end goal:
American Production and Inventory Control Society (APICS) defines SIOP as the "function of setting the overall level of manufacturing output (production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan. One of its primary purposes is to establish production rates that will achieve management's objective of maintaining, raising, or lowering inventories or backlogs, while usually attempting to keep the workforce relatively stable. It must extend through a planning horizon sufficient to plan the labor, equipment, facilities, material, and finances required to accomplish the production plan. As this plan affects many company functions, it is normally prepared with information from marketing, manufacturing, engineering, finance, materials, etc4."
A properly-implemented SIOP process routinely reviews customer demand and supply resources and "re-plans" quantitatively across an agreed upon rolling horizon. The re-planning process focuses on changes from the previously agreed sales, inventory and operations plan. While it helps the management team to understand how the company achieved its current level of performance, its primary focus is on future actions and anticipated results. Companies use the SIOP process to monitor the execution of the company's strategy.
The overall output of the SIOP process is a forecast that is updated monthly that leads to a sales plan, production plan, inventory plan, new product development plan, strategic initiative plan, and resulting financial plan.
Step 1 is mainly about gathering all the data that is needed for the subsequent steps and is the base for forecasting the future demand. A key to successful SIOP is clean, current, and accurate data.
Step 2 — Demand Planning
Demand planning involves converting a sales forecast to an actual demand plan (they are very different). The demand plan is a real assessment of demand, rather than simply a statistical forecast thrown out of a software package. A sales forecast is generally what is expected to be sold to an external customer. A demand plan includes all potential uses and accounts for defects, obsolescence, internal consumption, and safety stock.
Step 3 — Supply and Resource Planning
The operations side of the business unit now does its best to put together a production/supply plan to meet the demand plan on-time, in full every month, at the Product level. The proposed production/supply plan is matched against the key resources to identify whether the plan is feasible and to highlight which resources are going to cause problems. These problems are investigated to determine whether adjustments can be made to make the plan feasible.
Step 4 — Reconciliation & Integration Meeting
Normally, each of the steps described above occurs largely independent of the others. Everyone must then be brought together, to discuss the issues, agree on the recommendations to the Executive Team, and to turn the sales and operations/supply plans into financial numbers to be reconciled with the budget and business plan.
Step 5 — Executive SIOP Meeting
This is the final step in the monthly process. It is where recommendations are reviewed and may be accepted or adjusted. This is where management has its clear control on the business numbers — they can turn the control knob up or down. The whole, five-step monthly process may take three weeks to complete. The output of the meeting is a defined operational plan and consensus on financial expectations.
How Do You Know If It Is Working?
Most all organizations track the number of animals produced, used, and not used. The goal is to balance production to use as closely as possible. A decrease in the number of animals produced, but not used, is the target for success. A consistent downward trend in animals discarded for non-use is a phenomenal result that aligns perfectly with Russell and Burch's 3Rs.
Read the Other Related Taconic Insights About the 3Rs: