Demand Planning Design at Ghirardelli (IBF Conference)

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Demand Planning at Ghirardelli: Developing a Best Practice Process in support of S&OP. Presented at the IBF Business Forecasting and Planning Conference, Scottsdale Arizona on February 25th, 2014

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Demand Planning Design at Ghirardelli (IBF Conference)

  1. 1. Demand Planning at Developing a Best Practice Process in support of S&OP 1 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  2. 2. Speaker Background Kirk Relf Is the Manager of Demand Planning for Ghirardelli Chocolates where he is responsible for developing and implementing the new Demand Planning Process. Before joining Ghirardelli, Kirk held a variety of Demand Planning roles within the CPG industry. His more than 20 years of experience includes category demand planning and demand planning systems support at Clorox, Demand Planning at Del Monte Foods, and forecasting at Mothers Cookies. Kirk likes to develop tools in synchronicity with process and has a passion for training and system support for end users. 2 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  3. 3. Speaker Background Anthony Reese CPF CPIM SCOR-P Is the co-founder of Integrated Business Planning Associates and is a visionary leader with passion for bringing exciting products to market. His early interest in cars led to his first job as an auto mechanic and then into an impressive career in the automotive / motorcycle industry. Along the way, Tony earned two advanced degrees from MIT and now brings in-depth knowledge of Product Lifecycle Management, Demand Planning and Operations Planning to clients wanting to implement Sales and Operations Planning processes and its current best practice form, Integrated Business Planning. 3 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  4. 4. Presentation Outline • A Business Overview • The Need for S&OP • Beginning with Demand Planning • The Demand Planning Design Process • Design Best Practices • Questions & Answers 4 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  5. 5. The Chocolate Business 5 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  6. 6. Beans To Bars 6 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  7. 7. Demand Variability 7 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  8. 8. S&OP Project Benefits  Support company growth with better decision making     Achieve cross-functional alignment consistently    Increased data and decision transparency across teams Improve relationships with internal teams, customers and vendors! Achieve cost improvements    A better demand signal to the business – Improved forecast accuracy A better supply plan to meet our demand efficiently Action plans more deliberate with a longer term focus Optimized inventory and associated operating costs Lower exceptional clearance and scrap costs due to a lack of alignment Reduce the Herculean effort to sustain supply & service to our customers 8 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  9. 9. Target S&OP Process Consensus Demand Review Supply Review Financial Review Executive Review & Alignment • Senior Management Buy-In • Long Term View of Capability Building • Open to Best Practices Approach 9 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  10. 10. Types of Practices • Leading practice: Few have it, proprietary restrictions may exist, not proven in many industries, changing the competitive landscape, major improvement in one or more performance attributes/metrics. Emerging Best Practice • Best practice: Widely accepted, (significant) improvement over common practices, applicable to majority of industries, plus ‘current, structured, proven and repeatable’. Leading Best Good Common • Common practice: Generally accepted as minimum standard, baseline of acceptable performance, clearly defined, accepted in all industries (few to no exceptions). • Outdated practice: No longer accepted, widely identified as insufficient, compliance issues, lagging results. Outdated Source: SCC SCOR Model. Note: A practice should match several of the listed characteristics to qualify as a practice of that type. 10 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  11. 11. Begin with Demand Planning • A robust Demand Plan is the basis of S&OP • A reasonable Horizon is Required for S&OP effectiveness • The Timing and Process for Demand Gathering must align with the final S&OP Cadence 11 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  12. 12. Project Governance Bodies Project Sponsors: The VPs of the 3 Primary S&OP departments (Sales, Operations and Finance) – Key Deliverable Approval Steering Committee: Cross functional business leaders from Sales, Operations and Finance – Issue Resolution, Process Alignment and Review Core Team: Functional resources who are connected to the current processes and data and have committed up to 30% to perform the design work. Subject Matter Experts: Business experts that will be called on as needed to assist in the design work. 12 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  13. 13. The Demand Planning Design Process Three Step Approach Gap Assessment Detailed Design Envisioning 13 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  14. 14. Our Approach Tools Process Data People Goal Metrics Demand Planning Capabilities 14 Fostering Demand Planning, Forecasting, S&OP for 30+ Years! Change Management
  15. 15. Assessing Demand Planning Capability Goal Are objectives of demand planning aligned to supply chain & business goals? Does leadership understand the importance of this capability? People What role do the supply chain and others like commercial teams play in the demand planning process? Process What activities are included in the demand planning process? What level of formality and standardization exists? Tools What is the state of technology platforms, software applications, and tools that enable demand planning responsiveness? Data How accessible; accurate, and complete are the data available to enable the demand planning process? Metrics How developed and jointly shared are the key indicators for measuring and predicting performance improvements, and objectives? Change Mgmt What is the organization’s capability to make sustainable changes/improvements? Or identify constraints / enablers to achieving a target state? *Adopted from a Gartner Demand Planning Framework 15 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  16. 16. Mapping & Gapping  As Is Process Maps For Each Demand Segment  Process Descriptions For Each Demand Segment 16 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  17. 17. Detailed Design Level 1 Process Flow Consensus Demand Review Supply Review Financial Review Executive Review & Alignment Level 2 Process Flow Begin All Other Stat Forecast In/Out Seasonal Forecast Forecast Enrich & Consensus Publish & Communicate Metrics & Feedback Baseline Stat & Promo Forecast New Items Dist Whse Replenishment End 17 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  18. 18. Detailed Design Level 3 Process Flow – Baseline Stat & Promotional Forecast 18 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  19. 19. Detailed Design Level 4 Work Instructions Level 5 Systems, Architecture & Tools 19 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  20. 20. Design Best Practices:  New Demand Planning Function  Field Sales Planning Moves to One Tool  Key Customer Focus  Promotional Volume Focus  Stat Forecast For “All Other” Customers  Enrichment & Consensus Collaboration  Base/Lift Visibility for Promotions  18 Month Planning Horizon with 3 Zones  Metrics Driving Improvement  Constrained Demand Plan  New & In/Out Forecasts Always In System 20 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  21. 21. Questions 21 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!
  22. 22. Contact Information Kirk Relf, San Leandro, California krelf@ghirardelli.com Anthony Reese, San Jose, California anthony.reese@ibp2.com 22 Fostering Demand Planning, Forecasting, S&OP for 30+ Years!

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