Sop control paradox slides - 07 feb12

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Sop control paradox slides - 07 feb12

  1. 1. The S&OP Control Paradox: Folly in a Volatile World 02.07.2012 © StrataBridge 2012
  2. 2. e S&OP ControlParadox:Folly in aVolatile World?(or Babbage’s AnalyticalEngine in an iPad World?) © StrataBridge 2012
  3. 3. Some Structure & Thought-Provokers The Case for ‘Agility’ •  So, what’s Agility anyway… and ‘VUCA’? •  It’s a ‘VUCA’ World… Some Insights •  Most companies are compounding the situation Contending with ‘VUCA’ •  The ‘Growth ⇆ Control Paradox’ •  Underneath it all… Three Laws •  An Architecture for Growth against a ‘VUCA’ Backdrop ‘Joined-up Decision-Making’ for Growth •  Where are you on the ‘Control ⇆ Growth’ Spectrum? •  Some Implications and Questions for Decision-Making © StrataBridge 2012
  4. 4. What’s in a name? © StrataBridge 2012
  5. 5. Some Insights… It’s a ‘VUCA’ World…? V U C N O A O VUC A C M M L E B A P I T R L T E G I A U L X I I I I N T T T T Y Y Y Y © StrataBridge 2012
  6. 6. Some Insights… It’s a (naturally) ‘VUCA’ World…Beyond the Human impact…Massive disruption on both sides of the Demand and Supplysides of the economic equation, amplified by an increasinglyinterconnected world… © StrataBridge 2012
  7. 7. Some Insights… ‘VUCA’ – It’s amplifying… Brent Crude $/Barrel 140.00 130.00 120.00 110.00 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 Source: FT.com © StrataBridge 2012
  8. 8. Some Insights… ‘VUCA’ – It’s ‘Everywhere’… Price" Index (2003=100) 400 350 300 250 200 Sugar 150 Meat FoodCereals 100 Dairy Oil 50 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 Source: Centre for Security Studies" – ETH Zurich © StrataBridge 2012
  9. 9. Some Insights… There are many drivers; 20th Century Technology Adoption… Radio Source: Karl Hartig/WSJ Television Telephone Computer © StrataBridge 20122010 © StrataBridge -
  10. 10. Some Insights… The Context When S&OP Was Developed Radio Television Telephone Computer © StrataBridge 20122010 © StrataBridge -
  11. 11. Some Insights… The Internal Drive for Growth61% 78% of CEOs expect their innovations will lead toof companies plan significant new revenueto increase their opportunities over theInnovation spending...... next three years...while only 8% Source: PwC, 14th Annual Global CEO Survey, 2011plan to decrease itInnovation 2010 – BCG Report – April 2010 © StrataBridge 2012
  12. 12. Some Insights…CEO’s are turning to new product and service development for GrowthPercentage of CEO’s on the main opportunity to grow their business in the next 12 months Increased share in existing markets New product/service developments New geographic markets Mergers and acquisitions New joint ventures and/or strategic alliances 40% 37% 38% 30% 29% 30 23% 20% 20% 20 21% 17% 17% 19% 15% 15% 14% 13% 14% 14% 13% 13% 10 11% 10% 10% 0 2007 2008 2009 2010 2011 Source: PwC, 14th Annual Global CEO Survey, 2011 © StrataBridge 2012
  13. 13. Some Insights…How Common is Joined-Up Behaviour? Stephen Covey in his book The 8th Habit, describes a poll of 23,000 employees drawn from a number of companies and industries. Here are the findings: –  Only 37% said they had a clear understanding of what their organisation was trying to achieve and why. –  Only one in five was enthusiastic about the goals of their team and organisation. –  Only one in five said that they had a clear line of sight between their tasks and the goals of their team and organisation. –  Only 15% felt that their organisation fully enabled them to execute key goals. –  Only 20% fully trusted the organisation they worked for. The 8th Habit: From Effectiveness to Greatness November 2004 Simon & Schuster Or, put another way… © StrataBridge 2012
  14. 14. 4 Only of the 11 players would know which goal is theirs Only 2 would care 2 Only would know what position they play and what they are supposed to do 2 And all but players would, in some way, be competing against their own team members rather than the opposition© StrataBridge 20122012 © StrataBridge -
  15. 15. ‘VUCA’ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA in Yes Noyour external environment? 89% 11%Does your strategy call forincreasing degrees of new stuff -new products, new services, new Yes Nochannels, new markets/territories,new technologies, etc? 91% 9% © StrataBridge 2012
  16. 16. ‘VUCA’ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? You can check your e-mail now or be filling-in your expense form or something else useful… Keep improving what you’re doing and you’ll be fine! (Or will you?) © StrataBridge 2012
  17. 17. ‘VUCA’ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? You’ve obviously got some work to do, but as it stands you can dictate the pace… Make sure your strategy takes advantage of this; it won’t last forever! © StrataBridge 2012
  18. 18. ‘VUCA’ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? Wake-up! To quote Jack Welch: “When the rate of change on the outside exceeds the rate of change on the inside, the end is in sight” © StrataBridge 2012
  19. 19. ‘VUCA’ – How is it for you?Are you experiencing, or can yousee the early signals of, VUCA inyour external environment? Yes NoDoes your strategy call forincreasing degrees of new stuff -new products, new services, newchannels, new markets/territories, Yes Nonew technologies, etc? It’s time to review our strategic and operational planning and decision-making processes for ‘design overreach’. We’re in danger of taking them past the limits of what they were designed for! © StrataBridge 2012
  20. 20. Some Structure & Thought-Provokers The Case for ‘Agility’ •  So, what’s Agility anyway… and ‘VUCA’? •  It’s a ‘VUCA’ World… Some Insights •  Most companies are compounding the situation Contending with ‘VUCA’ •  The ‘Growth ⇆ Control Paradox’ •  Underneath it all… Three Laws •  An Architecture for Growth against a ‘VUCA’ Backdrop ‘Joined-up Decision-Making’ for Growth •  Where are you on the ‘Control ⇆ Growth’ Spectrum? •  Some Implications and Questions for Decision-Making © StrataBridge 2012
  21. 21. Contending with ‘VUCA’The Growth Paradox… The Pursuit of ‘Growth’ The creation of new value for customers and shareholders, driving the need for new stuff – new products, new services, new markets, new business models, etc. – by definition, increasingly different from what we currently do… The Desire for ‘Control’ The focus on continuously tightening the grip on how we do things today – driving predictability and productivity by fine-tuning our knowledge of, and control over, our existing business portfolio – products, customers, channels, etc. © StrataBridge 2012
  22. 22. Underneath it All"3 Fundamental Laws that have shaped the StrataBridge approach… The Law of CHANGE No matter how hard you resist or deny it, things are going to change, often unpredictably so The Law of PERSPECTIVE It all depends on ‘where you are coming from’ The Law of ENTROPY Unless energy is expended to counter it, things become random, break-down, over time © StrataBridge 2012
  23. 23. An Architecture for Strategy Development, Deployment & Delivery…Against a VUCA BackdropLong Term Plan (e.g. 5-10 Years) – Context, fundamental choices and boundaries, combining Clea routclarity about where you are going and flexibility about how to get there r de ines cisio to e n rig nact Strategic hts, strat integ Direction egy rate dp ng roce oi on-g s ses Joined-up" tive Strategic and effec Laws," Decision" Dialogue Making ure Principles" els ruct ll lev & Balances to st at a ons ices rsati cho onve gic ns/c trate estio nd s Strategy f qu arou ‘Toolkit’ ‘Big C’" es o gue Capability Seri dialo © StrataBridge 2012
  24. 24. Some Structure & Thought-Provokers The Case for ‘Agility’ •  So, what’s Agility anyway… and ‘VUCA’? •  It’s a ‘VUCA’ World… Some Insights •  Most companies are compounding the situation Contending with ‘VUCA’ •  The ‘Growth ⇆ Control Paradox’ •  Underneath it all… Three Laws •  An Architecture for Growth against a ‘VUCA’ Backdrop ‘Joined-up Decision-Making’ for Growth •  Where are you on the ‘Control ⇆ Growth’ Spectrum? •  Some Implications and Questions for Decision-Making © StrataBridge 2012
  25. 25. Striking the ‘Right Balance’? In general, how would you rank your C organisational DNA on the Control-Growth o Spectrum’? G 1 n 4% 2 42% 3 34% 4 19% 5 1% r t o What do you need to strike the right balance w r to deliver your strategy and desired business o results? t More Control’ More Growth’ l 13% About right 67% h 21% © StrataBridge 2012
  26. 26. Joined-up Decision-makingKey questions to provide a platform for Agility Does ‘VUCA’ represent a strategic threat or opportunity in" ‘VUCA’ and Growth Drivers? our environment and do we understand our drivers of growth? Are are these reflected in our Strategy, Tactics and underpinning Assumptions and Plans? ‘Control ⇆ Growth’ Balance? Are we ‘wired’ for Control or Growth? Are our internal mindsets, processes, routines and behaviours synchonised with our external realities? Do our decision-making processes and forums ask the right questions, bring Right Conversations? together the right perspectives from across the business, and generate insight and coherent actions? Right Capabilities? Do we have explicit development actions building organisational capability – Capability with a ‘Big C’ – to develop agility and use ‘VUCA’ to our advantage? Pace, Experimentation and Are we countering ‘VUCA’ with vision, understanding, clarity and agility, and accelerating results through an aggressive transition, rapid experimentation and ‘Learning-by-doing’? ‘learning-by-doing’? © StrataBridge 2012
  27. 27. Chris Turnermobile: +44 7802 252 003e-mail: chris.turner@stratabridge.comweb: www.stratabridge.com © StrataBridge 2012
  28. 28. The S&OP Control Paradox: Folly in a Volatile WorldPlan. 02.07.2012Perform.Profit. © 2012 Steelwedge Software, Inc. Confidential. 28
  29. 29. AgilityMeasured in time (e.g., Order to Delivery lead-time)Agile Characteristics Market Driven Bias Toward Information Over Inventory Low Inventory Levels Collaborative relations with trading partners“The Triple –A Supply Chain responds to short term changes in supply and demand more quickly” Dr. Hau Lee Thoma Professor of Operations, Graduate School of Business, Stanford University Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 29
  30. 30. Typical: Extended Lead Time = Reduced Agility Enterprise Customers Suppliers Info Raw & Info FG Info WIP Plan Driven Lack of Inventory Not External Excess Vs. Excess Demand Collaboration Inventory Demand Inventory Driven Extended Lead Time Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 30
  31. 31. Improved Agility Reduced Enterprise CustomersCarrying Costs Suppliers Increasedand Expedited Revenue and Logistics Improved Information Flow Fill Rate Reduced Inventory Raw & WIP FG Being Market Driven With Improved Information Flow Reduced Inventory and Lead Time Reduced Lead Time = Increased Agility Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 31
  32. 32. FlexibilityRapidly change processes based on market events•  Short term flexibility –  Can be obtained through better execution –  Limited ability to respond in a strategic manner –  S&OP has smaller role•  Long term flexibility –  Can be obtained through better strategic and operational planning –  Provides ability to execute new strategies and programs –  S&OP has major role Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 32
  33. 33. Agility and Flexibility Metrics areIntegral to Best-in-Class Performance Plan. Perform. Source: Steelwedge/Accenture value assessment Profit. © 2012 Steelwedge Software, Inc. Confidential. 33   33
  34. 34. Steelwedge: Business Agility Starts HereIntegrated Business Planning platformSupply chain “shock absorbers” to react, respond, recalibrate Collaborative S&OP solution: single view of demand, supply, finance, partners Powers “What if” scenario modeling Cloud-based: fast, elastic, value Trusted across Global 1000 Singular, obsessive focus Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 34
  35. 35. All Business Aspects Integrated Business Strategy Scenarios S&OP Finance M&A Strategy Capital Investment Financial Forecast Operating Budget Executive S&OP Executive S&OP Final S&OP Plan Final Consensus Plan Final Supply PlanStatistical Forecast Production Procurement Rough Cut Capacity Procurement Plan Marketing Marketing Plan ConsensusSales Management Unconstrained Inventory Finance Sales Plan Forecast Inventory Plan Inventory Investment Finance Revenue Plan Sourcing Allocation PlanDemand Planning S&OP S&OP Demand Plan Sales Ops Customer S&OP Supplier Forecast Collaboration Commit Plan Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 35
  36. 36. All Business Aspects Integrated Business Strategy Scenarios S&OP Finance M&A Strategy Market Capital Investment Financial Forecast Finance Operating Budget Executive S&OP ExecutiveExecutive S&OP Scenarios Planning & Final S&OP Plan Final Consensus Plan Final Supply PlanStatistical Forecast Production Procurement Rough Cut Capacity Procurement Plan Marketing Marketing Plan Demand Supply ConsensusSales Management Unconstrained Inventory Finance Inventory Plan Inventory Investment Sales Plan Product Forecast Capacity Finance Revenue Plan Sourcing Allocation PlanDemand Planning S&OP S&OP Demand Plan Sales Ops S&OP MarketCustomer Forecast Collaboration Supplier Supply Commit Plan Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 36
  37. 37. Improve Agility and Flexibility Focus on What Matters Understand Complexity and Its Impacts Statistical Forecast Collaboration with with Exception Monitoring Exception MonitoringImpact Stocking Strategy: Min/Max, Safety Stock, etc. with Exception Monitoring Volatility Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 37
  38. 38. Demand Planning Policy Steelwedge Policy Analysis ToolsPlan.Perform.Profit. © 2012 Steelwedge Software, Inc. Confidential. 38
  39. 39. Steelwedge Test DriveWhy Test Drive Live System = Real User Input = Real Proof Point Validate Requirements Assumptions (Customer & SW) Validate Data Health and Availability (Customer & SW)What is a Test Drive Compass Express “Best Practices” platform hosted by SW One time data load 8 hours of Hands-on TrainingOptional: Integrated Planning Assessment / Design workshop Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 39
  40. 40. Ed LewisEd Lewis joined Steelwedge in 2009 and brings over twenty years of leadership experienceproviding sales and operations planning and supply chain solution design, development andimplementation. Prior to Steelwedge, Ed was CEO and President of Amitive, Inc (acquired byGXS) which he founded in 2004. Under his direction the company grew from start-up to aleading SaaS supply chain synchronization and execution provider controlling complex supplychains around the globe. Prior to launching Amitive, Ed designed and implemented global SCMsolutions for numerous companies, including Mitsui & Co., as a Sales and Operations Executiveand consultant. Ed holds a Juris Doctorate from Western State University, College of Law.The Steelwedge SolutionSteelwedge, like our name, is a powerful, yet simple tool.The company is a pioneer in delivering cloud-based Integrated Business Planning (IBP.)Steelwedge Sales and Operations Planning (S&OP) solutions supercharge well-established, butcomplex collaborative planning processes that balance demand and supply, enable "what-if"scenario planning connecting operations with business strategy and financial performance.Our robust Integrated Business Planning Platform extends the value of customers investments.Large global enterprises, including five of the Fortune 100, trust Steelwedge to provide a clearline of sight from plan to performance to profit across demand, supply and finance systems.This visibility, in turn, empowers more agile "what if" scenario testing and decision-making tominimize confusion, maximize efficiency and optimize profit in even the most volatile businessenvironment. Plan. Perform. Profit. © 2012 Steelwedge Software, Inc. Confidential. 40
  41. 41. A Brief Introduction… …Chris Turner   Co-founder of StrataBridge, Chris works with a range of clients worldwide, across industry sectors, on strategy development, innovation and integrated decision making. A highly respected facilitator, Chris has a unique ability to understand and simplify complex business issues and opportunities and translate these into action. He has worked with leadership teams around the world, helping them to articulate, share and realise their strategies through aligning the organisation, integrating decision making and capability building. Chris’s long-term client relationships are built on his ability to balance the delivery of fast results with sustainability, and Chris’s clients include Anheuser-Busch, Bakehouse, Coca-Cola, Compass Minerals, Mars, Mass Mart SA, PZ Cussons, SC Johnson, Shell.   …StrataBridge   StrataBridge is a boutique consulting firm that specialises in advising fast-moving, brand led organisations on strategy, innovation and operations. StrataBridge help create and develop the relevant thinking, processes, capabilities and behaviours to allow organisations to bridge the gap between where they are and where they want to be. In short, we connect the dots between hard and soft organisational issues to create the bridge between a client’s real world and their ideal world.   Chris can be reached at: e | chris.turner@stratabridge.com m | +44 7802 252 003 o | +44 1277 633 433 w | www.stratabridge.com © StrataBridge 2012
  42. 42. Thank YouPlan.Perform.Profit. © 2012 Steelwedge Software, Inc. Confidential. 42

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