The Planning Rhythm: Managing Risk Through Marching to the Same Drum

  • 1,537 views
Uploaded on

This presentation shows how a high tech company can plan production in synch with finance and sales to reach target numbers and better serve customers. Posted with permission from Charlotte Diener, …

This presentation shows how a high tech company can plan production in synch with finance and sales to reach target numbers and better serve customers. Posted with permission from Charlotte Diener, who presented on this topic in May 2011, at Momentum, the annual Tensoft FSM User Conference.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,537
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
33
Comments
0
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Managing Risk Through Marching to the Same Drum The Planning Rhythm charlotte diener consulting llc
  • 2. Changing Variables in the Supply Chain
    • Customer Facing Risks
      • Intense and fast-paced competition
      • Increasing customer expectations
      • Fast product lifecycle management pressures
    • Supply Risks
      • Expanding global supply chains
      • Supplier financial solvency/decisions
    • Macro/Environmental Risks
      • Terrorism
      • Weather
    Market Expansion Design Growth Global Manufacturing Footprint charlotte diener consulting llc
  • 3. Predictability of Risk Varies Page 
    • Some risks are predictable and repeated
      • Customer forecasts
      • Cycle time variances
      • Transportation lags during peak seasons
    • Some risks are predictable, but intermitten t
      • Factory transfers
      • Supplier relationship issues
    • Some risks are unpredictable
      • Robbery
      • Yield busts
      • “ Acts of God”
    charlotte diener consulting llc
  • 4.
    • The over-arching objective for Supply Chain Managers is to provide time-appropriate supply allowing the company to:
      • Build Revenue
    • While the supply chain continually
      • Cuts Costs
    Page  The Supply Chain Must Manage Risk to Create Business Value Loss of revenue is the biggest risk to any business charlotte diener consulting llc
  • 5. Step 1 = Plug Into the Corporate Strategy to See the Score Page  Tactical Planning = Rhythm Execution = Drum Beat Strategy = Sheet Music Capacity Inventory Product Demand Financial Horizon 12 – 36 months out charlotte diener consulting llc
  • 6. The Information Management Challenge Page  Corporate Strategy Information Flow Customer Expectations Product Design Product Flow Demand Creation Capacity Alignment Finished Goods Die Wafers Suppliers Customers Supply Chain Management must complete the circuit by plugging into flows and connecting with the corporate strategy charlotte diener consulting llc
  • 7. Step 2 = Establish the Timing Rhythm Page  Tactical Planning = Rhythm Execution = Drum Beat Strategy = Sheet Music Capacity Inventory Product Demand Financial Horizon 4 - 6 months out charlotte diener consulting llc
  • 8. Use the S&OP Process to Establish Rhythm Page  S&OP Meeting Demand Review New Products Review Financial Review Resources
    • Focus Areas
      • Demand Management
      • Capacity Planning
      • Design / Engineering
      • Master Scheduling
      • New Product Introduction and Strategic Initiative Integration
    Integrates demand and supply planning, inventory planning, new product introduction, financial planning, and strategic initiatives to achieve improved business results Each meeting (or regularly scheduled conversation) has a separate focus Tracks events, and their movement around the loop for disposition Supply Review Start Process Map charlotte diener consulting llc
  • 9. Setting the Quarter Target (One Quarter Out) Page 
    • Quarterly Consensus Demand Review
      • Triangulate across multiple domains
        • Sales Operations – Bottoms up customer driven forecast
        • “ Which customer wants what and what is the priority?”
        • Business Management – Event based forecasts – Confidence Curves
      • “ Which new products are strategic to what strategic customers?”
        • Supply Chain Organization – Trend and collaborative forecasts
        • “ What is the actual order history vs. the forecast?”
    • Leads the meeting/conversation
    Demand Review Start charlotte diener consulting llc
  • 10. Setting the Quarter Target (One Quarter Out) Page 
        • Supply Management – Supplier capacity commitments
        • What are the supplier commitments?
        • Manufacturing/Operations Management – Manufacturing Plan
      • “ What actions are necessary to maximize output to demand?”
        • Supply Chain Organization – Supplier Schedules and Customer Commitments
        • “ What can we deliver and when?”
    • Quarterly Supply Review
      • Shows potential demand/supply mismatches
    • Leads the meeting/conversation
    Supply Review charlotte diener consulting llc
  • 11. Setting the Quarter Target (One Quarter Out
    • Quarterly Financial Review
      • Establishes the Quarterly Revenue target/projection
    Page 
        • Sales Management – Review demand forecast
        • What are the most probable, high and low side forecasts?
        • Supply Chain Management – Review supply forecast
      • “ What is the most probable, high and low side output?”
        • Business Management – Review competitive landscape
      • “ What must we do to maintain or grow market share?”
        • Finance Management – Review financial commitments
        • “ What number do we need to achieve?”
    • Leads the meeting/conversation
    Financial Review charlotte diener consulting llc
  • 12. Hold the S&OP Meeting to Set the Target Rhythm
    • Meeting is held quarterly, BUT
    • The review is for
    • Current Quarter+2 through Current Quarter +6
    Page 
        • Sales/Marketing – Long term market and customer driven forecast
        • “ What design wins do we have and what is happening with the customers’ business and the market?”
        • Business Management – Strategic revenue forecasts -Event based forecasts – Confidence Curves
      • “” What do we think will happen?”
        • Supply Chain Organization/Operations – Supply forecasts – New suppliers – Capacity outlook
        • “ What supply is in place for the medium term and what is happening with the suppliers?”
        • Finance – Forecast reconciliation
        • “ How does this picture correlate to our current outlook?”
    • Any of these groups can lead the meeting/conversation
    charlotte diener consulting llc
  • 13. Check for Potential Rhythmic Changes The New Product Review
    • Meeting is held quarterly, BUT :
    Page  The review is for Current Quarter+2 through Current Quarter +6
    • Any of these groups can lead the meeting/conversation
        • TD/Design Management – Tape out forecasts – new designs in the pipeline – new technology requirements
        • “” What do we need from others to make these products successful?”
        • Sales/Marketing – Long term customer design win forecast
        • “ What design wins do we have, when does the customer need the parts, what is the sample plan, what is the competition doing?”
        • Supply Chain Organization/Operations – Supply forecasts – New suppliers – Capacity outlook
        • “ What supply is in place for these designs and when will samples be available?”
    New Product Review charlotte diener consulting llc
  • 14. Step 3 = Establish the Drum Beat Page  Tactical Planning = Rhythm Execution = Drum Beat Strategy = Sheet Music Capacity Inventory Product Demand Financial Horizon – Current Quarter charlotte diener consulting llc
  • 15. Monitor the Drum Beat Page  Continuous Planning checks the drum beat and keeps the rhythm. It integrates the connections between the outer loop, inner loop, and execution as well as moving the processes around their cycle. Financial Gap Review charlotte diener consulting llc S&OP Meeting Demand Review New Products Review Financial Review Supply Review Supply Gap Review Demand Gap Review New Products Status Goals Trends Execution Quarterly Cycle Bi-weekly Cycle Plans Events Gaps Gaps Actions Gaps Goals Actions Gaps Actions
  • 16. Supply/Demand Gap Review Page 
    • Meeting is held bi-weekly or weekly
    • Objective: One current, common, actionable plan to meet the target
    Focus on TODAY
        • Business Management – Backlog review vs forecast
        • “” Where is our backlog today vs our forecast for the quarter?”
        • Finance – Backlog review vs. forecast
        • “” Where is our backlog today vs. our forecast for the quarter?”
        • Sales/Marketing – Market and customer action review
        • “ What can we do to close additional turns business?”
        • Supply Chain Organization/Operations – Production review
        • “ Is all the available backlog scheduled? Can we pull-in more to meet customer request? Do we need to build inventory for expected orders?”
    Demand Gap Review Supply Gap Review
    • Note: If on allocation, the demand review should be held before the supply review, not concurrently
    • Leads the meeting/conversation
    charlotte diener consulting llc
  • 17. Financial Decision Gap Review Page 
    • Meeting is held bi-weekly or weekly
    • Objective: One current, common, actionable plan to meet the target
    Focus on TODAY
        • Business Management – Part by part actions
        • “” Where are the drop-offs vs. last quarter? ”
        • Finance – Compile and Publish “the Plan”
        • “” What is the action plan and can we get there?”
        • Sales/Marketing – Market and customer action review
        • “ What can we do to close additional turns business?”
        • Supply Chain Organization/Operations – Inventory, Lead-Time, Capacity Review
        • “ What inventory should we push? Can we adjust lead times? What capacity is under-utilized
    Financial Gap Review
    • Leads the meeting/conversation
    charlotte diener consulting llc
  • 18. New Product Status Page  New Product Status
    • Meeting is held bi-weekly
    • Objective: All hands on deck to launch successfully
        • TD/Design Management – Tape out forecasts and actuals – new designs in the pipeline
        • “” Are we on time? ”
        • Sales/Marketing – Long term customer design win forecast
        • “ What design wins do we have and what is the priority for samples?”
        • Supply Chain Organization/Operations – Supply updates
        • “ What actions need to be taken urgently to ensure that samples will be available?”
    • Any of these groups can lead the meeting/conversation
    charlotte diener consulting llc
  • 19. Closing the Loop Possible Rhythm Beat Page  Continuous Planning integrates the connections between the outer loop, inner loop, and execution as well as moving the processes around their cycle. Financial Gap Review Tuesday Tuesday Thursday Thursday Week 11 Week 9 Week 8 Week 6 Week 7 charlotte diener consulting llc S&OP Meeting Demand Review New Products Review Financial Review Supply Review Supply Gap Review Demand Gap Review New Products Status Goals Trends Execution Quarterly Cycle Bi-weekly Cycle Plans Events Gaps Gaps Actions Gaps Goals Actions Gaps Actions
  • 20. Why Run to a Drumbeat? What Happens if You Don’t? Page 
    • One number planning with no drumbeat review neglects variability and risk
    • Lots of data churning, little luxury of analysis
    • Too many unpleasant surprises
    Product Lifecycle Mgmt disconnected to to Demand Management New products create chaos, not revenue Demand Planning and Review Supply Planning and Review Product Planning Financial Review S & OP Potential of not meeting demand Unhappy customers No Manual Rationalization Process No scenario capability Inefficient manufacturing No risk scenario capability No early warning Financial surprises Management Review No review of numbers Meeting the target is achieved at the last minute, if at all charlotte diener consulting llc
  • 21. Benefits of Drumbeat Planning Page  New Products lead to upside revenue Company develops a reputation of innovation Demand Planning and Review Supply Planning and Review Product Planning Financial Review S & OP Achievable plan to meet customer demand exists Customer communications are easier Sales people spend time selling, not expediting Time and discipline for analysis Improved communications with Manufacturing Minor course corrections are possible Realistic expectations are set No financial surprises Capital planning and utilization is improved Management Review Achievable targets are set Early warning is in place Action can be taken to mitigate risk charlotte diener consulting llc
  • 22. Benefits of Drumbeat Planning Page  * Place your footnotes here These benefits are possible if:
    • Process
    • S&OP is treated as a continuous process, not a management driven “event”
    • Process metrics defined and monitored
    • Process playbooks are defined
    • People
    • People are given the right responsibility, authority, and accountability
    • Systems
    • Systems capabilities support the process
    • Systems are flexible to change as business changes
    charlotte diener consulting llc
  • 23. More Information
    • If you need
      • more information and details
      • to schedule a review of your processes and systems
      • to implement a Planning Rhythm in your company
    • Contact Charlotte Diener Consulting
      • [email_address]
      • 602-703-0529
    Page  charlotte diener consulting llc