S&OP Alignment-Sales-Ops-Finance-Biel-07-17-11
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S&OP Alignment-Sales-Ops-Finance-Biel-07-17-11

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A concise discussion of the functional integration within a S&OP implementation. The Demand, Supply, Finance, and General Management functions are discussed. Additional concepts including One ...

A concise discussion of the functional integration within a S&OP implementation. The Demand, Supply, Finance, and General Management functions are discussed. Additional concepts including One Forecast are highlighted in this presentation.

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S&OP Alignment-Sales-Ops-Finance-Biel-07-17-11 S&OP Alignment-Sales-Ops-Finance-Biel-07-17-11 Presentation Transcript

  • 1 Sales & Operations Planning (S&OP) Aligning the Sales, Operations, & Financial Functions July, 2011 Jim Biel Management Consultant E-Mail: bielconsulting@gmail.com Phone: 847.687.5379 http://www.linkedin.com/in/jimbiel Additional S&OP Resources Available Here: http://www.slideshare.net/jimbielNote: S&OP may also be known as IBF (Integrated Business Forecasting), SIOP (Sales, Inventory, & Operations Planning), and other names. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 2 Professional Bio – Jim Biel• 20 Years Multi-Functional Experience, Concentrated in CPG Industry (Sara Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B (Foodservice)• Experience in Business Forecasting, Sales Operations & Planning, S&OP, Sales Systems, ERP, CRM, Demand Planning, Business Information Management, Supply Chain, Trade Promotion Management, IT, HR, Training & Development, and Finance (Corporate & Public Accounting, CPA)• Core understanding of multiple supply chains – frozen, fresh, cold, dry, liquid• Independent Management Consulting for large and small entities• Client Services position with a SaaS (software as a service) provider of trade promotion software (Adesso Solutions)• Practiced public accounting for 4+ years – McGladrey; Corporate Finance FP&A Roles• Adept at integrating relevant business concepts and processes with enterprise-wide systems, a strong business process understanding and acumen including S&OP (boot strap and retrofit S&OP implementations) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 3 Discussion Topics • Introductions • Review of Discussion Topics • S&OP Defined • Cross Functional Alignment • Performance Management & Metrics • One Forecast • S&OP Time Fences • S&OP Tool Box • Implementation Steps • S&OP Resource Guide • Summary & CloseJim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 4 S&OP Defined• APICS defines S&OP 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. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 5Alignment/Integration Defined• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)• Integrate All Available Data (Internal & External)• One Forecast (Used by All Functions * )• An Integrated Business Management Model• Buy-In, Accountability, & Trust• Transparency * With Some Caveats Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 6 “Connecting the Knobs” (Why Integration is Important)• “Before we had Executive S&OP in the Company, I Spent A Lot of Time Turning Knobs That Weren’t Connected To Anything” – VP & GM Quote From Tom Wallace’s Book, Sales & Operations Planning, The Executive’s Guide Page 24 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 7Cross Functional Alignment / Effective Communication – The S&OP Flow Demand Finance GM Generates Controls Monthly Proformas, S&OP Cost, Risk / Ops Monthly; + Results As Needed In + Metrics Review Interim + Var to Bus Pl + Future Frcst Utilize Demand Supply Outputs as Basis + Assumptions For Forecasts, + Bulk of Meeting: Daily Annual Plans, Gaps, Opps in Strategic Plans, Weekly Add Risks / Opps / Future Frcst Monthly Other Lifts / Discount Factors Balancing As Needed + Create Business Rules (Between Demand/Supply) + Forecast Time Fence: Rolling 12-24-36 Months + Functional Leads & Leader Participate in Monthly S&OP Review Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 8 Connection – Integration, Performance Management (Metrics), Results INTEGRATION PERFORMANCE METRICS Leadership Revenue, Cost Targets (Strategic Direction) Forecast Accuracy, Working Capital Targets, Inventory Targets New Product Launch Success Demand Feeds Cycle Time / Quality - Processes Supply; Balancing / Service Level Targets Capacitization(Ops Execution, Future Forecast) Finance DESIRED RESULTS($ Scorekeeper, Forward Looking Positive P&L Outcomes Economic Advisor) Positive Working Capital Outcomes Productivity Improvements Decision Making Improvements Leadership Customer Service Levels (S&OP Process Owner) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 9 Cross Functional Alignment Functional Role Business Role S&OP Role CommunicationGeneral Manager Strategic Direction Owns the Overall Owns Monthly S&OP Process – The Process Meeting; Consulted Owner Daily/Weekly as Needed (Exception)Demand Translates Strategy into Owns the Demand Daily, Weekly > Sales Demand Generation; Forecast; Accountable Interaction with Supply > Marketing Dem Planning Reports for Excess Inventory & Finance; Owns to a Demand Leader; Generated by a Monthly Demand Unconstrained Demand Forecast Miss Component of S&OPSupply Fulfillment of Owns the Fulfillment of Daily, Weekly > Finished “Constrained Demand”, the” Constrained” Interaction with > Raw Least Cost Demand Forecast at Demand & Finance; Least Cost (Balancing Owns Monthly Supply with Demand Planning) Component of S&OPFinance Economic Oversight / Counsel, Input, Risk Provides P&L Counsel Assessment, Pro- Proformas & Risk / Formas of Future Opportunity Forecasts Assessment Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 10Accountability Systems For Internal Stakeholders • Metrics – Common – 5 Basic Metrics: • Forecast Accuracy (Demand Owner) • Perfect Orders (Cust Serv, Supply) • Revenue (Units & Mix) • Profitability (Mix, Margins, Costs) • Inventory (Demand Owner + Supply Owner) – Simple Scorecard – Improvement From a Baseline • Active Involvement By All Functions – – Accountability & Roles / Responsibilities • Daily • Weekly • Monthly (Decisions Made + Follow-Up Assigned) • Transparency Through Dynamic Communication Flow Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 11 One Forecast Caveat (Linkage – S&OP to Other Plans) Strategic Use S&OPStrategic Demand Supply Financial Target / As a Gut Plan Plan Plan Check Intent Use S&OPBusiness Demand Supply Annual As Key Financial Plan Plan Plan Plan Input / Core, Plus Risks/Ops Use S&OP Latest Demand Supply Interim As Key FinancialEst / Frcst Plan Plan Forecasts Input / Core, Plus Risks/Ops Future Future Execution Demand Supply Forecast / Details, S&OP Financial Execution Active Risk / Ops Plan Plan / Forecast Discussion S&OP Outputs Validate, Support Other Planning Processes Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 12 Alignment Between Corporate Strategy and Operational ExecutionCorporate Strategy Business Plan S&OP Revenue Targets Revenue Targets Revenue Targets Margins Margins Margins Working Capital Working Capital Working Capital New Products New Products New Products New Markets New Markets New Markets New Customers New Customers New Customers New Channels New Channels New Channels Exit Strategies Exit Strategies Exit Strategies Capital Investment Capital Investment Capital InvestmentStrategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review Amount of Detail (Increases through various processes) > Working Backwards from S&OP, Provides Validation of Plan & Strategy > S&OP Focuses on Gap / Opportunity Assessment vs. Plan Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • S&OP Time Fences 13 Short-Term Mid-Term Long-Term (1-3 Months) (4-12 Months) (13-36 Months)Demand Demand Demand - StrategyDem Pl – SKUs Dem Pl – Prod Fam Dem Pl – Prod FamAll Demand Streams All Demand Streams All Demand StreamsSales Marketing MarketingCustomers Customers CustomersPromotions Promotions PromotionsNew Products New Products New ProductsSupply Supply Supply - StrategyFulfillment Fulfillment Fulfillment & SourcingCust Serv Finished Gds, Raw Ingred ContractsFinished Goods Supply Contracts Plant/Cap Network/InvestSupply Contracts Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 14 Tool Box Needed to ExecuteSystems of Record & Collaboration Tools - ERP System - Spreadsheets - Collaboration Tools - Purpose Built S&OP System Capability (i.e. SteelWedge) - Inventory Management System (i.e. SmartOps) - Metrics Scorecard CapabilityNeed a well thought-out and efficient S&OP Reporting Toolto support Meetings and interactions > Numbers > Metrics Reporting > AssumptionsMake your analysts “analysts” – not data and report generators Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 15 Implementation Steps• Education• Assessment• Process Design• Roles / Responsibilities• Metrics• Tools / IT Solutions• Execution / Implementation• Process Improvement• Business Performance ImprovementJim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 16 Closing Remarks• Key Learnings From My Experience – The Concept is Easy – The Initial Buy-In is Fairly Easy – The Change Management Required Can Be Hard • New Process • New Technologies / Systems • New Accountabilities / Roles • Traditional Functional Ownership Dies Hard – Silos • Transparency Hard For Some to Swallow – Consistency & Month-to-Month Execution is Hard – Leader Needs to Keep Functional Leads Feet to the Fire – May Need a Process Coach Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)
  • 17 Resources• A Book: Sales & Operations Planning, The Executive’s Guide, Thomas Wallace & Robert A. Stahl• “Sales & Operations Planning: Transformation From Tradition” White Paper, AMR Research, May, 2009• “The Transformation to Demand-Driven Industry Leader” White Paper, Oracle/Demantra, September, 2006• More Available Here: http://www.slideshare.net/jimbiel Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (July 7, 2011)