The Merging of Planning and Execution
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The Merging of Planning and Execution

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Presented by Trevor Miles, vice president of thought leadership

Presented by Trevor Miles, vice president of thought leadership

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    The Merging of Planning and Execution The Merging of Planning and Execution Presentation Transcript

    • Copyright © 2011 Kinaxis Inc. All Rights Reserved. 1
    • Convergence of Planning and Execution Trevor Miles director, thought leadership e: tmiles@kinaxis.com | m: +1.647.248.6269 | t: @milesahead Copyright © 2011 Kinaxis Inc. All Rights Reserved. 2Copyright © 2011 Kinaxis Inc. All Rights Reserved.
    • Convergence Drivers Copyright © 2011 Kinaxis Inc. All Rights Reserved. 3Copyright © 2011 Kinaxis Inc. All Rights Reserved.
    • Today’s multi-tier global supply chain Pervasive, global outsourcing Product portfolio proliferation Shrinking product lifecycles Increasing demand & supply volatilityCopyright © 2011 Kinaxis Inc. All Rights Reserved. 4
    • Companies can’t predict thefuture,…build organizations that willsurvive and flourish under…any possible future.Source: McKinsey Quarterly, Dynamic management: Better decisions in uncertain times, December 2009 Copyright © 2011 Kinaxis Inc. All Rights Reserved. 5
    • A volatile economy makestraditional budgetsobsolete before they’re evencompleted. New approaches: 1. Scenario planning with trigger events 2. Zero-based budgeting 3. Rolling forecasts Convergence of 4. Quarterly budgeting Planning & ExecutionSource: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009 Copyright © 2011 Kinaxis Inc. All Rights Reserved. 6
    • Demand Dynamics• Top CPG companies forecast performance – MAPE for a monthly lag was 33% – MAPE for a weekly lag was 48% – NPI with weekly item/location MAPE was 65% Terra Technology, “2011 Forecasting Performance Benchmark Study”• High-Tech/Electronics – anecdotal – Struggle to get better than 50% MAPE• Where will breakthrough performance come from? – Learning to forecast and plan better? – Learning to respond profitably to real demand? Copyright © 2011 Kinaxis Inc. All Rights Reserved. 7
    • Product Dynamics 80% of Volume 80% of Variability• Each point is a specific SKU• Coefficient of variation = Std.Dev./Mean Copyright © 2011 Kinaxis Inc. All Rights Reserved. 8
    • Product Dynamics Make-to-Stock Configure-to-Order Pull Make-to-Order Rationalize?• Each point is a specific SKU• Coefficient of variation = Std.Dev./Mean Copyright © 2011 Kinaxis Inc. All Rights Reserved. 9
    • Product Dynamics Make-to-Stock Configure-to-Order >50% Margin Contribution! Pull Make-to-Order Rationalize?• Each point is a specific SKU• Coefficient of variation = Std.Dev./Mean Copyright © 2011 Kinaxis Inc. All Rights Reserved. 10
    • Life Cycle Dynamics Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011Copyright © 2011 Kinaxis Inc. All Rights Reserved. 11
    • Life Cycle Dynamics Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011Copyright © 2011 Kinaxis Inc. All Rights Reserved. 12
    • Life Cycle Dynamics We focus too much of our attention on this phase Toolkit: Frameworks to Design and Enable Supply Chain Segmentation, Matthew Davis, Gartner, 19 May 2011Copyright © 2011 Kinaxis Inc. All Rights Reserved. 13
    • It is ironic that in many cases theprograms and innovations put inplace to generate growth causesuch a high level of demandvolatility and demandunpredictability that the resultingexecution failures create a loss ofboth top and bottom line growth. Next Generation Supply Chain Management - The Integration of Planning and Execution, CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009 Copyright © 2011 Kinaxis Inc. All Rights Reserved. 14
    • So what’s the solution? Copyright © 2011 Kinaxis Inc. All Rights Reserved. 15Copyright © 2011 Kinaxis Inc. All Rights Reserved.
    • The “Triple-A Supply Chain” Hau L. Lee, Harvard Business Review, October 2004Agile respond and recover from unexpected events quicklyAdaptable evolve over time to follow macro trendsAligned align interests of all participating firms To achieve sustainable competitive advantage, you need all three capabilities Copyright © 2011 Kinaxis Inc. All Rights Reserved. 16
    • Problem starts with Taxonomy• “Don’t Re Plan: Just Execute” – Wrong! – Segments process into planning and execution – Assumes forecast/plan is accurate/correct • When we know it is not • Therefore, executing against “wrong” plan• Don’t Just Execute: Coordinate & Collaborate – Start from knowledge that plan is not 100% correct – Recognize need to re-plan, quickly – Requires coordination across multiple tiers/functions • Alignment is the goal • Adaptability is the skill • Agility is the method Copyright © 2011 Kinaxis Inc. All Rights Reserved. 17
    • It’s a phased approach• Phase I – The Basics: – Improved S&OP, a single view of demand, and enhanced feedback loops to planning from execution• Phase II – The Real-Time Supply Chain: – Sensory networks, real-time visibility, intelligent alerts, and decision-support dashboards• Phase III – Sense & Respond Networks: – Next generation supply chain technologies, changes to hierarchical planning models, multi-level visibility, and new organizational structures Next Generation Supply Chain Management - The Integration of Planning and Execution, CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009 Copyright © 2011 Kinaxis Inc. All Rights Reserved. 18
    • Kinaxis’ Point of View Balancing supply and demand of anything is everythingCopyright © 2011 Kinaxis Inc. All Rights Reserved. 19
    • Kinaxis’ Point of View Business is Complex, but your Processes and IT systems don’t need to beCopyright © 2011 Kinaxis Inc. All Rights Reserved. 20
    • Kinaxis’ Point of View Planning, Monitoring and Responding must be equal and integrated competenciesCopyright © 2011 Kinaxis Inc. All Rights Reserved. 21
    • Kinaxis’ Point of View All of Planning and Execution must be integrated into a single systemCopyright © 2011 Kinaxis Inc. All Rights Reserved. 22
    • Requires a breakthrough approach … Visibility Analytics CollaborationConsequence Evaluation Simulation/ Scenario and Alerting What-If Analysis Comparison … on a proven technology architecture Copyright © 2011 Kinaxis Inc. All Rights Reserved. 23
    • Plan, monitor, and respond to all aspects of supply and demand balancing in minutes - not days or weeks Collapse time to make profitable course Reduce risk, corrections increase customer satisfaction and improving profitabilityCopyright © 2011 Kinaxis Inc. All Rights Reserved. 24
    • Customer manages Alerts and KPIs from Order Receipt to Order Delivery Carrier Supplier Inbound Hub EMS LCD Buffer SmartMarket DC PCC (VMI, SOI, CPO) (VMR, DDR, VMI) Component Material  Change in Customer Shortage Order Request  Late Build Plan  SKU Quality Issue (Stop Component Material Ship)  Customer Granted Order Late  ASY Shortage Delivery Appt Does Not  Load Date Missed Align To Commit Date Material Quality  ASY Excess  In Transit / Shipping Late  POD Date Missed Issue  Shipping Capacity Constraint Component Material  Request to Commit  ASY MPS Adherence Excess Difference  PRD MPS Adherence  SKU Material Readiness Shortage  MAD Date Missed  SKU Excess  ECN (New, Changed)  NPI (New, Changed) Copyright © 2011 Kinaxis Inc. All Rights Reserved. 25
    • Copyright © 2011 Kinaxis Inc. All Rights Reserved. 26
    • Thank you! Questions? Trevor Miles | e: tmiles@kinaxis.com | m: +1.647.248.6269 | t: @milesahead Copyright © 2011 Kinaxis Inc. All Rights Reserved. 27Copyright © 2011 Kinaxis Inc. All Rights Reserved.
    • Copyright © 2011 Kinaxis Inc. All Rights Reserved. 28