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Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
Planned presentation for the S&OP Chicago IE Event for Consumer Products
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Planned presentation for the S&OP Chicago IE Event for Consumer Products

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Presentation for S&OP IE Event for Consumer Products Companies in Chicago in May 2012

Presentation for S&OP IE Event for Consumer Products Companies in Chicago in May 2012

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  • 1. Supply Chain Insights What does Good Look Like? Supply Chain Insights, LLC © 2012
  • 2. BRICKS Book Publishes Matter in August 2012 The Role of Supply Chains in Building Market-Driven Differentiation LORA M. CECERE CHARLES W. CHASE JR.
  • 3. What’s in a name? A rose by any othername would smell as sweet. William Shapespeare 3 Supply Chain Insights, LLC © 2012
  • 4. What is in a name? Integrated business planning (IBP) refers to the technologies, applications and processes of connecting the planning function across the enterprise to improve organizational alignment and financial performance. IBP accurately represents a holistic model of the company in order to link strategic planning, and operational planning, with financial planning. By deploying a single model across the enterprise and leveraging the organization’s information assets, corporate executives, business unit heads and planning managers use IBP to evaluate plans and activities based on the true economic impact of each consideration. Sales and operations planning (S&OP) is an integrated business management process through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization. The S&OP plan includes an updated sales plan, production plan, inventory plan, customer lead time (backlog) plan, new product development plan, strategic initiative plan and resulting financial plan. Plan frequency and planning horizon depend on the specifics of the industry. Short product life cycles and high demand volatility require a tighter S&OP planning as steadily consumed products. Done well, the S&OP process also enables effective supply chain management. 4 Supply Chain Insights, LLC © 2012
  • 5. 5Supply Chain Insights, LLC © 2012
  • 6. The Questions to Ask What is the goal? How do we make decisions? What do we measure? 6 Supply Chain Insights, LLC © 2012
  • 7. The Questions to Ask What is the goal? How do we make decisions? What do we measure? 7 Supply Chain Insights, LLC © 2012
  • 8. Supply Chain Organization Functions Reporting Through Supply Chain Leader Supply Chain Supply Chain Planning (Supply) 80% Chief Operating Officer 43% 69% Supply Chain Profit Planning (Demand) 72% Center Gen Mgr of Business Unit (P&L Owner) 26% Managers Inventory 63%Deliver (Distribution) 56% Leader of Manufacturing 12% Transportation 52% Chief Financial Officer 9% Source (Procurement) 51% Head of Procurement 3% Make (Manufacturing) 38% Customer Service 37% Chief Information Officer 2% Base: Total Sample (117) Q5. Please tell us how you define your company’s supply chain organization by selecting Supply Chain Insights, LLC © 2012
  • 9. S&OP Evolution Greater Benefit Business- • GrowthSales Driven planning Driven • ResilienceMatch Demand Maximize • Efficiency with Supply Profitability Market Driven Manufacturing- Demand Driven Driven Maximize Maximize Opportunity and Deliver a Feasible Opportunity Mitigate Risk. Plan for Operations Sense and Orchestrate Match Demand Shape Demand with Supply Demand Market to Market
  • 10. S&OP Process Existence, Goals & ProcessesHave a Sales & Operations Planning S&OP Process Goal Process Not sure Match demand with supply 43% 3% No 10% Maximize opportunity and mitigate risk 32% Develop a feasible plan 14% Determine the most profitable plan 8% Yes Other 3% 87% # Distinct S&OP Processes 5 S&OP 27% 14% 20% 19% processes 12% 9% on average 1 2 3 4 5 More than 5 Base: Total Sample (117)
  • 11. The Questions to Ask What is the goal? How do we make decisions? What do we measure? 11 Supply Chain Insights, LLC © 2012
  • 12. 12 Typical Organization CEO Chief Customer COO Officer Chief VP of Supply VP of Marketing Sales CFO Chain Manufacturing Officer Account Customer Procurement Logistics CIO Quality Teams ServiceGrowth Volume Cost Supply Chain Insights, LLC © 2012
  • 13. A Supply Chain is a Complex System with ComplexProcesses with Increasing Complexity Supply Chain Insights, LLC © 2012
  • 14. Profitable Growth Revenue Cost of Goods Working Capital Corporate Social ResponsibilityR&D Strategy and Investment Asset Strategy and InvestmentForecast Accuracy Customer Service InventoryChannel Strategy Product and Supplier Strategy Service Portfolio Sales Distribution Manufacturing Logistics ProcurementPolicies Policies Policies Policies PoliciesReturns Backorders First Pass Yield Empty Miles Material Yield Supply Chain Insights, LLC © 2012
  • 15. An Athlete Needs: StrengthFlexibility Balance Supply Chain Insights, LLC © 2012
  • 16. What is Agility? How Define Supply Chain “Agility” Shorter supply Flexibility to make cycles and deliver whatever is ordered 3% 10% Ability to recalibrate plans in the face of market, demand and supply volatility and 49% deliver the same or comparable cost, quality and customer service 38% Ability to adapt to variations in demand and supply Base: Total Sample (117)Q11. How would you define what it means for your company’s supply chain to be “agile”?
  • 17. Agility Importance vs. Performance Agility Importance vs. Performance (7-Point Scale) 6% 5% 40% Low (1-3) 89% 32% Middle (4) 62 % Points (Gap in Performance vs. Importance) 27% High (5-7) Importance Performance Base: Total Sample (117)Q12. How important is it for your company’s supply chain to be “agile” in 2012? Please
  • 18. Agility Today vs. Past Agility vs. 5 Years Ago, 1 Year Ago 9% LESS Agile 15% 17% 54% Just as Agile 68% Ongoing Increases in Agility 38% MORE AgileVs. 5 Years Ago Vs. 1 Year Ago Base: Total Sample (117)
  • 19. The Role of Demand Signals in Becoming Market Driven Sell Deliver Make SourceNetwork Design: Channel Network Design Supplier Network.Probability of Design. Cost- SupplierDemand to-Serve Rationalization AnalysisSupply Chain Category Sales and Operations Planning CategoryTactical Management New Product Launch ManagementPlanning:DemandForecastSupply Chain Contract Corporate Social Responsibility ContractPolicy: Demand Management Revenue Management ManagementShaping Working Capital ManagementMarket-driven Demand/ Demand Orchestration Supplier SensingSignal Channel Demand TranslationManagement SensingTransactional Order Order-to-Cash Purchase OrderProcessing: Management Procure-to-Pay ManagementOrder andShipmentProcessing
  • 20. Demand-side Views Supply-side Views Hole in Enterprise Architectures Account-Level VMI C A Supplier Supplier Supplier SupplierDownstream Data Distribution Distribution Distribution Network Network Network
  • 21. Demand-side Views Supply-side Views Demand Translation Account-Level VMI C A Supplier Supplier Supplier SupplierDownstream Data Distribution Distribution Distribution Network Network Network
  • 22. A Forecast is not a Forecast is not a Forecast Increasing need for value network strategy alignment Business Planning Forecasting Constrained Forecast Increasing levels of granularity 22 Supply Chain Insights, LLC © 2012
  • 23. What drives Variability?Value: Price, trade incentives, new products, services, freshness, responsivenessVariety: Configurations, items, platforms, components, brands, processing technologiesVelocity: Lead-times, order to delivery, inventory turns, time to marketVolatility: Demand, inventory, schedules, reliability, yieldsVolume: Plants, warehouses, distribution centers/points, product flow Supply Chain Insights, LLC © 2012
  • 24. Getting to Letter Perfect…. Common Practice Market-driven FocusS Ask sales Focus on market drivers: How do we best shape demand?& Direct integration to supply Design of the value chain to optimize trade-offs, minimize risk, balance cycles, and orchestrate demandOP Manufacturing plan Trade-offs between make, source and deliver 24 Supply Chain Insights, LLC © 2012
  • 25. The Need for Balance S: Go-to- OP: Demand Market Strategies & Orchestration Goal 25 Supply Chain Insights, LLC © 2012
  • 26. The Questions to Ask What is the goal? How do we make decisions? What do we measure? 26 Supply Chain Insights, LLC © 2012
  • 27. S&OP Process Plan Execution S&OP Plan Execution Execution is not connected to S&OP plan 9%We try to execute the S&OP plan, but hardly do in practice 25% We execute the S&OP plan most of the time 35% We execute the S&OP plan nearly all of the time 19%We monitor market events and adjust to S&OP plan within limits 13% Base: Have a S&OP process (102)
  • 28. Stage 2: Benefits received from S&OP processesWhat benefits have you received from your work with S&OP processes? 28 Supply Chain Insights, LLC © 2012
  • 29. Historically, we have: • Tried to get precise on inaccurate data. • Believed that the most efficient supply chain is the most effective supply chain. • Built efficient chains, but not effective networks. • Focused inside-out, not outside-in. • Rewarded the urgent, not the important. 29 Supply Chain Insights, LLC © 2012
  • 30. Comparison of Revenue/Employee for the Period of 2000-2011 P&G Colgate Unilever Kimberly-Clark Nestle Kraft 700Revenue/Thousands of Employee 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 31. Comparison of EBIT/Employee for the Period of 2000-2011 P&G Colgate Unilever Kimberly-Clark Nestle Kraft 140.0 120.0 100.0EBIT/Employee 80.0 60.0 40.0 20.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 32. Consumer Products: Comparison of Days of Inventory P&G Colgate Unilever Nestle Kraft80757065605550 2002 2003 2004 2005 2006 2007 2008 2009 2010
  • 33. Consumer Products: Cost of Sales as a Percentage of Revenue Unilever Kellogg Kraft General Mills Campbell Hershey P&G 70%Cost of Sales as a % of Revnue 65% 60% 55% 50% 45% 40% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  • 34. Technology Goal A feasible plan • Model the network • Recognize and respect constraints • Gain plan visibility Match demand with supply • What-if analysis • Multi-tier inventory analysis • Network design Deliver the most profitable • Demand translation • Supply orchestration Plan • Optimize financial drivers Demand-driven • Sense channel demand • Shape demand • Drive the most profitable response Market-driven • Sense buy and sell-side market conditions • Bi-directionally orchestrate demandKey: Demand Planning Supply Planning Inventory Planning Financial Planning Demand Translation Market Sensing 34 Platform
  • 35. Ask the Right Questions What is the goal? How do we make decisions? What do we measure? 35 Supply Chain Insights, LLC © 2012
  • 36. Who is Lora? •Founder of Supply Chain Insights •Partner at Altimeter Group (leader in open research) •7 years of Management Experience leading Analyst Teams at Gartner and AMR Research •8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA) •15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble. Supply Chain Insights, LLC © 2012
  • 37. Where do you find Lora? Contact Information: loracecere@gmail.com Blog: www.supplychainshaman.com (3500 pageviews/month) Twitter: lcecere 2900 followers. Rated as the top rated supply chain social network user. Linkedin: linkedin.com/pub/lora- cecere/0/196/573 (2300 in the network) Supply Chain Insights, LLC © 2012

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