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Sales & Operations Planning: Role, Structure and Benefits

Sales & Operations Planning: Role, Structure and Benefits

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Sales & Operations Planning Sales & Operations Planning Presentation Transcript

  • Sales & Operations Planning
    • A Presentation to:
    • PMI and APICS
    • by
    • Tom Wallace
    • Grand Rapids – 1-14-08
  • Agenda
    • Sales & Operations Planning: Role, Structure and Benefits
    • Implementation
    • Q & A
  • The Many Tools for Improving Effectiveness Increase Reliability Total Quality, Six Sigma, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others X X X Enhance Coordination Reduce Waste & Time
  • Complexity, Change and Coordination COMPLEXITY AND THE RATE OF CHANGE NEED FOR EFFECTIVE COORDINATION PROCESSES: S&OP
  • The Four Fundamentals Mix
    • How Much?
    • Rates
    • The Big Picture
    • Families
    • Strategy/Policy/Risk
    • Monthly/out to 36 Mos
    • Which Ones?
    • Timing/Sequence
    • The Details
    • Products
    • Tactics/Execution
    • Weekly/Daily 1-3 Mos
    Demand Supply Volume
  • Sales & Operations Planning Demand Supply Volume Mix Executive S&OP Master Scheduling Supplier and Plant Scheduling Distribution Scheduling Demand Planning/ Forecasting Supply (Capacity) Planning
  • More Terminology Changes?
    • Sales & Operations Planning may
    • become the successor term to
    • ERP/MRPII
    • Thus the term Executive S&OP was developed – to set it apart.
  • Executive S&OP . . .
    • Is an executive decision-making process
    • Balances demand and supply
    • Deals with volume in both units and $$$
    • Ties operational plans to financial plans: one set of numbers
    • Is the forum for setting relevant strategy and policy
    • Is what, for years, we called
    • Sales & Operations Planning
  • Where Executive S&OP Fits Strategic Planning Detailed Planning, Scheduling & Execution Business Planning Disconnect!!! Executive S&OP
    • The Leader of the Business Unit (General Manager, President, COO) Needs to be Hands-On with Executive S&OP:
      • Stewardship
      • Leadership
            • Break ties
            • Set high standards
            • Motivate
    Monthly Time Commitment: 1.5 The Role of Top Management hours
  • Examples of S&OP Best Practices
    • Three (of 13) Companies Studied:
    • High Seasonality
    • High Cyclicality
    • Highly Complex New Product Launch
  • Executive S&OP in Make-to-Stock w/ High Seasonality: The Scotts Co.
    • Important Questions:
    • When start Pre-Build?
    • At what rates?
    • Which SKUs?
    • When ramp up & how much?
    • When ramp down?
    • S&OP helps answer these
    • & others
    Pre-Build Pre-Build
  • The Scotts Company
    • “ During the last four years, almost half of the company’s increase in earnings has come from Supply Chain savings : inventory down, manufacturing efficiency up, purchase and transportation costs down. All of these are due to improved planning .”
    • Ken Reiff
    • Vice President, Product Planning
  • S&OP in Make-to-Order w/ Extreme Cyclicality: Cast-Fab
    • Cast-Fab Technologies – Year-to-Year Sales Change
    1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 %Chg 15 38 6 12 14 25 14 1 32 25 18 up up down down up down down down down down up up up Implemented S&OP Some competitors go out of business Acquired from Cin’ti Milacron 46!!! 12
  • Cast-Fab Technologies
    • “ During 2004, we posted sales increases of over 40% , which meant employee call-backs, retraining, new hires, initial training, getting up the learning curve and so forth.
    • “ During the same year, we had productivity gains of up to 3%! We never would have believed this was possible if we hadn’t done it.
    • “ S&OP played a key role in this; it gave us the forward visibility to make the right decisions on a timely basis.”
            • Ross Bushman
            • President and COO
  • Eli Lilly and Company
    • New Product Launch in the Pharmaceutical Industry
    • Multiple stages of testing
    • Multiple approvals by FDA
    • Multiple years
    • Multiple 100s of millions of dollars
  • Eli Lilly and Company
    • New Product Launch Performance:
    • Industry
    • Average Lilly
    • 2001-04 1.8
    • Years Required
    • (avg per product) >14
    9 <11
  • Eli Lilly & Company
    • “ In the past three years we have launched 9 new products and met all demand despite 2 products that sold significantly above the high-side forecast .
    • “ Without Global Sales & Operations Planning, we would have been driven to reaction mode, which could have resulted in an increase in investment in new assets, a slow down in our launch plans, and/or missed demand opportunities. ”
    • Ron Bohl
    • Supply Chain Coordinator
  • These 3 Examples: A Common Thread
    • Executive S&OP is being used in areas of the business that are:
    • Mission Critical
    • Very Difficult to Manage
  • Agenda
    • Sales & Operations Planning: Role, Structure and Benefits
    • Implementation
    • Q & A
  • The Real Issue . . .
    • Understanding S&OP is simple.
    • The hard part is . . .
    • Behavior Change
    • changing the way we do our jobs.
    “ The hard stuff is the soft stuff.”
  • The ABC’s of Implementation
    • C - Computer
    • B - Data
    • A - People
  • Implementing Executive S&OP
    • Bad News
    • Change
    • 8-12 Months
    • Good News
    • Few People (several dozen)
    • Early Results ( 2-3 Months)
    • Low Cost (~ $100K)
  • Implementing Executive S&OP Is Different Active, Hands-on Participation by the Leader and Staff
    • The leader of the business ( president,
    • COO, CEO, general manager) must provide:
      • Support
      • Funding
      • Commitment
      • Leadership
    So what’s new? Each and Every Month
  • Implementing Executive S&OP Is Different
    • Highly focused on Top Management
    • Relatively few people
    • Low cost/high impact
  • Implementation Path 1 2 3 4 5 6 7 8 9 Months Business Improvement Phase I Preparation Phase II Expansion Live Pilot Demonstration Go/No-Go #2 Phase III $$$ Integration Executive Briefing Go/No-Go #1 Kickoff Session
    • Month #1
    • Assignment of Responsibility
    • Kickoff Education & Planning
    • Development of Project Schedule
    • Families & Sub-Families (Pilot Family)
    • Data Definitions, Sources & Displays
    • Month #3
    • Pilot Demo Preparation & Execution
    • Go/No-Go Decision #2
    • Month #2
    • Demand Planning Processes & Data Feeds
    • Supply Planning Processes & Data Feeds
    Executive Briefing & Go/No-Go Decision #1 Phase I Preparation Phase II Expansion Phase III $$$ Integration
  •  
  • Implementation Roles
    • Roles:
    • Executive Champion
    • Design Team (Core Team, Project Team)
    • Design Team Leader
    • S&OP Expert
  • The Executive S&OP Expert
    • Role:
    • Adviser to the leader of the business
    • and others
    • Requirements:
    • Excellent people skills
    • Excellent facilitation skills
    • Experienced in implement/operating
    • at least one successful Executive
    • S&OP process
    • Courage
  • Implications for Project Management Professionals
    • Participate in an Executive S&OP implementation in a support role
    • Gain knowledge and credibility
    • Become the internal Executive S&OP Expert for subsequent implementations within the company
  • Implications for APICS Members (CPIM)
    • Premises:
    • Executive S&OP is a powerful tool for top management
    • It’s here to stay and it’s growing
    • It’s in APICS’ space
    • CPIMs know more about Executive S&OP than most others
    • Therefore, CPIMs are positioned to take part in the growth and to be more valuable to their companies
  • Agenda
    • Sales & Operations Planning: Role, Structure and Benefits
    • Implementation
    • Q & A
  • Thanks for Listening
    • Go to www.tfwallace.com for:
    • Copies of slides
    • Bi-monthly newsletter
    • White papers
    • Books and videos