Integrating New Products and the Sales Funnel in Demand Planning
1. 1
How to Integrate New Products and
Your Sales Funnel in the Demand
Planning Discussion For a Better S&OP
David Kloostra
Demand Manager
Mallinckrodt Pharmaceuticals
2. 2
Introduction
• Significant manufacturer of pain management solutions in the
world.
• Performing S&OP in one form or another since 2007.
• Extending or launching new Generics products roughly 3 per
quarter on average
• Started measuring the output “benefit” of S&OP in 2013.
– Yearly Glide path goals to improvement of S&OP
3. 3
David Kloostra
• Performed Demand not only at Mallinckrodt,
but for other significant brands.
• I’m also an adjunct instructor for
4. 4
Agenda and Deliverables
• Ways the Demand meeting can assist the sales
team in driving sales while simultaneously
improving forecast accuracy.
– What has worked and not worked.
• Integrating new products and the sales funnel
into the Demand Discussion.
• Experiences using this process to improve
forecast accuracy, increase sales and bring
added collaboration to the S&OP process.
5. 5
Sales, & Operations Planning is the single process to engage all functions in
creating aligned, forward looking plans and make decisions that will
optimize resources and achieve a balanced set of goals.
i.e. A process to plan the main business activities
Demand
Planning Financial Planning
Inventory
Planning
Supply Planning
S&OP must be built on a standard process, good tools and a fully engaged
culture
Culture = 60% Process = 30% Tools = 10%
S&OP
What is S&OP? – Basic Expectation
8. 8
My Philosophy for The Demand Step
• Alignment is more important than accuracy
• The person closest to the sales action knows most about the
account and products
• Alignment and empowered, accurate expectations of sales and
supply are the purpose. Not a “review of business”
• A Demand specialist needs to “think in customer and translate to
product”-Analytics should show that
• Sales owns the end result of our forecasting process
• Everyone is empowered to ask “fearless” questions
• Ties into a strategic selling process in best case scenarios
• Agenda brings team to tactical and strategic alignment
• A demand plan should reflect real product/customer needs
9. 9
The Importance of Assumptions
• Numbers alone are ineffective
– If we do not understand what lays behind the numbers, if they are wrong we will not
learn from them, so we will not improve next time
– The forecast number in reality lies within a likely min/max range – we need to
understand the size, risks & opportunities of that range
• What is the thinking behind the numbers….i.e the assumptions
• Types of assumptions
– Economy & industry growth rates
– Customers and markets
– Competitor activity
– Business resources
– Performance & rate of improvement
• Evaluate the risks and opportunities
– Develop plans to mitigate or exploit
Assumptions can be used to learn from the past and shape the future
10. 10
Demand Meeting Agenda/Inputs
• Review from Last cycle
• Financial status from last cycle
• New products status
– Product Pipeline development
– Sales needs-Expected new product delivery dates
– Sales/Marketing approach to new products
• People/Training/Education requirements
– Are new products in master data and showing in systems
– What is the anticipated demand for the new product? Why?
– Expected impact on financials and sales
• MAPE/Metrics review
• Current forecast vs last forecast and gap to closure review
• Slow and non moving inventory
11. 11
Product Pipeline Update
Product MFG Site Forecast
Loaded
Planned
Launch
Potential
Launch
Product 1 Plant 2 No Dec 2015 Next Month
STATUS UPDATE • FDA approval should come after submission and approval of REMS documents. Process may only
take a month or two.
OPEN ITEMS • Review latest forecast load
• Follow-up on production plan/validation schedule
• Begin launch planning/launch checklist (Josh)
Product 2 Plant 1 Yes March 2016 June 2016
STATUS UPDATE • Launch delayed from approved plan due to out of specification during initial validation
• PAS was submitted November 20, 2015
OPEN ITEMS • Forecast review (Jim)
• Refresh of launch plan closer to launch (Jim)
12. 12
Generic Pipeline Update (2)
Product MFG Site Forecast
Loaded
Planned
Launch
Potential
Launch
Product 3 Plant 2 No Sept 2016 June 2016
STATUS UPDATE • Product no longer being sold by competitor
OPEN ITEMS • Small market research study will be conducted to learn how market has adapted to the
discontinuation, estimate how much demand may return (Mike)
• Develop launch plan and pricing based upon demand analysis (Joe)
• Refresh and load forecast (Fred/Dave)
Product 4 Plant 2 Yes March 2016 Sept 2016
STATUS UPDATE • Launch delayed due to spending resource availability.
OPEN ITEMS • Strategic analysis of product family (Sam). If family remains viable:
• Begin launch planning/launch checklist (Sam)
Product 5 Plant 2 No Sep 2016 Sep 2016
STATUS UPDATE • CMC review nearly complete, but too early to know if approval date may move up
OPEN ITEMS • Review latest forecast and load (Kevin/Jennifer)
• Begin launch planning/launch checklist (Jennifer)
13. 13
Bridge exampleExample
Demand Schedule
Calendar
201XX Budget ( monthly data) Previous Period PT Tracker (current Forecast) Adjusted Outlook Variance to Budget
Volume Net Sales GP ($MM) Volume Net Sales GP ($MM) Volume Net Sales GP ($MM) Volume Net Sales GP ($MM) Volume Net Sales GP ($MM)
2.3 12.1 2.7 Line 1 1.5 8.2 1.7 1.5 8.3 1.7 1.5 8.3 1.7 (0.7) (3.8) (1.0)
64.0 332.9 148.2 Line 2 64.0 326.3 133.9 63.5 326.6 134.6 64.7 331.0 135.4 0.6 (1.9) (12.8)
7.9 41.4 16.8 Line 3 8.5 43.4 16.5 8.9 46.0 17.6 8.9 46.0 17.6 0.9 4.5 0.8
13.2 52.9 15.6 Line 4 12.9 52.3 17.4 13.3 54.6 19.0 13.3 54.3 18.7 0.1 1.4 3.1
0.2 0.9 (0.1) Line 5 0.2 0.8 (0.1) 0.2 0.9 (0.1) 0.2 0.9 (0.1) (0.0) (0.0) 0.0
5.1 9.4 2.4 Line 6 5.0 9.3 2.4 5.1 9.6 2.8 5.1 9.6 2.8 (0.1) 0.2 0.4
1.1 1.0 (0.3) Line 7 1.2 1.1 (0.1) 1.2 1.1 (0.0) 1.2 1.4 0.1 0.1 0.4 0.3
- - - Line 8 - - - - - - - - - 0.0 0.0 0.0
2.7 14.1 8.4 Line 9 2.6 13.1 7.4 2.5 12.8 7.4 2.6 13.2 7.5 (0.2) (0.9) (0.9)
96.7 464.7 193.7 Total 95.7 454.5 179.1 96.2 459.7 182.8 97.5 464.6 183.7 0.8 (0.0) (10.0)
Financial Changes required for next cycle in APO
Changes Volume Net Sales GP ($MM)
Comments (Items that will be incorporated in next cycle)
Line 1
Line 2 1.1 4.4 0.9 Added missing forecast for Fines 1,140 MT ($4.4MM revenue)
Line 3 - - -
Line 4 (0.0) (0.3) (0.3) Write down for Supre 2640 DS quarantined in Venezuela ($250)
Line 5
Line 6 0.1 0.4 0.1 Missing forecast for Huli 85MT
Total 1.2 4.5 0.7
Upsides Volume Net Sales GP ($MM) Comments (Items not firm enough to include in Forecast)
Line 1 0.0 0.1 0.0 Alicno 18MT
Line 2 1.4 8.0 3.8 Infinius 336MT, Abb134MT, PT Nutria 127MT, Mcs117MT, Plitzer 111MT, Century 107MT, Vadiaal 84 and Almad 50MT
Line 3 0.5 2.8 1.2 Poster 250, Kell's 175MT, VSI 60MT, Almad 38MT and Consway 20MT
Line 4 0.2 0.8 0.2 Ne Ecor 67MT, Laco 52MT, Nats Che 38MT and Dogie 23MT
Line 5 0.4 0.7 0.2 Ca Bd 189MT, Int Flav Solns 91MT, Sarank 82MT, Naimenos 42MT and Fritzt 29MT
Total 2.6 12.3 5.5
Risks Volume Net Sales GP ($MM) Comments (Forecasted projects or other business at risk)
Line 1 (0.0) (0.1) (0.1) Frius (14MT) and Bieoa Co (5MT)
Line 2 (2.1) (10.4) (4.7) Jasomacal (325MT), Herlna (300MT), Abb (250MT), Colein (150MT), Kabe (125MT), Atlokins (100MT) and haha (100MT)
Line 3 (1.1) (5.2) (2.0) Abbie (800MT), Crave co (70MT), Quant Chem (67MT), Schmiel (29MT), Cubert (24MT), GITZO (22MT) and laxto (20MT)
Line 4 (0.2) (1.0) (0.3) Cubero (102MT), july Max (29MT), Daily (23MT), Hood pope (22MT), Med Belt (21MT), Bin Hot Co (18MT) and Nutfood (13MT)
Line 5 (0.0) (0.0) (0.0) Alli Dis Ticket (7MT)
Total (3.4) (16.7) (7.1)
EXAMPLE MATERAL
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Year over Year Comparison Example
Last year Budget Forecast Last year Budget Forecast Last year Budget Forecast
Jan 845$ 1,454$ 1,751$ 338 561 679 2.50$ 2.59$ 2.58$
Feb 1,281$ 1,436$ 1,650$ 513 556 644 2.50$ 2.58$ 2.56$
Mar 1,271$ 1,221$ 1,869$ 518 474 749 2.45$ 2.58$ 2.50$
Apr 1,279$ 1,383$ 1,807$ 500 541 707 2.56$ 2.56$ 2.56$
May 1,206$ 1,485$ 1,650$ 461 568 650 2.62$ 2.61$ 2.54$
Jun 1,196$ 1,534$ 1,743$ 504 606 687 2.37$ 2.53$ 2.54$
Jul 1,110$ 1,450$ 1,678$ 451 569 660 2.46$ 2.55$ 2.54$
Aug 1,965$ 1,688$ 1,660$ 805 660 659 2.44$ 2.56$ 2.52$
Sep 1,698$ 1,429$ 1,753$ 665 551 689 2.55$ 2.59$ 2.54$
Oct 1,709$ 1,625$ 1,660$ 664 631 649 2.57$ 2.58$ 2.56$
Nov 1,220$ 1,507$ 1,752$ 475 589 694 2.57$ 2.56$ 2.52$
Dec 1,539$ 1,391$ 1,593$ 618 546 637 2.49$ 2.55$ 2.50$
Total 16,319$ 17,603$ 20,566$ 6512 6852 8104 2.51$ 2.57$ 2.54$
Revenue volume Price
$-
$500
$1,000
$1,500
$2,000
$2,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Revenue
Last year Budget Forecast
0
100
200
300
400
500
600
700
800
900
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Volume
Last year
Budget
Forecast
16. 16
MAPE Example
Overall tracking signal 1.56
Overall YTD MAPE is 22%
SBU Desc Unit1
Family Desc (All)
Month Jan-16
Values
Sub-Family Desc 'MAPE Sum of ABS Er
Line1 41% 153,918
Line2 8% 111,267
Line3 28% 62,558
Line4 200% 53,982
Line5 19% 50,103
Line6 23% 19,238
Line7 12% 13,469
Line8 15% 11,905
Line9 10% 6,287
Line10 19% 6,249
Line11 18% 6,133
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A Process to:
• Avoid undesirable business
• Get to decision makers
• Increase sales penetration
• Prevent sales being sabotaged
• Recognize when a sale is in jeopardy
• Track account and sales progress
Strategic Selling
18. 18
Strategic Selling’s* Role in Demand
• Voice of solutions that are working at customers
• Voice of what is wanted by customers
• Voice of the value proposition at customers
• The answer to what needs help in the market
place
• The answer to where your organization’s
“headlights” are to what’s coming in the market
place
*Miller Heiman Strategic Selling
19. 19
Strategic Selling® Key Elements
What are we proposing
to sell?
What is our current
position?
Is the prospect a good match
for what we offer?
How does each Buying
Influence rate my solution,
and what evidence do I have
to support this rating?
What does each Buying
Influence get out of what
I’m proposing?
Who are the Buying
Influences, their roles,
openness to change, and
level of influence?
What are those factors that
strengthen my position,
and what are those things I
need to fix or neutralize?
What are some possible
actions we could take to
strengthen our
position?
What information do we need,
and what are the best actions
to take, who will do them, and
when?
20. 20
UNIVERSE Prospect Prospect Scorecard Score > 25
ABOVE Qualify Growth and Trouble Mode Confirmed
Budget Confirmed
IN Cover the Bases
Buying Influences Rate +3 to +5
Growth or Trouble Mode Confirmed
BEST FEW Close the Order
ORDER Closed
Contract Signed/
Order Released
Miller Heiman Sales Funnel
Funnel Filters
21. 21
Informing the Reconciliation Process
• Purpose of the Reconciliation process is to:
– Ensure Supply-Demand balance
– Match Demand Plan to the Financial Plan and
reconcile gaps
– Develop a plan for gap closure
• Review the strategic sales process to test viability of plans to
close gaps
– Align Demand Plan, Financial Plan and Strategic Plan
• Determine resources needed for all
• Make recommendations for the Executive Review
22. 22
Informing the Executive Review
• Purpose of the ER is to confirm actions from previous four steps in
S&OP
• Re-affirm strategy, results and tactics are all in alignment vs goals
• Explain Sales/Demand Picture and their validation
• Alignment from a physical resources, human resources, legal and
regulatory standpoint
• Use of the Demand Plan as basis for Goal achievement
• Set Strategy for going forward and communicate back to the
business
23. 23
S&OP Schematic – Managing the Gap
Strategic Planning
(STRAT)
Business Planning
(AOP)
S&OP
(Volume)
Master Scheduling
(Mix)
Detailed Scheduling
(MRP, Prod. Scheduling, etc)
Execution
DemandPlanning
CapacityPlanning
Customers
Suppliers
Operations
Plan
Sales
Plan Inv
S&OP keeps strategy, planning and execution aligned
Strategy
Planning
