S&OP Overview - Implementation Approach - Biel- 01-18-12

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A simple, straight forward set of 25 slides which provides the basics of S&OP (Sales & Operations Planning) from concept to implementation. (Used to introduce and discuss S&OP concepts with clients and prospective clients.) S&OP is also know as IBF or IBP (IBF = Integrated Business Forecasting; IBP = Integrated Business Planning)

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S&OP Overview - Implementation Approach - Biel- 01-18-12

  1. 1. 1Sales & Operations Planning (S&OP) Introduction & Overview of the Process / My Implementation Approach Wednesday, January 18, 2012 Jim Biel Management Consultant E-Mail: bielconsulting@gmail.com Phone: 847.687.5379 LinkedIn Profile: http://www.linkedin.com/in/jimbiel S&OP Writings: http://www.slideshare.net/jimbielJim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  2. 2. 2 Professional Biography – Jim Biel Phone: 847.687.5379, Chicago, IL E-Mail: bielconsulting@gmail.com LinkedIn Profile: http://www.linkedin.com/in/jimbiel SlideShare Profile: http://www.slideshare.net/jimbiel• Multi-Functional Experience, Concentrated in Consumer Product Goods (CPG) Industry (Sara Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B• Core understanding of multiple supply chains – frozen, fresh, cold, dry, liquid• 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). – Demand Planning / S&OP Writings Available Here: http://www.slideshare.net/jimbiel• 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 FP&A & Public Accounting, CPA)• 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 as a CPA with McGladrey; Corporate Finance Financial Planning & Analysis (FP&A) Roles• Project Management Capabilities (PM Certification – Loyola, Chicago)• Network of Resources (Can bring additional experts to the table) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  3. 3. 3 Business Drivers / Pain Points The Why• Implement Concepts & Tactics To: – Improve Demand Forecasting Accuracy – Reduce Supply Chain Volatility – Improve Working Capital (Inventory) – Improve Decision Making• A Blend of Concept & Tactics• The Recipe: Process, People, Performance (Metrics), Platform (Systems) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  4. 4. 4 My Bias – S&OP (Sales & Operations Planning)• My Preferred Business Model To: – Improve Forecast Accuracy – Reduce Supply Chain Volatility – Improve Customer Service Levels – Drive Decision Making The Concept is Easy, Execution Can Be Challenging Note: 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 (January 18, 2012)
  5. 5. 5 Top Business Benefits of Best-in-Class S&OP• Increasing revenue• Improving forecast accuracy• Improvements in the perfect order/ customer service• Better supply planning/scheduling adherence• Improving new product launch• Reduction of inventorySource: “Demand Driven Sales and Operations Planning”, One Network Enterprises (Downloaded from CGT E-Mail, 8/22/11) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  6. 6. 6 Key Learnings / Observations• 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 (Includes Collaboration) • 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 – Treat Implementation as a Project Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  7. 7. 7 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 (January 18, 2012)
  8. 8. 8 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 (“Rolling Forecasts”)+ 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 (January 18, 2012)
  9. 9. 9 Best Practices• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance) – Start with Baseline• One System of Record (Platform)• All Demand Streams (Demand Supply)• Integrate All Available Data (Internal & External) - Collaboration• One Forecast (Used by All Functions * ) * With Some Caveats Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  10. 10. 10 S&OP• Process Alignment / Integration – (Demand-Supply-Finance-GM)• “Connect the Knobs” for Leadership GM Owner Dem Pl Finance Supp PlJim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  11. 11. 11 “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 (January 18, 2012)
  12. 12. 12 Process, Metrics, Results PROCESS PERFORMANCE METRICS Leadership Revenue, Cost Targets (Strategic Direction) Forecast Accuracy, Working Capital Targets, Inventory Targets New Product Launch Success Demand Feeds Service Level Targets Supply; Balancing / Cycle Time / Quality - ProcessesCapacitization / Shipment (Ops Execution, Future Forecast) Finance DESIRED RESULTS ($ Scorekeeper, Forward Looking Positive P&L Outcomes Economic Advisor) Positive Working Capital Outcomes Customer Service Levels Productivity Improvements Leadership Decision Making Improvements (S&OP Process Owner) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  13. 13. 13 Metrics– 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 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  14. 14. 14Accountability 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 (January 18, 2012)
  15. 15. 15 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 (January 18, 2012)
  16. 16. 16 Cross Functional Alignment / EffectiveCommunication – The S&OP Communication Flow Role Daily Weekly MonthlyGM Rarely Rarely Owns the MeetingDemand Active w/ Supply Active w/ Supply Owns DemandPlanning Planning; Sales; Planning; Sales; Component Marketing; Marketing; Customers CustomersSupply Planning Active w/ Active w/ Owns Supply Demand Demand Component Planning PlanningFinance Consulted As Consulted As Owns Financial Needed Needed Component Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  17. 17. 17Methodological Approach Measuring, Managing, Executing StrategiesFrequency Activity Typical Finance GM InteractionsDaily Demand Dem Pl with When needed, If Needed, very Planning: System & exception rare + Dem Planners Sources; basis + Sales Dem Pl w/ + Marketing Supply – + Customers Balancing + Synd Data Supply MetricsWeekly Demand Same as When needed, If Needed, very Planning: Above exception rare + Same as basis AboveMonthly + Demand Pre- Demand to P&L Proforma S&OP Meeting: Meeting Supply; Supply with Gaps / Metrics + Supply Pre- Back to Opps; Risks Best Frcst Demand; Assumptions Meeting New Products Finance P&L w/ + Capacitization Risks / Opps Gaps / Opps Strategic Issues Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  18. 18. 18 S&OP• Improve Demand Forecasting Accuracy • Process, Structure, & Ownership • Tools, Metrics• Reduce Supply Volatility • Process, Structure, & Ownership • Tools, Metrics – Drive Decision Making • Process Alignment / Integration – (Demand-Supply-Finance-GM) • “Connect the Knobs” for Leadership Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  19. 19. S&OP 19 (The Recipe / A Holistic View) Process, People, Performance, Platform • DP Starts the Process (Demand-Supply-Finance) Process / • Business Intelligence / Collaboration Essential People • Defines Units, Revenue, Margin $ Can Be Derived • Ownership of Forecast: Demand Owner • Unconstrained Demand / Constrained Demand • One Forecast (Demand/Supply/Finance/GM Consensus)Performance • Metric Driven: Forecast Accuracy (Level/Time Fence) • Metric Driven: Supply Fulfillment Platform / • Tool / System – Foundation For Demand Forecast Process • Tool/ System – Rough Cut Capacity • Tool/ System – Detailed Supply Planning • How (Demand Management): Tools, Collaboration, and Summary Assumptions Managed By Demand With a Defined Accuracy Metric (Start With Baseline) • Debate the Assumptions Not the Number Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
  20. 20. 20 One Forecast (Linkage – S&OP to Other Plans) Strategic Use S&OPStrategic Demand Supply Target / Financial As a Gut Plan Plan Plan Check Intent Use S&OPBusiness Annual Demand Supply As Key Financial Plan Plan Plan Plan Input / Core, Plus Risks/Ops Use S&OP Latest Interim Demand Supply As Key FinancialEst / Frcst Forecasts Plan Plan Input / Core, Plus Risks/Ops Future Future Execution Demand Supply Forecast / Details, S&OP Execution Financial 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 (January 18, 2012)
  21. 21. 21 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 (January 18, 2012)
  22. 22. S&OP Time Fences 22 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 (January 18, 2012)
  23. 23. 23 Tool Box Needed to ExecuteSystems of Record & Collaboration Tools - Spreadsheets - ERP System - 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 (January 18, 2012)
  24. 24. 24 Implementation Steps• Education• Assessment / Discovery• Project Planning• 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 (January 18, 2012)
  25. 25. 25 Resources• A Book: Sales & Operations Planning, The Executive’s Guide, Thomas Wallace & Robert A. Stahl• Expanded Library of Resources Available Here, – http://www.slideshare.net/jimbiel/sampop-resource-guide-biel-04-19-11 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)

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