Continuous Sales & Operations Planning                                                         Aamer Rehman – VP, Manufact...
Prelude …     Volatility is a given in today’s environmentGlobal supply chain, Shrinking product lifecycles, Supply Risks,...
Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP   Copyright © 2012 Ki...
Traditional S&OP•   Plan on a monthly cycle, at best•   Sequential process•   Plan only outside the time fence•   Limited ...
Misconception # 1: You need to try Integrated BusinessPlanning (IBP) if S&OP isn’t working                                ...
Misconception # 2: S&OP doesn’t require technology – Itis all about the process          Most companies stuck at stage 1 o...
Misconception # 3: S&OP is a sequential cadence of        separated sub-processes leading to an executive meeting         ...
Misconception # 4: Create S&OP plan and then forget it                           for a month                              ...
Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP   Copyright © 2012 Ki...
Continuous S&OP Definition   Set of decision making processes used to          Balance supply, demand and financials (vo...
S&OP Maturity Model    Attributes                 LEVEL ONE                       LEVEL TWO               LEVEL THREE     ...
Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP   Copyright © 2012 Ki...
• Technology choice means  – Different skills/people  – Different processes  – Different results   Copyright © 2012 Kinaxi...
Enabling Capabilities                                              Continuous S&OP                                 Demand ...
Enabling Capabilities                                                         Organizational Alignment                    ...
Kinaxis Point of View                                     Planning, monitoring and                                     res...
Thank you for your Participation                                                         For further questions, please con...
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Continuous Sales and Operations Planning

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Continuous Sales and Operations Planning

  1. 1. Continuous Sales & Operations Planning Aamer Rehman – VP, Manufacturing Solutions Las Vegas - Jan 27, 2012Copyright © 2012 Kinaxis Inc. All Rights Reserved.
  2. 2. Prelude … Volatility is a given in today’s environmentGlobal supply chain, Shrinking product lifecycles, Supply Risks, Demand Fluctuations Non-responsive processes of yesterday will not cut it !Copyright © 2012 Kinaxis Inc. All Rights Reserved. 2
  3. 3. Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP Copyright © 2012 Kinaxis Inc. All Rights Reserved. 3
  4. 4. Traditional S&OP• Plan on a monthly cycle, at best• Sequential process• Plan only outside the time fence• Limited / No inclusion of NPI process• Bogged down by spreadsheets Ability to detect issues within the time fence and propose feasible alternatives is not in “scope” of S&OP Copyright © 2012 Kinaxis Inc. All Rights Reserved. 4
  5. 5. Misconception # 1: You need to try Integrated BusinessPlanning (IBP) if S&OP isn’t working IBP is S&OP done well Goal: Make the financial budget. Top-down focus. Wants: Control and predictability of operations Forecast: The budget/annual operating plan Finance Goal: Minimize supply Goal: Maximize revenue chain costs, often and market share Demand inventory Wants: Guaranteed Sales and Side Operations Marketing Supply Wants: Minimum product availability Side demand uncertainty Forecast: Sales plan Forecast: Supply plan Supply Chain Goal: A feasible plan. Bottom-up focus Wants: Minimize risk and disruption Forecast: The demand plan Copyright © 2012 Kinaxis Inc. All Rights Reserved. 5
  6. 6. Misconception # 2: S&OP doesn’t require technology – Itis all about the process Most companies stuck at stage 1 or 2 Source: Dr. Larry Lapide, MIT Center for Transportation & Logistics Relative importance of technology Copyright © 2012 Kinaxis Inc. All Rights Reserved. 6
  7. 7. Misconception # 3: S&OP is a sequential cadence of separated sub-processes leading to an executive meeting Day 11-14 Iterative collaborative process requires Operational Plan understanding of cross functional impact – Operationalize Plan At any stage of S&OP process  Release production & procurement plans  Update MRP systems  Publish to supply base  Address Exceptions Day 1-4 Day 5-7 Day 8-10 Day 11-14 Day 15-17 Demand Supply Pre S&OP Financial Conciliation Executive Review“What do we want to make?” “What can we make?” “What will we plan to make?” “Impact on operating plan?”Demand Planning Supply Planning S&OP Meetings Financial Executive Review Develop  Evaluate forecast  Evaluate capacity and  Roll up revised volumes  Review industry, sales, marketplace against existing production gaps  Provide appropriate market share, shipment assumptions production plans revenue and cost and dealer inventory  Evaluate commercial Create industry, and constraints plans and forecast figures against forecast changes by Distribution market share Services and Product and inventory  Create executable  Decide on commercial  Create updated production plan financial outlook Business Division plans direction and constraint Evaluate forecast  Generate shipment plan resolution for accuracy / bias Copyright © 2012 Kinaxis Inc. All Rights Reserved. 7
  8. 8. Misconception # 4: Create S&OP plan and then forget it for a month month The decision flow is bi-directional. One must be able Time Horizon 24 week 1 2 4 2 4 18 to react when the S&OP guidance is violated due to unplanned events Long Term Planning (S&OP, NPI)  4 months – 2+ years  monthly buckets  Includes new product launch plans  Plan capacities e.g. assembly lines, tooling,Level of Planning Detail capacity / volume / program allocations to Order Planning regions (support CAPEX decisions for  4 months equipment with lead-times). Sourcing  weekly / daily decisions based on enterprise cost model buckets  manage capacities (e.g. over time, additional shifts/shift models) and operational alternatives (production Scheduling / Sequencing adjustment between plants, allocation of  0 - 3 weeks material shortages, supplier allocations)  hourly / slot based buckets  provide course correction based on shop floor / supply chain actual execution data (production adjustment as per material issues) Traditional Decision Flow Monitor & Response Window Planning Window Copyright © 2012 Kinaxis Inc. All Rights Reserved. 8
  9. 9. Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP Copyright © 2012 Kinaxis Inc. All Rights Reserved. 9
  10. 10. Continuous S&OP Definition Set of decision making processes used to  Balance supply, demand and financials (volume, mix, $$)  Seamlessly converge planning and execution Provide a holistic view to the business Monthly planning process with continuous feedback loop from execution Most effective when led by senior executives with process, technology and organizational alignment Issues and Supply adjustments Targets Production, Product Procurement & Launch Plans Inventory Plans Business plan Response to targets Demand Financial Consensus Plans Demand Plan Copyright © 2012 Kinaxis Inc. All Rights Reserved. 10
  11. 11. S&OP Maturity Model Attributes LEVEL ONE LEVEL TWO LEVEL THREE LEVEL FOUR Consensus Demand Demand – Supply Continuous S&OP Continuous S&OP Management Integration Extended Across Trading PartnersOperational Disconnected Partially Connected Connected Within the Connected Within the Enterprise &Synchronization Batch Based Batch Based Enterprise Key PartnersFocus Real Time Based Real Time BasedCorporate Sales Sales and Sales, Manufacturing, Sales, Manufacturing, SupplyFunctional Manufacturing Supply Chain, Engineering, Chain, Engineering, Finance, KeyParticipation Finance Customers and SuppliersFrequency Quarterly / Monthly Monthly Monthly / Weekly & Monthly / Weekly & Continuous Continuous Feedback FeedbackProcess Workflow Limited Demand – Supply Workflow Automation / Inter-Enterprise ProcessIntegration Process Cadence Event based Alerting OrchestrationWhat-if Scenario Demand Volume Demand & Supply Demand, Supply, Inventory, Demand, Supply, Inventory,Analysis Financial Financial – Value Chain LevelProcess Ownership Sales / Demand Supply Chain Cross Functional Senior Cross Functional Senior Management Management Leadership – Dedicated Leadership – Dedicated S&OP S&OP Owner OwnerEnabling Forecasting & Rough Cut Capacity Quick Scenario Analysis, Demand & Capacity Planning-Capabilities Consensus Demand Planning Role & Action Based Constraint Representation Across Management Collaboration, Financial Multi-Tiered Supply Chain Reconciliation, Audit Trail and Assumptions Copyright © 2012 Kinaxis Inc. All Rights Reserved. 11
  12. 12. Agenda• Common Misconceptions• Continuous S&OP Definition• Enabling Capabilities for Continuous S&OP Copyright © 2012 Kinaxis Inc. All Rights Reserved. 12
  13. 13. • Technology choice means – Different skills/people – Different processes – Different results Copyright © 2012 Kinaxis Inc. All Rights Reserved. 13
  14. 14. Enabling Capabilities Continuous S&OP Demand Consolidation and Single View of Demand CAPABILITIES Demand Supply Balancing BASIC Volume Level Planning Sequential / Static Process Cadence Calendar Financial View of Plan (revenue, cost) DIFFERENTIATIN Multi-Tiered Supply Chain Representation G CAPABILITIES Quick Scenario Analysis & Comparison Iterative & Cross-Functional Planning (demand, supply, inventory, financial, NPI) Audit Trail & Assumptions Role & Action Based Collaboration“If I had asked people what they wanted, they would have said faster horses.” Henry Ford Copyright © 2012 Kinaxis Inc. All Rights Reserved. 14
  15. 15. Enabling Capabilities Organizational Alignment No Consensus Sales Forecast - No Allocation No Production Plan without a Consensus Sales Forecast All sales plans have associated production plans S&OP Production target changed only if mfg. say yes on sales’ urgent orderAlignment Principles Bring problems to the surface and improve them regularly Forecast customer demand through a consensus process Sales Sell what sales say they sell within 4-6 weeks Sell inventory ahead of making items Sales are responsible for inventory Produce only what is committed during the S&OP meetings Manufacturing Produce items in a daily production plan exactly on a daily basis. Analyze plan and actual, find resolution, and execute it on a daily basis Procure to support planned production on a weekly / bi-weekly basis Procurement There’s no procurement plan without a production plan. Analyze plan and actual, find resolution, and execute it. Copyright © 2012 Kinaxis Inc. All Rights Reserved. 15
  16. 16. Kinaxis Point of View Planning, monitoring and responding to change must be equal and integrated competenciesS&OP and dynamic demand/ Business is complex, but yoursupply balancing must be IT systems must not beintegrated under a single system Copyright © 2012 Kinaxis Inc. All Rights Reserved. 16
  17. 17. Thank you for your Participation For further questions, please contact: arehman@kinaxis.comCopyright © 2012 Kinaxis Inc. All Rights Reserved.

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