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2019 ipsm conference_sop_workshop_muddassir_ahmed

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Планування продажів та операцій (Sales & Operational Planning)

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2019 ipsm conference_sop_workshop_muddassir_ahmed

  1. 1. Sales and Operations Planning (S&OP) Presented by: Dr. Muddassir Ahmed Overview, Process Steps, Practical Considerations and Benefits June 5-6 2019 Kyiv, Ukraine
  2. 2. Our Agenda for Today Introduction What we will learn today 2 Who we are Meet who are behind the curtain. S&OP Position in Supply Chain Planning & Overview Detail Introduction of 5 Steps of S&OP Process Practical Challenges in S&OP Deployment Working Session
  3. 3. Introduction
  4. 4. 4 In this workshop, you’ll learn how to: • S&OP Position in Supply Chain Planning & Overview – 9:00 – 09:45 • Detail Introduction of 5 Steps of S&OP Process – 09:45 – 10:45 • Break – 10:45 – 11:05 • Practical Challenges in S&OP Deployment (sharing my 11 years of experience) & Survey Results – 11:05- 11:50 • Working Session - In this session Participants Groups will create Agenda, Participants list, Objectives, Purpose and expected Input & Outputs of the respective S&OP Process steps assigned -11:50 – 13:00
  5. 5. Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused efforts Paul J. Meyer
  6. 6. S&OP Position in Supply Chain Planning & Overview
  7. 7. What is S&OP 7 S&OP is a process to help you delivery better customer service, lower inventory, shorter lead times, more stable production rates, better management control of the overall business, and a team building mechanism across the whole of the senior management organisation. It is a cross-functional Planning process designed to keep demand and supply in balance. This is achieved by continually monitoring external market demand changes (through the Sales department) and communicating these changes to the internal organization. Personnel in the Supply Chain, Finance and Production departments utilize this information to optimize purchasing (Inventory) and production (Operations) planning decisions
  8. 8. What is S&OP 8 • It is board level agenda item. • Integrated ‘business management process’ that aligns demand, supply and financial planning. • It drives gap-closing actions between what you target and what is business reality. • It intends to delivery management commitment in a transparent way. • It deploys the business strategy, and make it under stable to all layers of the organization.
  9. 9. S&OP – What Its Not? 9 • S&OP is NOT another set of meeting on top of already existing meeting. • S&OP is NOT a black box, automatically delivering improved results rapidly. • S&OP is NOT just another Supply Chain Process! • S&OP is NOT a planning system.
  10. 10. Why S&OP 10
  11. 11. Why S&OP 11
  12. 12. S&OP in 5 Levels of Supply Chain Planning 12
  13. 13. Need S&OP - Importance of Balancing Supply & Demand 13
  14. 14. S&OP Objectives & Outcomes 14
  15. 15. Benefits S&OP 15 Typically, organizations that have used S&OP have experienced improvements in Customer Service, Days-On-Hand (DOH) and Operating Costs. –Improved customer service levels the right product at the right place at the right time (and in the right quantity) Typical Achievements 15 - 30% 10 - 30% 5 - 20% –Reduced operations costs due to: manufacturing, transportation, temporary storage, product scrap/obsolescence, manpower –Reduced inventory levels
  16. 16. 16 • Reduced Spare Parts Inventory 15-35% • Improvement Yields 5-20% • Reduced Obsolete and Stale Inventory 40-50% • Savings in Transportation Costs 7-12% (load consolidation, better sequencing to outward demand/shipments) • Return On Investment 3-12 months • Increased Sales (Improved Customer Loyalty) 3-10% • Improvements in Manufacturing Efficiencies 10-20% Benefits S&OP
  17. 17. S&OP Process Overview – Quiz 1 17 1. S&OP – What Its Not? 2. What are the top 3 benefits of S&OP? 3. What are the key objectives of S&OP? 4. Why you need one set of numbers to run S&OP?
  18. 18. Coffee Break -1 Take your time and relax!
  19. 19. Introduction of 5 Steps of S&OP Process
  20. 20. S&OP Process Overview 20 Five Step Process: 1.Data Gathering & Statistical Analysis 2.Demand Planning 3.Supply Planning 4.Consensus / Integration 5.Regional & Global Executive reviews Global Executive Review to engage the senior leadership in sync with the financial rolling forecast Data Gathering Demand Planning Supply Planning Consensus Executive Review
  21. 21. S&OP - Data Gathering & Statistical Analysis 21 Critical Characteristics: • Prior Month actuals recorded in a standard tool or Excel • Statistical analysis baseline • Economic indicators obtained • Product planning inputs with sales & inventory impacts • Updated baseline with economics and Product planning inputs factors • Demand input templates provided to in- region sales and to partner-region S&OP teams Important Changes: • Economic trend input (still need to establish source) • Sales & Inventory agreement and tracking with Product Planning • Structure for different demand inputs
  22. 22. S&OP - Data Gathering & Statistical Analysis 22 Statistical Forecast by Customer
  23. 23. S&OP - Demand Planning Review 23 Critical Characteristics: • Customer Sales FC is based on input from Sales and Marketing • Forecast Metrics and Bias reviewed as input to forecast • Unconstrained Demand plan passed to next step • Reconcile the Customer Demand with Profit Plan, developing gap closing initiatives • Work with a single Demand Plan across the corporation Important Changes: • Forecast by Product Family or Group • Expanded forecast horizon to 18 months • Create a realistic Demand Plan for the next 12 months • Months 13-18 based on Strategic Plan and Statistic • Drives alignment of S&OP with Profit Plan
  24. 24. S&OP - How Demand Forecast is Produced? 24
  25. 25. S&OP – Demand Review Dashboard Example 25 Period 2014/Jan 2014/Feb 2014/Mar 2014/Apr 2014/May 2014/Jun 2014/Jul 2014/Aug 2014/Sep 2014/Oct 2014/Nov 2014/Dec Last Y K 1,890 K 1,989 K 2,290 K 2,517 K 2,617 K 2,239 K 2,270 K 2,067 K 1,954 K 2,235 K 2,092 K 1,423 Prior SIOP K 2,349 K 2,124 K 2,335 K 2,261 K 2,229 K 2,266 K 2,222 K 1,891 K 2,319 K 2,332 K 1,903 K 1,463 Current SIOP K 2,406 K 2,158 K 2,463 K 2,296 K 2,319 K 2,296 K 2,214 K 2,003 K 2,379 K 2,287 K 2,051 K 1,515 Current Firm K 2,187 K 2,108 K 1,463 K 1,033 K 730 K 357 K 225 K 290 K 249 K 119 K 153 K 106 % Firm 91% 98% 59% 45% 32% 16% 10% 14% 10% 5% 7% 7% Profit Plan K 2,406 K 2,322 K 2,418 K 2,608 K 2,627 K 2,680 K 2,453 K 2,210 K 2,328 K 2,052 K 2,030 K 1,716
  26. 26. S&OP – Demand Review Agenda 26 Chairman: Sales & Marketing Director (Or S&OP Director) • Facilitator: Demand Manager/ S&OP Manager • Attendees: • Marketing • Sales • Customer Service • Key Account Managers • Finance • Agenda: • Performance Analysis • Review Assumptions • Review market and sales plans • Volume, price, revenue, timing • Understand changes, seasonality • Review upside / downside • Impact on committed plan • Agree demand plan
  27. 27. S&OP – Supply Review 27 Critical Characteristics: • Unconstrained Demand plan presented to manufacturing sites • Supply requirements plan presented to key suppliers • Inter-Region Supply Agreements established (if applicable) • Site and Supplier capacity plans maintained and compared to unconstrained demand • Constrained Supply Plan passed to the next step Important Changes: • Inventory Forecasting and Follow-up owned by S&OP facilitation team. Rough cut inventory plan (total $INV by site) is created at this step. • Capacity planning owned by S&OP facilitation team. • Concept of a well documented constrained demand plan
  28. 28. S&OP – Supply Review Dashboard Example 28 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Predicted demand 4264 6730 5289 3767 5277 4565 3694 7863 3816 2576 2488 3396 Total capacity (Including 20% Over Time) 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 Predicted excess capacity -736 1730 289 -1233 277 -435 -1306 2863 -1184 -2424 -2512 -1604 What are the options to chase capacity in Feb-19 and August -19?
  29. 29. S&OP – Supply Review Agenda 29 Chairman: Supply Chain Director • Facilitator: Supply Planning Manager • Attendees: • Operations • Supply Chain • Purchasing • Finance • Agenda: • Review Performance • Supply plan to balance supply and demand • Resource implications (people/machine) • Inventory levels or order book to support service, cost and strategy • Change and consequences • Impact on committed plan • Review and agree alternative scenarios with implications
  30. 30. S&OP – Consensus Review 30 Critical Characteristics: • Cross-Functional attendance • Review S&OP process performance metrics • S&OP facilitator presents: • Unconstrained demand • Constrained supply plan; Capacity, Gaps, and Actions • Inventory Forecast (Total by site) • Team discussion, updates, and final agreement documented • Complete S&OP communication package passed to next step Important Changes: • Assess capacity and material availability for the next 12 months • Plan and manage inventories and logistics costs at an aggregated level • Identify strategic sourcing issues for raw material or contract manufacturing • Manage direct labour and overtime
  31. 31. S&OP – Consensus Review Agenda 31 Chairman: Operations Director • Facilitator: S&OP Manager • Attendees: • Operations • Supply Chain • Forecasting • Sales & Marketing • Finance • Agenda: • Discuss Consolidated Plan • Sign off new operating plan • Agree scenarios and consequences • Understand gaps to budget and record advise on gap-fill actions
  32. 32. S&OP – Executive Review 32 Critical Characteristics: • Review S&OP process performance metrics • S&OP facilitator presents: • Unconstrained demand • Constrained supply plan; Capacity, Gaps, and Actions • Inventory Forecast (Total by site) • Executive inputs and approval documented • Inventory Forecast developed • S&OP consensus forecast loaded into the ERP • Gross Inventory or Days On Hand (DOH) review Important Changes: • Detailed inventory forecast prior to Financial Rolling Forecast • Inventory forecasting and DOH confirmation led by S&OP team, in coordination with the sites and Finance • S&OP Forecast and Financial forecast must align
  33. 33. S&OP – Executive Review 33 Chairman: Chief Executive / MD/VP • Facilitator: S&OP Manager • Attendees: • Front Line Reports • Board / Senior Management Team • Agenda: • Key Performance Indicators • Revenue / profitability • Customer satisfaction • Demand Planning Performance • Supply Performance • Business trends • Major changes analyzed; internal & external • Key issues reviewed by “family or product line” • Alternatives presented • Opportunity / vulnerability • Operational and financial impact • Decisions taken • Latest view aligned to: • Annual business plan • Strategy • Plans Agreed (sign-off) • Input to next cycle
  34. 34. S&OP Process Overview - Quiz 34 1. What is Unconstrained Demand? 2. Who own capacity plans and why? 3. Should you understand supplier capacity to learn successful S&OP Process steps? 4. What type of forecast should be loaded in ERP/MRP system and why? 5. What you expect from Executive Review?
  35. 35. Practical Challenges in S&OP Deployment & & Survey Results
  36. 36. S&OP is a major effort in orchestrating cross functional teams interactions 36
  37. 37. S&OP – Why Gone Wrong? J. Andrew Grimson, David F. Pyke, (2007) “Sales and operations planning: an exploratory study and framework”, The International Journal of Logistics Management, Vol. 18 Issue: 3, pp.322-346
  38. 38. My S&OP Experience – How Did We Fix S&OP Pillars Key Learning People & Change Management • Conduct a pilot – “play” with the new templates • Recruit Master Scheduler/Demand Planner(s) • Intense stakeholder communications S&OP Process Elements • Agenda and Input / Output should clearly defined for each review. • Data breakdown & preparation for effective meetings • Create attended sheet for reviews based on RACI Matrix!
  39. 39. My S&OP Expereince – How Did We Fix S&OP Pillars Key Learning IT Systems/Tools • First understand the S&OP process before changing or buying any IT System or fancy Forecasting software. • Excel will help in most cases! • Make it easy for people to use as easy as possible Project Management /Execution • Make it a project! When initiative deployment!. • Gain Leadership support • Structured way of working • Plan all project meetings at the start • Project team with senior people • Central role to transfer learnings and keep the speed... • Use S&OP for efficient decision making process • focus on longer term horizon has reduced “fire fighting”
  40. 40. S&OP Self Assessment Survey Results 40 The Sales and Operations Planning Process Self Assessment tool has 29 questions under below mentioned 6 categories: • S&OP Process Policy and Documentation • S&OP Organization, Meetings and Collaboration • S&OP Plan Integration, Planning Horizon and Scope • Measurements- Use of KPI in S&OP Process • The maturity of 5 Steps S&OP Process on Scale of 1-5 (1- Lowest & 5 Highest) • S&OP Advance Stage Questions Amazingly 6 people has responded!
  41. 41. S&OP Self Assessment Survey Results 41 S&OP Process Policy and Documentation
  42. 42. S&OP Self Assessment Survey Results 42 S&OP Organization, Meetings and Collaboration
  43. 43. S&OP Self Assessment Survey Results 43 S&OP Organization, Meetings and Collaboration
  44. 44. S&OP Self Assessment Survey Results 44 S&OP Organization, Meetings and Collaboration
  45. 45. S&OP Self Assessment Survey Results 45 S&OP Organization, Meetings and Collaboration
  46. 46. S&OP Self Assessment Survey Results 46 S&OP Plan Integration, Planning Horizon and Scope
  47. 47. S&OP Self Assessment Survey Results 47 S&OP Plan Integration, Planning Horizon and Scope
  48. 48. S&OP Self Assessment Survey Results 48 S&OP Plan Integration, Planning Horizon and Scope
  49. 49. S&OP Self Assessment Survey Results 49 S&OP Plan Integration, Planning Horizon and Scope
  50. 50. S&OP Self Assessment Survey Results 50 Measurements- Use of KPI in S&OP Process
  51. 51. S&OP Self Assessment Survey Results 51 Measurements- Use of KPI in S&OP Process
  52. 52. S&OP Self Assessment Survey Results 52 Maturity of 5 Step S&OP Process on Scale of 1-5 (1- Lowest & 5 Highest)
  53. 53. S&OP Self Assessment Survey Results 53 Maturity of 5 Step S&OP Process on Scale of 1-5 (1- Lowest & 5 Highest)
  54. 54. S&OP Self Assessment Survey Results 54 Maturity of 5 Step S&OP Process on Scale of 1-5 (1- Lowest & 5 Highest)
  55. 55. S&OP Self Assessment Survey Results 55 S&OP Advance Stage Questions
  56. 56. S&OP Self Assessment Survey Results 56 S&OP Advance Stage Questions
  57. 57. Coffee Break 2 Take your time and relax!
  58. 58. Working Session
  59. 59. Working Session 59 • In this session Participants Groups will create Agenda, Participants list, Objectives, Purpose and expected Input & Outputs of the respective S&OP Process steps assigned. • For examples, the group who is assigned S&OP Demand Planning Meeting will present above exercise task in group. After presentation, I will and other participants can give them feedback
  60. 60. 60 Get in Touch Here to help! Email / Website Muddassir@scmdojo.com http://www.scmdojo.com/
  61. 61. PFEP Introduction 61 It is expected that every Plant/Location is committed to reviewing the static data in their ERP system in the following cycles using the following tools…
  62. 62. How to Conduct ABC Analysis 62 OR Try this tool for free- Super Quick! http://www.scmdojo.com/abc-analysis-tool/

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