This document summarizes a presentation about optimizing sales and operations forecasting at NBC Universal Home Entertainment. It discusses NBC Universal's business and forecasting process for DVDs and Blu-rays. It identifies inefficiencies in the current forecasting process and the goal to streamline the process. It then describes using Lean techniques like value stream mapping to analyze the process and identify improvements. Finally, it discusses choosing an enterprise IT system to implement the optimized forecasting process.

1. Optimizing Sales and Operations Forecasting
Andrew C. McVeagh
April 23rd, 2009

2. Agenda
• NBC Universal And Home Entertainment
• Forecasting DVD’s And Blu-ray
• Optimizing The Forecasting Process
• Choosing The Right IT Tools To Help
• Questions
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3. An Introduction to NBC Universal
• One of the World’s Leading Media & Entertainment Companies
• Formed In May 2004 Through Combining NBC & Vivendi Universal Entertainment
• NBC Universal Is 80% Owned By General Electric And 20% Owned By Vivendi
Universal Studios Home Entertainment
• Markets & Distributes NBC Universal's Content Through DVD, Blu-ray, EST & VOD
• Includes Titles From Universal Pictures, Focus Features & Rogue Pictures
• Original Titles From USHE Family Productions and Mattel Properties
• Distribution for Summit Entertainment and other 3rd parties
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4. Forecasting DVD’s and Blu-ray
Operations
Forecast
Initial Production Store Level
Title Sales
Financial /Box Office Final
Greenlight Forecast
Ultimate Release Forecast
Financial
Forecast
Order DVD/BD
Ship to VMI
DVD/BD Production
Stores Replenish
Materials /Marketing
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5. Optimizing the Forecasting Process

6. What is the Problem?
• Inefficient Communication in Forecasting and Planning
• Returns Still Too High
• Limited Visibility To Promotional Effectiveness
• Multiple Forecasts In Multiple Systems – Which Is Correct?
Finance Sales & Cat Mgmt
Greenlights, Annual Plans, Account, Customer, Store
P&L, Cash, Overhead, Level & Fixture Level Planning
In Year Pacing & Ultimates
Marketing Operations
Replenishment, POS Forecasting,
DVD Release Schedule
SKU Forecasting
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7. What Is The Goal?
A Satisfied Customer
Objectives: Sub-Goals:
• Optimize and Streamline the S&OP Process
• Drive Cross Team Visibility of Data for Better Decisions Right Product
• Utilize Consensus & Leverage Statistical Demand Planning Right Store
Right Time
• Minimize Returns – Stop Revolving Door Syndrome
• Revenue Lift – Better Promotion Management Right Shelf
• Optimize Trade Spend $ - Utilize Highest Impact Tactics Right Price
• One System to Unite and Communicate All Forecasts
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8. How to Accomplish Process Change
• LEAN Value Stream Map Entire As-is Process
• Identify Value Add, Value Enabling and Non-Value Steps
• Identify Duplicates, Wait Time, Touch Time & Process Time
• Identify Pain Points and Integration Points to Other Processes
• Create New Process Maps Eliminating Non-Value Steps
• 9 Days Of Workouts With 40 Subject Matter Experts From:
• Operations • Finance
• Sales • IT
• Strategic Planning • Marketing
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9. A Closer Look at a LEAN Process Box
Accomplishments After Workouts
• Reduced Number of Process Steps from 160 to 130
• Eliminated 12 Rework Loops
• 65 Non-standardized Process Steps to be Automated in IT
• Estimated Reduction of Average Process Time by ~70%
• Estimated Reduction of Average Touch Time by ~75%
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10. Choosing The Right IT Tools To Help

11. What is the Systems Focus?
• Implement New LEAN Process In Enterprise Class System
• Simplify Systems Landscape & Retire Custom Applications
Enterprise
Packaged Custom
Order Management,
Replenishment Sales
Finance & Supply Packaged
System Application
Chain System Replenishment
Enterprise System
Order Management,
Finance & Supply
Chain System
add
Forecast, Demand,
Custom Custom Custom Custom Sales &
Reporting Forecasting Decay Planogram Reporting
Custom
System System Application System
Planogram
Leverage Enterprise Centers of Excellence
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12. Example: Implementation Timeline
Vendor 1
Q3’08 Q4’08 Q1’09
Q2’08 Q3’09 Q4’09 Q1’10
Q2’09
Finance Implement Go Live
Sales Implement Go Live
Demand Implement Go Live
Replenish Implement Go Live
$$$$$
Spend by Year $$$$$ $$$$$
Vendor 2
Q3’08 Q4’08 Q1’09
Q2’08 Q3’09 Q4’09 Q1’10
Q2’09
Finance Implement Go Live
Sales Implement Go Live
Demand Implement Go Live
Replenish Implement Go Live
$$$$$ $$$$$ $$$$$
Spend by Year
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13. Example: Cost/Benefit Walk by Qtr
Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
Vendor 1
Costs conclude
6 months earlier
Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
Higher payback starts
9 months later
Vendor 2
Replenishment
Demand
Sales
Financial
Q2’08 Q3’08 Q4’08 Q1’09 Q2’09 Q3’09 Q4’09 Q1’10 Q2’10 Q3’10 Q4’10 Q1’11 Q2’11 Q3’11 Q4’11
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14. Lessons Learned
• Examine the Cost of Doing Nothing!
• Executive Management Commitment and Buy in Necessary
• Recognize Required Refresh Frequency of Data in Systems
• Understand Data History Requirements to Forecast
• Solid Requirements, Exhaustive UAT and Training = Success
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15. Questions?