Annual Operations (AOP) and Long-Range (LRP) Planning Process

ANNUAL OPERATIONS (AOP) AND LONG-RANGE (LRP)
PLANNING PROCESS
(IT 2700-XX V 0.1 DRAFT: FOR DISCUSSION PURPOSES)
PRESENTATION
as of: Friday November 13, 2003
Prepared for:
<Client>
Prepared By:
Scott Denson: Director Enterprise Computing &
Communication Systems
David Niles; Director Enterprise Infrastructure Division
Thursday, October 22, 2015ENTERPRISE INFRASTRUCTURE "THE YEAR IN REVIEW" Page: 1

VALUE PROPOSITION/PROBLEM STATEMENT/ TAKEAWAYS
• Outline an approach to the development of an Annual Operating Plan (AOP) and
Long-Range Planning (LRP) process. Show an appropriate timeline to this process.
• Describe the background to Hoshin Charts, Affinity Diagrams and how they fit into
the AOP and LRP processes
• Illustrate examples of Enterprise Infrastructure Goals and Objectives for a large
manufacturing organization, and how they could fit into an AOP.

AGENDA
• IT Enterprise Infrastructure Divisional Goals and Objectives
– excerpt from the EID Divisional Strategic Plan
• Part I: Planning Process
– Samples of Elements of AOP
– Data Collection
– Steps in Creation
– Final Output Required
– What is Hoshin?
• Catch-Ball Process
• Strategic Planning Process

IT ENTERPRISE INFRASTRUCTURE GOALS AND OBJECTIVES
(FROM THE EID DIVISIONAL STRATEGIC PLAN)

GOAL: SELL/ESTABLISH SANMINA-SCI
• Goal: Sell/Establish Sanmina-SCI as Industry Leader in I/T capabilities
– Develop Marketing Collateral
– Establish 3 strategic vendor relationships (Oracle, Agile, TBD) to develop joint
(case study) value proposition literature that promotes Sanmina-SCI capability
through “world class implementation/use of vendor toolset”
– Develop Case Studies/Solution documents that highlight specific customer
value propositions around Logistics Services, Global Order Fulfillment,
Engineering Collaboration, and Return/Repair. Target: IBM, HP, Tellabs, and
Boston Scientific.
– Extend Industry Leadership through solution presentations at key industry
forums.
– Establish Monthly Press Release Strategy to Promote Sanmina-SCI I/T solutions

GOAL: EXTEND INDUSTRY LEADERSHIP IN DRIVING I/T COST
• Goal: Extend Industry Leadership in Driving I/T Cost and Efficiency. Maintain
overall I/T costs within 1.2% of revenue
– Ramp India Competency Center to staff 15-20% of development and support
resources
– Continue to Rationalize Software Maintenance Costs through consolidation
and aggressive contract negotiations
– Deliver VOIP or Alternative private network services to lower international
voice charges
– Continue Deployment of Common Application Architecture to reduce legacy
contracts, labor, and other support costs.

GOAL: ESTABLISH SUPERIOR INFORMATION SECURITY CONTROLS
• Goal: Establish Superior Information Security Controls and Practices in
alignment/support of Sarbanes-Oxley SOX 404 Compliance. Improve technology
and culture of security to move organization from reactive to proactive risk
containment.
– Establish SOX Compliance environment to support new legislation
– Ramp Focused Security Organization.
– Deploy IDS Solution for Data Centers and 15 Critical Facilities
– Expand the Communications/Training of employees on Security
Policies/Procedures
– Deploy Anti-SPAM capabilities on external e-mail gateways
– Rollout Global Patch/Desktop Management Solution

GOAL: DELIVER WORLD CLASS GLOBAL CAPABILITIES
• Goal: Deliver World Class Global Capabilities to align with Strategic Requirements.
– Complete IBM OGP transition and establish baseline systems infrastructure in
these facilities to support Logistics Center Capabilities
– Establish repeatable VMI model for low cost Hubbing
– Finalize Strategic Solutions for Oracle ERP based Logistics Center and VMI
solution set.
– Enhance and Rollout Global CTO model for Oracle based environments
– Implement base R&R Model for Tellabs and develop replication plans for core
center deployment.

PART I:
PLANNING PROCESS

OVERVIEW OF PROCESS
• The purpose of Corporate’s planning process is to put thoughts, ideas and
priorities into action by gaining consensus on the top priorities and aligning all
employees to accomplish those priorities.
• Many times employees don’t feel as if Corporate plans well. In some cases that is
true, but for the most part, plans exist. What is lacking is the communication of
plans with employees and involvement in the planning process at all levels.
• In addition, what often lacks is the communication of our business model and the
need for our business to be flexible and fast. One example would be getting rid of
a manufacturing line that is not needed and then putting it back in two quarters
later. Employees often say why didn’t we just leave it in in the first place. It takes
a lot of time and energy to put in manufacturing lines.
• However, if employees understood our P&L and business model, they might
understand why it might be beneficial to remove and replace some equipment.
– Planning process & timing
– Gaining alignment

GUIDING PRINCIPLES: THE 3 D’S
DUTY, DISCIPLINE, AND DEDICATION
• Duty
– Commitment to do what you said you would do
• Discipline
– To do things in an organized fashion. Not, “as you would like” but “as it is
needed to be done”
• Dedication
– The involvement or spirit in which you do your job and deliver for your team

WHAT IS HOSHIN?
• A management method to reliably execute strategic breakthroughs
• Provides a disciplined management system to deploy strategic priorities
• Concentrates resources on the vital few strategic performance gaps selected by
the leadership
• Consists of a few simple steps:
– Analyze changes in the external environment (PLAN)
– Select the vital few priorities (PLAN)
– Create an integrated plan of attack (PLAN)
– Execute the plan (DO)
– Regularly review progress for subsequent modifications (CHECK/ACT)
• (The Management Compass, Michele L. Bechtel, 1995)
MANY COMPANIES HAVE SUCCESSFULLY UTILIZED HOSHIN PLANNING OR HOSHIN KANARI. THIS HAS
BEEN THE BACKBONE OF STRATEGIC PLANNING AT HP FOR MANY YEARS. THIS IS NOT A “CORPORATE
PROCESS.”

WHAT DO HOSHINS DO?
• Align the organization with changes in the external environment
• Translate the challenges into a small set of strategic gaps that must be closed
• Mobilize the entire organization to close these gaps
TO...
ALIGNMENT OF DIRECTION AND EFFORT

HOSHIN CATCHBALL PROCESS
Cascaded Plan Deployment (Hoshin)
Corporate
Hoshins
Strategic
Objectives
Strategies Projects
Senior
Executive
Executive
Management
Business Unit
Management
Individuals &
Teams
Negotiated
indicators and goals
(i.e., “catchball”
Processes
AOP

PLAN CASCADED
DEPARTMENT
OBJECTIVES
HOSHIN
DEVELOPMENT
LRP
AOP
CIO
GOALS

ORGANIZATIONAL ALIGNMENT
Support Services
HR Fin. IS Sales Eng. Quality Mtls.
Business Unit
Customer Focus Team
Customer

SAMPLE CEO HOSHIN’S
1. Consistent and Systematic Creation of Wealth
1.1 Increase Annual Operations by 30% per Year
2. Market Responsiveness
2.1 Create and Provide services that will be in demand in the marketplace where
and when the customer requires
2.2 Provide the service to the marketplace in a timely and consistent manner
3. Dedication and Commitment
3.1 Nurture and infuse employees that provide total commitment to Corporate’s
Goals
3.2 Total Focus and Dedication to 1.0 and 2.0 above
3.3 Make Sanmina-SCI the best place to work consistently
HOSHINS DO NOT CHANGE YEAR OVER YEAR. THEY ARE MEANT TO BE BREAK-THROUGH OBJECTIVES. WE ARE USE TO RUNNING OUR
BUSINESS BY CONTINUOUS IMPROVEMENT. HOSHINS ARE MEANT TO ESCALATE THIS PROCESS AND MAKE JUMPS. IT IS RARE FOR A
COMPANY TO HAVE THREE HOSHINS. MOST COMPANIES WOULD HAVE ONE OVERRIDING OBJECTIVE. SAMPLE HOSHINS HAVE REMAINED
CONSTANT FOR MANY YEARS.

WHAT IS THE LRP (LONG RANGE PLAN)?
• Developed every year for the following three years
• Markets
– Analyze Market Segments
– Target Specific Customers
– Develop Market Opportunity Potential (Revenue)
– Obtain Buy-in on Revenue Plan
• Capabilities
– Analyze Customer Requirements
– Analyze Capability Gaps
– Develop Responses to Gaps (Action Plans)

WHAT IS THE AOP (ANNUAL OPERATING PLAN)?
• Developed every year and resembles the first year of the LRP
• Detailed Financial Plan for Corporate, Each Business Unit, Materials, and Support
Functions. The Parts add up to the whole (site/Corporate).
– Profit & Loss Statement (Revenue, costs, profits)
– Balance Sheet (Assets and Liabilities: inventory, accounts receivable, capital
equipment owned, facilities, cash, accounts payable)
• Detailed Operational Plan
– Analysis of customer requirements
– Analysis of operational targets (quality, efficiency, CSI, turns, A/R)
– Detailed action plans to close capability gaps and achieve financial and
operational plans.

OUTLINE OF THE AOP
1. Vision
2. Mission
3. Overall Strategy
4. Outline Key Initiative's
5. Develop Hoshin Chart
6. Management Implementation Plans
7. Policy Deployment Chart
8. Key Dependencies
9. Organization Chart

STRATEGIC PLANNING PROCESS (ANNUAL CYCLE)
MISSION,
VISION, VALUES
AND STRATEGY
SET WORLDWIDE
VISIONS AND
PROJECTIONS IDENTIFY
GENERAL
GOALS BY
REGION AND
SITE
DEVELOP
NEXT YEAR'S
AOP AND
HOSHINS
DEVELOP
THREE-YEAR
MARKET AND
CAPABILITY
PLANS
SET MARKET
PROJECTIONS AND
ASSESSMENT OF
COMPETITIVE
POSITION
MEASURE AND MONITOR
PLANNING AND
GOAL SETTING
PROCESS
Nov. Feb.-Mar.Jan.
Quarterly
Nov.-Jan.
Apr.-May
Aug.
REVIEW PROJECTIONS IDENTIFICATION DEVELOPMENT
MEASURE

AOP PROCESS STRUCTURE
• Functional and Business Unit Review
– Review and begin consolidation of the Business Units, Corporate Functions,
and Regional Operations plans
– Finalize the key initiatives
• AOP Launch Meeting
– Rollout of the high level plan to the Key Management group
– Clarify details and begin development of the site level support plans
• Implementation
– Implement and measure execution

THE BEGINNING OF AOP CREATION
• Discuss what you are trying to accomplish? What is your Value Proposition? Your
Mission? What does success look like?
• Sift data inputs to develop key focus areas
• What are all of the actions that need to be taken in these focus areas
• Sift the actions to come up with key objectives - Be realistic
• Be realistic again!
• Bounce off of other regional / site functions for consistency / reality check
• Bring new ideas back to the team

CONSTRUCTION OF AN AFFINITY DIAGRAM
• Assemble the Right Team
• Phrase the Issue to be Considered
• Generate and Record Ideas
– Follow brainstorming guidelines
– Don’t criticize any idea
– Everyone needs to participate
– Record ideas on Post It Notes

• Generate and Record Ideas Continued
– Record ideas without interpreting them
– Post ideas so everyone can see them One idea per Post It Note
– Write legibly
– Be concise--no more than 5 words
– Use a noun and a verb to help clarify thought
• This step is to capture ideas on what needs to be accomplished.

• Arrange the Cards into Related Groupings
– Review each card to insure that everyone understands its meaning
– Work simultaneously & quickly
– Work silently
– Spend between 15 to 20 minutes grouping
– You will have between 8 to 15 groupings
– If necessary, a card can be placed in more than one group
– Look for relationships, but don’t force--groupings will emerge
• This step is to help organize thoughts into logical, natural initiatives.

• Create Header Cards
– Concise
– Clearly identify the common theme
– Clearly reflect what cards say about the theme
– Put a box around each header to indicate the card is a header
– Number each header card and each associated card
• This step helps to identify key initiatives

LET’S REVIEW THE TITLE CARDS
• We Can’t Do It All! How do we get down to 3-4 key areas?
– Can we combine any groups further? Is one a subset of another broader
topic?
– Can we use a voting mechanism to get to the top 3-4?
• Consider Impact of Achieving the Objective on Our Business
• Consider Ability to Achieve the Objective
• Consider the Alignment with Objectives Determined Further Upstream

REVIEW WITH THE TEAM AGAIN
• Clean up phase
– Review for duplication
– Review for similarities
– Review for non-related items to your top 3-4
• Outline and priorities
– Remember the primary Hoshin’s and Missions
– Priorities largest threats or Quick wins
– Assign task for further research
– Work as a team to solve within a timely manner
– Stay focused on the 3 D’s. The team is depending on you

CLOSING Q&A
• Questions?
• Ideas?
• What is the take away?
• Does this fit our business strategy?

FUTURE STATE

PRESENTERS BACKGROUND
• David Niles (djn_bus@msn.com)
– Director, Systems Development
• USA Federal Government Health Care, Washington DC
– Director Enterprise Infrastructure
• Sanmina-SCI Contract Manufacturing, San Jose CA, Huntsville AL
• Largest Oracle ERP instance in the world… HSV Z series, Superdomes
– Director, Project Control And Service Management
• Sanmina-SCI, Chennai India Guadalajara MX
• Mergers and Acquisitions, DRP, SOX, GSC, PMO
– Sr. Director Support Services
• Burlington Coat Factory, Philadelphia PA
• Change Control, GSC, Asset Management, Field Services, Technical Services,
PMO
– Program Director, Day 2 Wipro
– Special advisor, CIO/COO Macmillan Publishing NYC
• Scott Denson
– Director, Enterprise Computing & Communication Systems

TOOLKITS USED IN THE ASSISTANCE FOR COLLECTION OF
INFORMATION
• Mindmap
• eCIO Executive Workbench
– Toolkit and examples for all facets of the
workplace for managers, executives and
the individuals contributor
– Leave your card and I’ll get you a copy

END OF PRESENTATION

Annual Operations (AOP) and Long-Range (LRP) Planning Process

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