Demand Planning at Ghirardelli: Developing a Best Practice Process in support of S&OP. Presented at the IBF Business Forecasting and Planning Conference, Scottsdale Arizona on February 25th, 2014

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Demand Planning at
Developing a Best Practice
Process in support of S&OP

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Presenters
Kirk Relf
Is the Manager of Demand
Planning for Ghirardelli
Chocolates where he is
responsible for developing and
implementing the new Demand
Planning Process.
Anthony Reese
Is the co-founder of Integrated
Business Planning Associates
and is a visionary leader with a
passion for improving business
processes and performance.

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Presentation Outline
• A Business Overview
• The Need for S&OP
• Beginning with Demand Planning
• The Demand Planning Design Process
• Design Best Practices
• Questions & Answers

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The Chocolate Business

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Beans To Bars

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Demand Variability

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S&OP Project Benefits
 Support company growth with better decision making
 A better demand signal to the business – Improved forecast accuracy
 A better supply plan to meet our demand efficiently
 Action plans more deliberate with a longer term focus
 Achieve cross-functional alignment consistently
 Increased data and decision transparency across teams
 Improve relationships with internal teams, customers and vendors!
 Achieve cost improvements
 Optimized inventory and associated operating costs
 Lower exceptional clearance and scrap costs due to a lack of alignment
 Reduce the Herculean effort to sustain supply & service to our customers

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Target S&OP Process
• Senior Management Buy-In
• Long Term View of Capability Building
• Open to Best Practices Approach
Consensus
Demand
Review
Supply
Review
Financial
Review
Executive
Review &
Alignment

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• Leading practice: Few have it, proprietary restrictions may
exist, not proven in many industries, changing the competitive
landscape, major improvement in one or more performance
attributes/metrics.
• Best practice: Widely accepted, (significant) improvement
over common practices, applicable to majority of industries,
plus ‘current, structured, proven and repeatable’.
• Common practice: Generally accepted as minimum
standard, baseline of acceptable performance, clearly
defined, accepted in all industries (few to no exceptions).
• Outdated practice: No longer accepted, widely identified as
insufficient, compliance issues, lagging results.
Types of Practices
Outdated
Common
Good
Best
Leading
Emerging
Best Practice
Source: SCC SCOR Model.
Note: A practice should match several of the listed characteristics to qualify as a practice of that type.

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Begin with Demand Planning
• A robust Demand Plan is the basis of
S&OP
• A reasonable Horizon is Required for
S&OP effectiveness
• The Timing and Process for Demand
Gathering must align with the final S&OP
Cadence

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Project Governance Bodies
Project Sponsors: The VPs of the 3 Primary S&OP
departments (Sales, Operations and Finance) – Key
Deliverable Approval
Subject Matter Experts: Business experts that will be called
on as needed to assist in the design work.
Steering Committee: Cross functional business leaders from
Sales, Operations and Finance – Issue Resolution, Process
Alignment and Review
Core Team: Functional resources who are connected to the
current processes and data and have committed up to 30% to
perform the design work.

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Three Step Approach
The Demand Planning
Design Process
Envisioning
Gap
Assessment
Detailed
Design

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Our Approach
Demand
Planning
Capabilities
Goal
People
Process
Tools
Data
Metrics
Change
Management

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Assessing Demand Planning
Capability
Goal
Are objectives of demand planning aligned to
supply chain & business goals? Does leadership
understand the importance of this capability?
People
What role do the supply chain and others like
commercial teams play in the demand planning
process?
Process
What activities are included in the demand
planning process? What level of formality and
standardization exists?
Tools
What is the state of technology platforms,
software applications, and tools that enable
demand planning responsiveness?
Data
How accessible; accurate, and complete are the
data available to enable the demand planning
process?
Metrics
How developed and jointly shared are the key
indicators for measuring and predicting
performance improvements, and objectives?
Change
Mgmt
What is the organization’s capability to make
sustainable changes/improvements? Or identify
constraints / enablers to achieving a target state?
*Adopted from a Gartner Demand Planning Framework

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Mapping & Gapping
 As Is Process Maps For Each Demand Segment
 Process Descriptions For Each Demand Segment

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Level 2 Process Flow
Detailed Design
Begin
Metrics &
Feedback
Baseline
Stat &
Promo
Forecast
All Other
Stat
Forecast
In/Out
Seasonal
Forecast
New Items
Dist Whse
Repleni-
shment
Forecast
Enrich &
Consensus
Publish &
Communi-
cate
End
Level 1 Process Flow
Consensus
Demand
Review
Supply
Review
Financial
Review
Executive
Review &
Alignment

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Detailed Design
Level 3 Process Flow – Baseline Stat & Promotional Forecast

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Detailed Design
Level 4 Work Instructions
Level 5 Systems, Architecture & Tools

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Design Best Practices:
 New Demand Planning Function
 Field Sales Planning Moves to One Tool
 Key Customer Focus
 Promotional Volume Focus
 Stat Forecast For “All Other” Customers
 Enrichment & Consensus Collaboration
 Base/Lift Visibility for Promotions
 18 Month Planning Horizon with 3 Zones
 Metrics Driving Improvement
 Constrained Demand Plan
 New & In/Out Forecasts Always In System

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Questions

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THANK YOU