Exponential population and technology growth is occurring at a rate never before seen in history. Together, these forces have created the data driven world we live in. The business landscape has become more competitive and complex given the increased level of capability required to scale, evolve and rapidly gain market share; shortening the business maturity lifecycle. A critical success factor to survival and succeed in both nature and business is the ability to learn and implement quickly – to adapt and evolve. By reducing the time it takes for your business to know what’s happening, learn what is needed for success and implement, you can outpace your competitors and capture new opportunities. Today, there is an imperative to turn the vast seas of data into information, something useable which drives insights and enables us to make decisions which optimally utilise assets and resources. In operational speak, this entire process is enabled by excellence in Scenario Planning. This presentation covers the relevancy of Scenario Planning today including an analysis of the stages of S&OP maturity as well as a case study with Simplot, a leading Australian food manufacturer and a leader in S&OP maturity and Scenario Planning.

1. SCENARIO PLANNING
Addressing a capability gap affecting
industry competitiveness
2018

2. Authors Who we are.
GRA was founded in 1997 and is Australia’s
premier specialist supply chain consulting firm.
Our team has extensive commercial &
government supply chain and logistics
experience across a broad range of industries
and at all levels of the process, both strategic
and operational.
At GRA we understand the complex challenges industry is
facing. We can help you with not only designing an optimal
supply chain, but also ensuring that your inventory is
optimised to ensure that the highest possible service levels
can be achieved at the lowest possible cost.
Subscribe to GRA news at
www.gra.net.au/subscribe
(w) www.gra.net.au
(p) +61 (03) 9421 4611
(e) webinfo@gra.net.au
Supply Chain Strategy,
Planning & Execution
Carter McNabb
Carter is a founding Partner of GRA and is
widely acknowledged as an influential industry
expert. He advises CEOs of some of Australia’s
top companies and has helped organisations
in North America, Asia and Australia deliver
rapid and sustained supply chain
improvements.
Charles Edwards
Charles is a Senior Consultant with GRA. Charles
has worked with clients across the Australian
Defence Force, MROs, automotive,
telecommunications and retail industries to
enhance their performance. He is particularly
interested in business strategy and the impacts
of disruptive technologies on the supply chain.

3. 2XThe volume of
data is doubling
every 3 years.
SETTING THE SCENE
Exponential population and technology growth is
occurring at a rate never before seen in history.
Together, these forces have created the data driven
world we live in. The business landscape has become
more competitive and complex given the increased
level of capability required to scale, evolve and
rapidly gain market share; shortening the business
maturity lifecycle.
A critical success factor to survival and succeed in
both nature and business is the ability to learn and
implement quickly – to adapt and evolve. By
reducing the time it takes for your business to know
what’s happening, learn what is needed for success
and implement, you can outpace your competitors
and capture new opportunities.
Today, there is an imperative to turn the vast seas of
data into information, something useable which
drives insights and enables us to make decisions
which optimally utilise assets and resources. In
operational speak, this entire process is enabled by
excellence in Scenario Planning.

4. SCENARIO PLANNING
Scenario Planning is a structured “what if”
analysis of the future internal and external
operating environment.
It enables proactive strategic, operational
and tactical adjustment to address
potential issues and opportunities. Trade-offs
between opportunities & risks are then
analysed against given constraints.
Effective Scenario Planning supports rapid,
optimal decision making and enables a
business to act swiftly and with confidence.
The qualitative benefits of Scenario Planning
include:
Essentially, Scenario
Planning enables
organisations to
turn unknowns into
knowns, factually
assess options and
act with
confidence.
Informed Trade-
off Decisions
Forward Visibility
Decision
Optimisation

5. BENEFITS OF SCENARIO PLANNING
Trade-off decisions, such as “is it worthwhile targeting a 2%
service level increase on A class items?” and “what is the
required investment?” can be determined with confidence
with mature Scenario Planning.
It follows that we can measure the impact of certain
scenarios to a high level of confidence, enabling informed
decision making. Often these scenarios can deliver both
revenue and cost improvements.
5-15% supply chain
operating cost
reductions are not
uncommon from
optimising both
fixed and variable
costs
Inventory
management
Scenario Planning will
often reduce holding
requirements by 10%
to 40%, freeing up
cash.
Superior scenario
management and
decision making
typically yields
revenue increases
of up to 10%.
In GRA’s
experience,
Scenario Planning
projects yield
investment ROI of
minimum 3:1, with
typical ranges in
the order of 10:1
plus
Higher Service Levels at Lower Inventory Cost
$82.1M
$72.0M
$59.5M $57.1M
Current
Position
Average
Inventory
Position
Current
Policy
Optimised
$48.8M
&
Additional
Forecast
Algorithms
& Mfg
Constraints
Removed
Service Level
98%
92%
*Actual client results
TOP- AND BOTTOM-LINE BENEFITS

6. WHERE IS THE
INDUSTRY TODAY?
A recent survey
conducted by GRA and
the AFGC into the
Australia’s food, drink and
grocery manufacturing
industry found that:
89%
of respondents
identified their
capability in
Scenario Planning
as non-existent or
insufficient.
of survey
respondents
identified as
having a formal
S&OP process in
place.
60%
THESE RESULTS SUGGEST
• an industry capability in
scenario planning has
not evolved out of
S&OP yet
• organisations are not
fully prepared to
manage shocks or
changes to the business
environment
HOWEVER
SO WHY HASN’T AN INDUSTRY
WIDE SCENARIO PLANNING
CAPABILTY EVOLVED
?

7. 7
Tactical
Horizon
0-2 months
Operational
Horizon
3-12 months
Strategic
Horizon
12-36 months
Tactical Planning
• Scheduling
• Replenishment
• Refine transportation
• Redistribution
Operational Planning
• Demand shaping and statistical forecasting
• Key event / promotion planning
• Product run-out strategies
• Capacity planning
• Procurement
• Supplier collaboration / re-planning
• Product portfolio analysis
• Transportation planning
Strategic Planning
• New product / service introduction
• New market Entry
• Customer segment expansion
• Network redesign
• Joint planning with customers & suppliers
• Service level offering enhancement
…BECAUSE IT TAKES TIME
& COMMITMENT
S&OP forms the building blocks of Scenario
Planning capability, and an effective and
mature S&OP process evolves incrementally.
S&OP, and Scenario Planning, should layer
across the organisation’s Strategic,
Operational and Tactical horizons. Examples
of some of the Scenario Planning activities
that occur over these horizons are illustrated
in the adjacent figure.
Based on these horizons, organisations need
to commit to the process in order to see
measurable and sustainable results in the
long-term. It’s an evolutionary journey.
Building an effective Scenario Planning
process does not come without its
challenges. These often include establishing
a disciplined and trusting culture – and
development of a integrated planning and
analysis framework which enables the ability
to act with confidence.

8. STAGES OF S&OP MATURITY
If Scenario Planning sounds a lot like S&OP, that’s because it’s the next step in its evolution…
Effective Scenario planning is a product of mature, adaptive S&OP. Scenario Planning is not just a
capability, but a clearly defined process which is overlaid across cross-functional frameworks.
S&OP may start as simple demand & supply balancing,
but it then typically evolves to consider organisational
level trade-offs, considering both volumes and financials.
It also takes time. An organisation cannot
simply skip a stage; however, it can move
through them more quickly with the right
enablers. Ultimately, Scenario Planning
must evolve in response to increasing
competitive pressures, if organisation are
to survive. Today’s “leading” capability is
tomorrow’s “essential” foundation.
• Inter-business S&OP
• S&OP drives forward business & financial plans
• Integrated business management
• Used to deploy & drive the value proposition
• Intra-business S&OP
• Focus is tactical demand & supply balancing
• Common KPI framework & single set of numbers
• Enhanced structures, processes & systems in play1. Foundation
2. Operational
3. Enterprise
4. Adaptive
• Scenario planning
• Focus on competitive priorities
• Responds & adapts to strategy
• Reshapes with changing
structures
• Information gathering
• S&OP structure & process design/definition
• Gap analysis (people, processes & systems)
• Implementation approach
“How do I
develop a
good
plan?”
“Can I
supply to
projected
demand?”
“What is the
financial
impact?”
“What is
likely to
happen
if…?”
Capability
Time

9. EFFECTIVE S&OP ISN’T
EASY…
Sometimes in the face of complexity,
organisations oversimplify and make
costly assumptions. The simplification
approaches highlighted here lead to loss
in value in the S&OP process and
business results, and can ultimately
erode confidence in the S&OP
framework altogether.
Often these simplification techniques
and settings occur behind the scenes
and deep within ERPs and other
planning systems. They are common in
industry and lead to a substantial loss of
value and unmanageable supply chain
results.
As a result, many organisations invest
heavily in the structures and frameworks
of S&OP but don’t see results.
Systems which allocate
“Top Down” via
averaging, can lead to
cases where two different
items, one with sales
trending down and
another with sales
trending up, get allocated
the same forecast!
Demand Planning
lacking Analytics
Replenishment methodologies
which do not provide forward
visibility, such as ROP/ROQ and
Min/Maxes do not yield effective
time phased replenishment plans.
Basic Supply
Chain Planning
Portfolio
Review
Demand
Review
Supply
Review
Pre-
S&OP
Exec
S&OP
Approaches like “Days Cover” do not consider costs,
service level targets or variability. They are inflexible and do
not achieve consistent, targeted service levels.
Over simplistic Service Level Optimisation

10. AN EFFECTIVE CULTURE FORMS
THE BACK-BONE
In addition, the importance of a strong team culture in
achieving effective Scenario Planning cannot be
overstated.
We outline the components of an effective culture later,
but in short, clear processes, roles and responsibilities are
fundamental for success. Processes should be
understood and lived across the organisation. Roles and
responsibilities can be well defined using the established
RACI framework, as an example.
Disciplined business processes and carefully considered
KPIs help to drive an organisation in the right direction
and break down silos which can otherwise occur
between the likes of sales, marketing, supply chain and
finance teams. Silos and KPI misalignment can be large
hurdles in assessing and acting on Scenario Plans.
Top management ownership and involvement in S&OP
and Scenario Planning also helps to drive the right
culture.
Responsible Accountable Consulted Informed
For your business process, task or project do
you know who is:
R A IC
The RACI Framework
?

11. THE KEY INGREDIENTS TO SUCCESS
The key ingredients to successful Scenario Planning are a strong foundation
of effective culture and information which enable “one version of the truth”.
The
Right
Culture
one
version
of the
truth
Reliable
Info
Scenario
Planning
Results from Scenario Planning
are often lacking as many
organisations haven’t yet created
this single truth in which trade-off
analysis results can be acted on
with confidence.
The most frequent issues we see
are disintegrated planning
systems and cross-functional
frameworks. There is often no
central way to make a change
upstream and assess the
downstream impact. Scenarios
are often created in isolated
spreadsheets, built independently
with disintegrated information
which aren’t able to create an
accepted “single version of the
truth”. The “one set of numbers”.

12. THE RIGHT CULTURE
The right culture can be difficult to quantify; however, it should include
strong trust, discipline, clarity and commitment. For an excellent
definition of trust, we recommend Brene Brown’s B.R.A.V.I.N.G
(BecomingWhoYouAre, 2015). Of note, it is essential that your people
have capability, ownership and can speak the truth without fear or
reprisal.
Google calls this “Psychological Safety” – feeling safe to take risks and
be vulnerable in front of others. In its 2015 study of the interactions of
over 180 Google teams over a 2-year period, Google found five key
dynamics of successful teams, with “Psychological Safety” being “far
and away the most important of the five dynamics”.
If your company culture is such that mistakes are punished and
freedom to experiment curtailed, there will be less opportunity for
open minded trade-off decisions to be assessed, let alone
implemented.
Roles, responsibilities and accountabilities should be clear to all. It is
essential that the team is empowered, trusted and accountable. An
environment where “what do we need to do now” is valued above
“who did something wrong then”.
The No. 1 most
important factor to
building successful
teams (Google, 2015)
“Psychological
Safety”

13. RELIABLE INFORMATION
Reliable Information could involve AI, Advanced Planning Systems, and
blockchain. Or, it could just be a relatively simple Excel model.
Simple is OK for some Scenario Planning tasks. The key is to have reliable
and integrated data where it matters. At the end of the day, users must
be able to quickly and reliably assess outcomes which deliver results in
which there is organisational wide confidence.
Some of the essentials in securing reliable information include:
Information must be able to be transparently transformed and read
across all sectors of the business for analysis results to be reliable and
trusted.
Systems don’t
need to be
‘perfect’. Think
roughly right
versus precisely
wrong.
Data integrated
across all business
functions, and
includes financials.
Data granularity
applicable to the
business (such as
product-by-location
or by customer).
Both data and
systems
management has
clear owners and
policies.
Systems and settings
configured
specifically for the
business and fully
understood.
Organisation wide
confidence in data
accuracy.
Easy to use systems
which enable users
to quickly and
reliably assess
outcomes.

14. a change in
store
forecast...
a change to
store
replenishment...
a change to
DC
purchasing...
a change to
inventory
investment ...
a change
inventory
balance...
a change to
projected on
hand.
ONE VERSION OF
THE TRUTH
A strong culture and reliable
information enable scenario plan
analyses to yield one version of
the truth. Scenarios are
repeatable, reliable and their
implications can be fully
understood across the supply
chain.
This example is a high level
illustration of the power of one
version of the truth in
understanding the down- and up-
stream impacts on the supply
chain of different scenarios.
J F M A M J J A S O N D J F M A M J J A S O N D
J F M A M J J A S O N D
150 150 150
J F M A M J J A S O N D
J F M A M J J A S O N D J F M A M J J A S O N D

15. In Australia, Simplot is a leader S&OP maturity and Scenario Planning. Simplot
is a leading Australian food manufacturer and the home of many known
household brands, including Birds Eye, John West and Edgell.
Simplot operates in a complex environment.
On the supply side, Simplot has an “Australian Grown” customer value
proposition for many of its categories, making alternative sources of supply
hard to come by. There are requirements to contract growers out two years
in advance. Further, being in the food industry, they are at the whim of
mother nature and seasonal variability, what is grown is what can be
supplied. A basic staple such as potato's presents Simplot with a high cost
trade-off decisions. When processed at harvest they yield approximately
80%, however if demand requires them some time later, the yield quickly
drops to levels near 60%.
On the demand side, Simplot’s customers expect consistent and excellent
service. Their customers include quick service restaurants such as McDonalds,
and large supermarket chains which have no tolerance for service failures.
These supply chain constraints require Simplot to have accurate two year
forecasts. On top of the day-to-day there is the continual search for growth
via new customer contracts and product range management.
CASE STUDY: SCENARIO PLANNING @ SIMPLOT Background Foundations Capability

16. Simplot has become extremely effective at navigating this complex and
changing environment and developed a strong Scenario Planning
capability.
How did they do it?
Simplot have been running a disciplined S&OP process for over 15 years and
regularly audit for improvement. All business processes are interconnected,
with S&OP being the central thread.
The right culture:
• Roles and responsibilities are clearly defined
• Middle management is empowered and trusted
• Ability to quickly mobilise teams to assess options and capabilities
• High confidence in potential outcomes & ability to service contractual
changes
• Strong capability to win work
Reliable information:
• Sophisticated and integrated systems where they count; a tier one ERP
and supply chain planning system which is well tuned to the business
• Data is granular, and costs well understood.
• Data accuracy is prioritised based on what inputs drive decisions
CASE STUDY: SCENARIO PLANNING @ SIMPLOT Background Foundations Capability

17. At Simplot, most Scenario Planning discussions are around financial outcome
risks and opportunities, plans are then syndicated throughout the
organisation with S&OP driving action. ‘What-if’ analyses are employed to:
• Assess capability to manage changes in demand or supply
• Negotiate new supply agreements with distributers
• Assess options to close budget gaps
Simplot has clear trigger points and high confidence in potential outcomes &
their ability to service contractual changes. This ability to commit with
confidence has provided a strong capability to win work.
Recently, Scenario Planning enabled Simplot to win a frozen goods contract
with a large supermarket retailer. When the offer was on the table, Simplot
quickly established a team to assess their ability to service the contract into
the future. They assessed options and customer impacts quickly and with
confidence. In doing so, Simplot was able to respond swiftly and win the
work; locking out the competition in the process and delivering a clear
competitive advantage.
Scenario Planning is not a silver bullet, impacts in the tactical horizon are still
felt. The difference is that Simplot can see most issues coming and adapt
and respond quickly. Hard decisions are made from an informed position.
Lessons are learnt and the Scenario Planning capability is continually
evolved.
LESSONS
LEARNT
Foster a culture
where everyone
can speak the
truth
Reliable,
integrated data
across systems
where it counts
Employ capable
people and give
ownership
Clear business
owners and
policies
CASE STUDY: SCENARIO PLANNING @ SIMPLOT Background Foundations Capability

18. 18
PIECING IT ALL TOGETHER
What’s required to survive in this volatile, changing
World? Market adaptation in the face of rapid
change, with Scenario Planning as an underpinning
capability.
While Scenario Planning may be considered an
emerging capability today, with only leading ‘best in
class’ organisations at the forefront, we expect to
see it become more and more common and a
necessity of survival in the not too distant future.
Organisations embarking down the Scenario
Planning path should do so with full consideration for
the commitment required to make it effective.
Organisational transformation may be required. The
key is to establish the right culture and reliable
integrated information which enables one version on
the truth.
The benefits of Scenario Planning are real.
Excellence in Scenario Planning is a competitive
advantage and your organisations capability in it
can build barriers to competition.
It’s an
evolutionary
journey and a
competitive
necessity.

19. HOW DO YOU KNOW YOU’VE GOT IT?
Imagine you just got a call form the MD. A new customer wants to
increase online sales volumes by 40%. The MD is querying if you can
supply them, within current lead-times, and if you did, how would it
impact your other customers? What are the supply chain costs
and capacity impacts into the future?
If your response here is one of self assuredness in your ability
to assess the situation in an accurate and timely manner,
your confidence is likely built on your Scenario Planning
Capability.
However, if your response is one of anxiety, there
may be a case for developing your Scenario
Planning capability!
50%
The Percentage chance of
survival of all publicly traded
companies todays business
environment.
Daepp, MIG (2015), The Mortality of Companies