- Sonoco Products Company realized in 2007 that traditionally organizing its supply chain functions was not improving processes as needed, so it adopted a cross-functional Sales and Operations Planning (S&OP) process starting with its paper-based supply chains. - S&OP provided a standardized monthly planning cycle and integrated demand management to better synchronize information, materials, and dollars flows across the company's push-based paper supply chain and pull-based conversion supply chains. - Implementing S&OP and demand management capabilities with Logility software helped Sonoco improve key metrics like perfect order performance, cash gap, inventory levels, and achieve better demand visibility, responsiveness, and profitability across its global supply chains.

1. Member 2009/10
Sales and Operations Planning
Supported by Demand Management Capability
Keith Holliday- Director Corporate Supply Chain & Operating Excellence
Sonoco Products Company
keith.holliday@sonoco.com

2. Purpose
The intent of this discussion is to share our approach to improving a critical business
process – The Supply Chain
Sonoco Products has been a traditionally organized manufacturing company with
functions organized under a general manager with P&L accountability
The supply chain was viewed like any other function – a set of practices to be
employed in support of making product and a cost to be reduced
In 2007, the company realized that the end to end process would not improve as much
as required by traditional cost reduction methods and it was determined a cross
functional process approach would be needed
Sales and Operations Planning was chosen as the process change
starting in our paper based supply chains

3. Eleven Decades of Packaging Leadership
 Founded 1899 in Hartsville, S.C.
 Diversified provider of consumer and industrial packaging,
and services
 $4 billion in sales
 312 operations in 35 countries
 17,000 employees
 Products sold in 85 countries

4. Global Plastics
Industrial
Converted Products Primary Materials
Product Lines

5. Global ServicesGlobal Flexibles
Global Rigid Paper
and Closures
Product Lines

6. What Makes a Lean Supply Chain Lean?
 Low Inventory
 Synchronized Flows - Information, Materials, Dollars
 Optimized logistics full truckload, on time and in full
 Perfect quality, perfect transactions
 Demand pull from the customer back
All of these objectives require a good view of Demand

7. S&OP was a Part of a Larger Transformation Effort
Conflicts between disciplined planning and agile response
 Traditional production to a forecast with set lead time agreements with
customers (and suppliers)
 Demand driven pull, short lead time processes emphasized in lean
supply chains
Sonoco Products has blended the use of forecast based supply chain
practices with demand pull processes to create agile supply chains
 Collaborative demand management
 Sales & Operations Planning (S&OP)
 Lean transformation and cash/ cost optimization

8. Industrial Products- Supply Chain
Paper
Manufacturing
Converting
Tubes & Cores
Composite Cans

9. S&OP Impact in Push and Pull Supply Chains
 Conversion (Pull from End Customer)
 Many customers, short 2-3 day order fulfillment lead time
 Inventories concentrated on raw materials with primarily make to order FG
 Postponement strategy with many small facilities close to customer
 Forecast effort is on raw materials to prepare supplier
 MAPE on raw material demand averages ~5-10%
 Paper (Push from Forecast)
 Runs integration process through monthly S&OP cycle
 Integrates input from 3 internal divisions and external sales
 Operates a forecast based push process for asset optimization
 Each mill tracked weekly on Perfect Order performance
 ABC categorization for inventory strategy & lead time promise

10. Installed a Standard 5 Step Monthly Cycle First
 Supported the Process with
spreadsheets and trend analysis in
Minitab
 Displayed using a web based display
tool
 Built support for and credibility for the
process, then looked for a software tool
to improve integration and analysis
10
STRATEGY
BUSINESS PLAN
PERFORMANCE
STRATEGY
BUSINESS PLAN
PERFORMANCE
Demand
Review
Supply
Review
Portfolio
Management
Review
Management
Business
Review
System follows Process!

11. A cross functional selection team selected Logility
 Decision Criteria
 Leverage a suite of integrated supply chain tools that would allow us to do more
than Demand forecasting and analysis
 Logility offered a unique combination of integrated supply chain modules, relatively
simple administrative requirements, and solid statistical capabilities
 Project implementation was projected to be 3-4 months - actual start up of Demand
Planning was Jul 1, 2009 after authorization Feb 1
 Total Cost of Ownership
 How we use the System
 Forecast demand from 3 internal divisions and external trade sales
 Internal divisions add knowledge on upcoming market changes
 Sales collaborates to adds knowledge on external customer changes
 Impacts
 Sales has demand visibility and can potentially shape demand
 Rough Cut Capacity Planning highlights the supply/demand imbalances ahead
11

12. 12
Example
from the
December
S&OP
Demand
Meeting

13. S&OP is Contributing to Improved Performance
Perfect Order = (On time %) * (in full %) *
(Perfect Condition %) * (Invoice Accuracy %)
As demand has filled plant capacity, perfect
order performance has suffered and expedited
freight has increased
Cash Gap improved 14 days (full year
average) between Dec05 and Mar10
As the recession hit, cash emphasis
continued to drive inventory down and
sustain gains in AR & AP
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010
Now ~90%
Perfect Order %
Cash Gap Days
-27%
13
-14 Days

14. Key Takeaways
Lean pull systems are most effective in combination with data driven,
disciplined supply chain practices - Push Pull integration
 S&OP provides the cross functional process to make decisions based
on the best demand information available
 Demand Management is critical to prepare to meet customer
requirements
 Customer information must be supported by statistical view of Demand
 There is too much data and the world moves too fast to manage with
spreadsheets
 Lean pull systems provide the response capability to deal with the
remaining error

15. www.logility.com
S&OP Success Factors
Karin Bursa
Vice President, Marketing
kbursa@logility.com

16. www.logility.com
© 2011 Logility, Inc. Proprietary & Confidential
Innovative  Reliable  Proven
• Global Provider of Collaborative
Supply Chain Software Solutions
 40+ years of supply chain expertise
• Over 1,250 customers in more than
70 countries
• Comprehensive Best of Breed S&OP
and SCM product suite
• Long-term customer relationships
• Deep Domain Expertise in
development, implementation and
support
• Financial and Organizational Stability

17. www.logility.com
© 2011 Logility, Inc. Proprietary & Confidential
The Hierarchy of Supply Chain Metrics
Supplier
Quality
Supplier
On-Time
Purchase
Costs
Direct
Material
Costs
RM
Inv
Cost
Detail
Production
Schedule
Variance
Plant
Utilization
WIP + FG
Inventory
Order
Cycle
Time
Perfect
Order
Detail
DPO DSO
Inventory
Total
Cash-to-Cash
Perfect
Order
SCM
Cost
Demand
Forecast
Source: AMRResearch
What It Is What It Tells You
Demand Visibility Perfect Order Predictor
Responsiveness
Cost/Margins
Performance Tradeoffs
Cash-to-Cash Cashflow Health
Customer v. Supplier
Operational
Effectiveness
Root Cause Analysis
Surgical Intervention

18. www.logility.com
© 2011 Logility, Inc. Proprietary & Confidential
S&OP Success Factors
• Ongoing routine S&OP meetings
• Structured meeting agendas
• Establishing TRUST in the numbers and people from various
departments
 Cross-functional participation
 Participants empowered to make decisions
 Pre-work to support meeting inputs
• An unbiased baseline forecast to start the process
• An unbiased, responsible organization to run a disciplined process
• Internal collaborative process leading to accountability/consensus
• Shared metrics across key business areas

19. www.logility.com
© 2011 Logility, Inc. Proprietary & Confidential
What Does Good Look Like?
Stage
I
Reacting
II
Anticipating
III
Collaborating
IV
Orchestrating
Balance:
S&OP
Goal Alignment Development of
operational plan
Demand and Supply
matching
Profitability Demand sensing,
shaping and a
profitable demand
response
Frequency Monthly Monthly Monthly As Needed
Metrics Frequent changes.
Each function has
their own metrics
with little alignment
Consistent metrics,
but not all players
equally own the
metric
Shared and
consistent metrics
Shared metrics with
an outward focus on
the market
Ownership Single function Multiple functions,
but not the entire
organization
Marketing and sales
own the forecast, the
organization owns
the process
All functions are
equal partners in
demand-shaping
activities
S
OP
S
OP
S
OP
S
OP
Average Leaders
*Source: AMR Research

20. www.logility.com
Thank You