Leveraging S&OP                          A Webinar                                  by                        Tom Wallace ...
News Flash!                    S&OP CertificationWhat: Become certified in S&OPHow: Pass the Certification ExamWho: - The ...
The Four Fundamentals                                    How Much?                                    Rates             X ...
Sales & Operations Planning                            ?????                       Executive S&OP                         ...
The Executive S&OP Process                                                                 Step #5                        ...
EXECUTIVE S&OP by   Tom Wallace   WWW.TFWALLACE.COM
Last Time We Discussed . . .   •   BASF   •   Cisco Systems   •   V&M Star   •   Dow ChemicalEXECUTIVE S&OP by   Tom Walla...
Executive S&OP in Retail Delivery Staples, Inc. Framingham, MA Products: Office Equipment and Supplies Corporate Annual Sa...
S&OP at Staples DeliveryData GatheringAggregate Demand Process/Meeting• Review recent performance to forecast• Generate fo...
S&OP at Staples DeliveryAggregate Supply Process/Meeting• Generate supply plans based on new demand plan   (vendor purchas...
S&OP at Staples DeliverySTAPLES                           THE “STANDARD” MODEL• Data Gathering                  • Data Gat...
Benefits   Krist Lutz, Director of Sales & Operations   Planning for Staples Delivery:   Hard benefits include the traditi...
Benefits, continued Kris Lutz again: • Soft benefits are communication and teamwork. • Teams discuss items earlier and muc...
The Moral of the Story   There are far more similarities than differences   between Staples’ use of Executive S&OP and a  ...
Executive S&OP in Advanced                 New Product Launch Applied Materials Process Diagnostics and Control Business (...
Applied Materials: Process Diagnostic and           Controls Business (PDC)   • S&OP user for over 10 years   • New produc...
The Stage-Gate Process (phase-gate)   The stage–gate model is a technique in which   new product development (or other ini...
The Stage-Gate Process at PDC   • Gate 3:         project approval received   • Gate 3.5: product can enter S&OP   • Gate ...
COMBINED PDC                                  S&OP BUILD PLAN                                  SUPPLY REVIEW MTG          ...
The Stage-Gate Process at PDC   • Gate 3:         project approval received   • Gate 3.5: product can enter S&OP   • Gate ...
Benefits As cited by Shelly Zafrir, Director of Sales & Operations Planning, Silicon Systems Group in Santa Clara (formerl...
Benefits, continued As cited by Shelly Zafrir: MANUFACTURING CYCLE TIME Down 15 - 20% on ongoing products, more on new pro...
The Moral of the Story   Three points:   1. New Product Launch is filled with uncertainty      and change   2. S&OP helps ...
Executive S&OP Support for                  Earnings Calls The Procter & Gamble Company Cincinnati, OH Products: Consumer ...
The Operating Environment•   300 unique brands, sold worldwide•   Plants in 40 countries•   Operations in 80 countries•   ...
A Single S&OP Process • Only one standard S&OP process for   all businesses and “regions” • Only one standard set of metri...
Figure 12-1                                                   27                       Procter & Gamble              Busin...
Alignment     Region 1’s forecast of what it expects to sell of              Business Unit 1’s Products                   ...
P&G’s S&OP Assessment ToolSix sections, ~ 20 items per section• Leadership• Operating Strategy• Initiative Planning• Deman...
The Annual Assessment Process 1. Self-assessment by the BU’s and Regions    using the Assessment Tool 2. Self-assessment v...
The Moral of the Story Companies should have a formal assessment process to: • maintain the integrity of its S&OP processe...
Summary – S&OP at P&G • One of the very best S&OP processes in the   world • Made possible by the Assessment Process • A q...
In Memory      Richard A Clark        Associate Director,Global Network Supply Operations The Procter & Gamble Company    ...
ORDER FROM                                  WWW.TFWALLACE.COM                                  ENTER DISCOUNT CODE:       ...
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Leveraging S&OP- Not Just Your Father's Supply/Demand Balance Anymore

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Steelwedge Agility Webinar Series

Featuring Tom Wallace, S&OP Author and Educator, and Nari Viswanathan, Steelwedge

The converging forces of internal complexity and external market volatility are driving business leaders from across the enterprise to look for new, more agile solutions to inform business decisions. In fact, 90% of attendees at Steelwedge's first Agility Series webinar in February said change and uncertainty are impacting their ability to do their jobs.

Tom Wallace has found fascinating examples of nimble businesses like Dow, Applied Materials, Procter & Gamble and Staples using S&OP as the engine for collaboration and decision making for applications far beyond its original scope in supply/demand balancing such as:

• Enhancing business strategy
• Earnings call support
• New product introduction, and
• Retail delivery

Nari Viswanathan, VP of Product Marketing and Management at Steelwedge, a former Supply Chain analyst at Aberdeen Group, will add perspective on S&OP solutions to jump start the journey to end-to-end demand driven process.

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  • STEELWEDGE IS A SUPPORTING SPONSOR
  • PRE-SESSION QX – CHEMICALS, HIGH-TECH. VIEW LAST SESSIONSEGUE - STAPLES
  • RETAIL DELIVERY ~ AMAZONSTAPLES CLAIMS 2ND LARGEST ON-LINE RETAILERSEPARATE BRICK & MORTAR DIVISION – ALSO USING S&OP
  • SEG: APPLIED MATERIALS
  • ----- Meeting Notes (3/12/12 11:37) -----PDC EMPLOYS ~900 PEOPLE
  • BUILD PLAN = DEMAND PLAN + SUPPLY PLAN
  • SEG: PROCTER
  • DOZENS & DOZENS OF S&OpsHOW TO ENSURE THAT ALL BUSINESSES ARE DOING IT RIGHTSEG: ASSESSMENT PROCESS
  • Leveraging S&OP- Not Just Your Father's Supply/Demand Balance Anymore

    1. 1. Leveraging S&OP A Webinar by Tom Wallace sponsored by Steelwedge Software March, 2012EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    2. 2. News Flash! S&OP CertificationWhat: Become certified in S&OPHow: Pass the Certification ExamWho: - The S&OP Institute - Ohio State UniversityWhen: Exams can be taken beginning Sept 1More info: sopinstitute.com (after 3/20) tom@tfwallace.comEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    3. 3. The Four Fundamentals How Much? Rates X Sales & The Big Picture Operations Volume Product Families Planning Strategy/Policy/Risk Monthly/18 months+ Top Management Demand Supply Which Ones? Timing/Sequence The Details Products, SKUs, Orders Mix Tactics/Execution Wkly/Daily, 2 days – 6 mos Middle ManagementEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    4. 4. Sales & Operations Planning ????? Executive S&OP Volume Demand Planning/ Demand Supply Supply (Capacity) Forecasting Planning Mix Master Scheduling Supplier and Plant Scheduling Distribution SchedulingEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    5. 5. The Executive S&OP Process Step #5 Executive Decisions & Meeting Game Plan Step #4 Pre- Conflict Resolution, Meeting Recommendations & Agenda for Exec. Mtg. Step #3 Supply Planning Capacity constraints 2nd-pass spreadsheets Step #2 Demand Planning Management Forecast 1st-pass spreadsheets Step #1 Data Gathering Sales Actuals, Statistical Forecasts & Supply Actuals End of MonthEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    6. 6. EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    7. 7. Last Time We Discussed . . . • BASF • Cisco Systems • V&M Star • Dow ChemicalEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    8. 8. Executive S&OP in Retail Delivery Staples, Inc. Framingham, MA Products: Office Equipment and Supplies Corporate Annual Sales: $24.5 billionEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    9. 9. S&OP at Staples DeliveryData GatheringAggregate Demand Process/Meeting• Review recent performance to forecast• Generate forecast for 12 future months• ID “gaps” in the forecast and plans to mitigate (between Demand Planning and Merchant teams versus what’s been submitted to corporate)EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    10. 10. S&OP at Staples DeliveryAggregate Supply Process/Meeting• Generate supply plans based on new demand plan (vendor purchase plans and logistics plans)• Review/resolve supply constraints (forecast translated from $$$ into case counts, cubic feet, labor hrs)• Capability updates (process improvement, new business initiatives, shifts in suppliers/customers, cost/benefit analyses)EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    11. 11. S&OP at Staples DeliverySTAPLES THE “STANDARD” MODEL• Data Gathering • Data Gathering• Demand Planning • Demand Planning• Supply Planning • Supply Planning• Core Team Meeting • Pre Meeting• Exec Team Meeting – President, NA Delivery • Exec Meeting – Sr. VP Heads of 3 BU’s – Sr. VP Finance – Sr. VP Supply ChainEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    12. 12. Benefits Krist Lutz, Director of Sales & Operations Planning for Staples Delivery: Hard benefits include the traditional ones . . . : - higher in-stock positions with lower inventories - increased revenue due to lost sales avoidance - decreased service expense - better working capital and cash flowEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    13. 13. Benefits, continued Kris Lutz again: • Soft benefits are communication and teamwork. • Teams discuss items earlier and much better than before. • This makes for a more nimble organization, one where ideas and initiatives can be executed faster and with greater precisionEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    14. 14. The Moral of the Story There are far more similarities than differences between Staples’ use of Executive S&OP and a how a manufacturing company does it. Implications: if you have units in your corporation that do not produce physical products, they may still be candidates for S&OP.EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    15. 15. Executive S&OP in Advanced New Product Launch Applied Materials Process Diagnostics and Control Business (PDC) Rehovot, Israel Products: Equipment for the manufacture of: Semiconductors Flat Panel Displays Photovoltaic Cells Corporate Annual Sales: $9.5 billion PDC Employment: ~900EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    16. 16. Applied Materials: Process Diagnostic and Controls Business (PDC) • S&OP user for over 10 years • New products dominate the business: over 40% of sales in 2010 (some years over 60%) • New products at PDC require strong alignment between customer penetration strategy and build and supply chain plans • Thus, they created a separate S&OP process for new productsEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    17. 17. The Stage-Gate Process (phase-gate) The stage–gate model is a technique in which new product development (or other initiative) is divided into stages separated by gates. At each gate, a manager or a steering committee decides on whether or not the project should go forward.EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    18. 18. The Stage-Gate Process at PDC • Gate 3: project approval received • Gate 3.5: product can enter S&OP • Gate 4: product ready to ship as alpha and then beta test version • Gate 5: product ready to move from new product status to the ongoing (“sustaining”) product lineEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    19. 19. COMBINED PDC S&OP BUILD PLAN SUPPLY REVIEW MTG TEST FOR CAPACITY NEW SUSTAINING PRODUCTS PRODUCTS S&OP BUILD PLAN S&OP BUILD PLAN Products Products between beyond Gates 3.5 and 5 Gates 5 Gate 5 Transition from New Product to Sustaining ProductEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    20. 20. The Stage-Gate Process at PDC • Gate 3: project approval received • Gate 3.5: product can enter S&OP • Gate 4: product ready to ship as alpha and then beta test version • Gate 5: product ready to move from new product status to the ongoing (“sustaining”) product lineEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    21. 21. Benefits As cited by Shelly Zafrir, Director of Sales & Operations Planning, Silicon Systems Group in Santa Clara (formerly head of S&OP at PDC) NEW PRODUCT LAUNCH In new product launch, perhaps the most important metric is lead times to customers. It was more than one year before S&OP. It is now 3 - 5 months and less on occasion.EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    22. 22. Benefits, continued As cited by Shelly Zafrir: MANUFACTURING CYCLE TIME Down 15 - 20% on ongoing products, more on new products, while volume increased four-fold since 2009 EXCESS & OBSOLETE INVENTORY Less than half of 2009 level and expected to drop even moreEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    23. 23. The Moral of the Story Three points: 1. New Product Launch is filled with uncertainty and change 2. S&OP helps companies deal with uncertainty and change 3. The larger the role that New Products play in your company, then the larger the role that S&OP should have in New Product Launch. A classic example: Applied Materials PDCEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    24. 24. Executive S&OP Support for Earnings Calls The Procter & Gamble Company Cincinnati, OH Products: Consumer Packaged Goods Corporate Annual Sales: $82.6 billionEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    25. 25. The Operating Environment• 300 unique brands, sold worldwide• Plants in 40 countries• Operations in 80 countries• S&OP used throughout the companyEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    26. 26. A Single S&OP Process • Only one standard S&OP process for all businesses and “regions” • Only one standard set of metrics • Each business evaluated once per year to: – Insure compliance – Provide road map for improvement • S&OP done on two axes: business unit regionEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    27. 27. Figure 12-1 27 Procter & Gamble Business Unit and Region Integration BU1 BU2 BU3 BU4 Reg1 X x Reg2 Reg3 EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    28. 28. Alignment Region 1’s forecast of what it expects to sell of Business Unit 1’s Products = What Business Unit 1 expects Region 1 to sell of its products This alignment is the foundation for: • Running the business internally with one set of numbers • Using S&OP as an important foundation for quarterly earnings calls to Wall StreetEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    29. 29. P&G’s S&OP Assessment ToolSix sections, ~ 20 items per section• Leadership• Operating Strategy• Initiative Planning• Demand Planning• Supply Planning• S&OPEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    30. 30. The Annual Assessment Process 1. Self-assessment by the BU’s and Regions using the Assessment Tool 2. Self-assessment validated by qualified assessors from outside that business 3. Assessment interviews and document reviews by the “outsiders”: 1. With business leaders 2. Assessors may attend Exec meeting 4. Assessment summary a. Set final score b. Strengths and improvement opportunities c. Action PlanEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    31. 31. The Moral of the Story Companies should have a formal assessment process to: • maintain the integrity of its S&OP processes • improve those processes Are your earnings calls (to corporate or the financial community) based on S&OP? If not, why not?EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    32. 32. Summary – S&OP at P&G • One of the very best S&OP processes in the world • Made possible by the Assessment Process • A quote from Dick Clark, formerly Associate Director, Global Network Supply Operations: S&OP plays a substantial role at P&G. It is one of the – some might say the – primary planning processes used to run the business.EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
    33. 33. In Memory Richard A Clark Associate Director,Global Network Supply Operations The Procter & Gamble Company 1953 – 2011
    34. 34. ORDER FROM WWW.TFWALLACE.COM ENTER DISCOUNT CODE: STEELWEDGE FOR A 20% DISCOUNTEXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM

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