Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Steelwedge 2015 Agility Webinar Series: From Good to Great: The Business Case for Best-in-Class S&OP

862 views

Published on

Most organizations recognize the need to have a robust, holistic sales and operations planning (S&OP) capability to drive intelligent business decisions. But many struggle to quantify the benefits generated by their S&OP investments.

This webinar will address how a strategic value assessment can help you:

- Develop a vision of what “great” S&OP looks like to your organization
- Assess your company’s current S&OP process and the development of a roadmap to get to “great”
- Realize the benefits of S&OP, determine the changes with the most positive impact, and measure success

Attendees at this session will learn:

- How a strategic value assessment supports a successful S&OP capability
- The key capabilities required to support the assessment effort
- How the output of the assessment can garner executive buy-in to support S&OP initiatives
- The role that technology can play in enabling and accelerating the process

Published in: Technology
  • Be the first to comment

  • Be the first to like this

Steelwedge 2015 Agility Webinar Series: From Good to Great: The Business Case for Best-in-Class S&OP

  1. 1. 1© 2015 Steelwedge Software, Inc. Confidential. From Good to Great: The Business Case for Advanced S&OP Andrew McCall Vice President Customer Success
  2. 2. 2© 2015 Steelwedge Software, Inc. Confidential. Getting to Value? • Business Value: The Size of the Prize • The Roadmap: Getting there rapidly • Measuring Success: Tangible Results • Case Study: How to Bring this all together
  3. 3. 3© 2015 Steelwedge Software, Inc. Confidential. Performance of Best-in-Class Companies • 15% -25% higher average Customer Service Levels • Three times lower Cash-to-Cash cycles • 35% greater forecast accuracy at the product family level • 30% of Best-in-Class companies have increased their inventory turns in the last six months as compared to 10% of All Others. • Sixty percent (60%) of Best-in-Class companies have increased their perfect order percentage to customers versus 20% of All Others. Source: Aberdeen Group
  4. 4. 4© 2015 Steelwedge Software, Inc. Confidential. Another View: The Benefits of S&OP Source: Supply Chain Insights Recent Survey Question to 180 Respondents – What benefits have you received from your improvement efforts surrounding S&OP?
  5. 5. 5© 2015 Steelwedge Software, Inc. Confidential. Value Levers 50-70% Reduction 15-30% Improvement 20%-25% Reduction 25% Reduction in Stock-outs 1-2% Lift in Revenue Typical Results Our View
  6. 6. 6© 2015 Steelwedge Software, Inc. Confidential. Why So Hard? Given these results, • Why do companies struggle to articulate the value? • Why is it so difficult to build a business case to support S&OP improvements? • Why does the view persist that we don’t achieve these goals, therefore the process doesn’t sustain?
  7. 7. 7© 2015 Steelwedge Software, Inc. Confidential. Sustaining Value
  8. 8. 8© 2015 Steelwedge Software, Inc. Confidential. A Question of Focus • Process often starts in the supply chain, and gets focused on Forecast Accuracy—not the results from a better forecast • Competing Metrics—every project results in inventory reductions, so we either double count, or don’t count at all • Cross functional measures can be too difficult (fill rate/revenue lift for instance) to attribute to one set of improvements • Measures need to be more broad based
  9. 9. 9© 2015 Steelwedge Software, Inc. Confidential. Balanced Score Card
  10. 10. 10© 2015 Steelwedge Software, Inc. Confidential. Getting Specific About Value S&OP, Metrics, Customer Experience, Inventory Op, Demand Planning, Strategic Sourcing Why it is important 5 Value Questions Growth Profitability Efficiency Demand Planning Total Annual Conservative Opportunity Estimate Range 1. How do you measure it? $Revenue Gross Profit Asset Turnover Forecast Accuracy 2. What is it today? $7.1B (2013) 7.5% increase based on $6.6B ’12 COGS $3.9B (2013) 45.9% Gross Margin 2.9% improvement based on 43.0% in ‘12 Ratio 1.33 0.06 decreaseYOY based on 1.39 in ‘12 Moves all the rest (1% improvement correlation 2% improvement in Perfect Order) 3. What would you like it to be? 5% growth rate assumption 2% target improvement assumption Target 1.43 5% Rev growth and 2% asset optimization assumption 4. Value of the difference? $357M $77M $107M (asset only) $541M 5. Value Over time ? (3-5 years) $1.0B – $1.7B $3.9M-$7.7M $321M – $536M $1.6B - $2.7B “Moving the needle” just 5%-10% of the % above Opportunity (% of a %) $17.9M – $35.7M $2.1M-$6.5M $5.3M-$10.7M $___ X Factor ___ Multiplier for previous $27.0M – $54.2M Annually Opportunity monthly (Cost of doing nothing each month) $1.4M – $3.0M $322K-$644K $446K-$893K $___ X Factor ___ Multiplier for previous $2.3M - $4.5M Monthly
  11. 11. 11© 2015 Steelwedge Software, Inc. Confidential. Defining the Roadmap Holistic End-State Vision People, Process & Technology Maturity Model Defined evolution of capabilities Value Releases Anticipated Benefits at each stage Executive Engagement Development of a true “Management Operating System” for Integrated Business Planning—not a silo process owned by a single domain
  12. 12. 12© 2015 Steelwedge Software, Inc. Confidential. The Roadmap: Strategic Value Assessment Overall Process Framework Vision Assessment Road Map / Maturity Model Value & Measures Theme: Training & Baseline Data for Value - Key S&OP Baseline - Critical Success Factors - Value Drivers - Pain Points - Follow Up/Clarification on Pre Work & Data Requests - Test Drive Planning - Data Bin Requirements - Core Use Cases - Value Driver & Pain Point Examples - Forecasting Validation Data Theme: Assessment - Process Review for - Demand - Supply - Pre-S&OP - Executive S&OP - Data Management - Pipeline Management - Master Data - Landscape & Integration - Financial Inputs to Value Drivers - Current Org Review - R&R - Process Ownership Theme: Road Mapping - End State Process Map - What Does Good Look Like? - Key Components of End State - Industry Flavor - Test Drive Linkage - Implementation Strategy - Process RACI - Master Data Strategy - Integration Strategy - IT Landscape - Proposed - Getting There - Phasing - Resources - ROI Analysis (Cost/Benefit) - Time To Benefit – Phasing - Crawl, Walk, Run - EVA & Linkage - Key Enablers Theme: Validation & Review - Create SVA Roadmap - Sponsor Walk Through - Financial ROI Validation & Acceptance - Baseline - Stretch Goals/ Upside - SVA Output Document - Executive Review - Road Map Summary - Test Drive - Critical Success Factors - Business Case Review - Phased Actions - 90 Day Play Book - Mobilization - Governance & Budgeting - Mid Term Planning - Go Forward Decisions
  13. 13. 13© 2015 Steelwedge Software, Inc. Confidential. Specific Vision Assessment Maturity Model Metrics & Results Monitoring Getting there
  14. 14. 14© 2015 Steelwedge Software, Inc. Confidential. Measuring Success • Define the right metrics • Create a baseline that clearly outlines current state and recent trend • Establish targets • Link desired improvements to the roadmap
  15. 15. 15© 2015 Steelwedge Software, Inc. Confidential. Defining & Using Metrics • Establish Strategic Goals • Monitor Performance • Measurable and quantifiable • Linkage to responsibility • Ensure metric is well-defined 1 5 * Source: Supply Chain Council 15
  16. 16. 16© 2015 Steelwedge Software, Inc. Confidential. 1 6 Attribute Strategy Reliability (RL) Consistently getting the orders right, product meets quality requirements Responsiveness (RS) The consistent speed of providing products/services to customers Agility (AG) The ability to respond to changes in the market (external influences) Cost (CO) The cost associated with managing and operating the supply chain Assets (AM) The effectiveness in managing the supply chain’s assets in support of fulfillment CustomerInternal Performance Attributes* 16 * Source: Supply Chain Council Question: What is/are the most important attributes to achieve your supply chain strategy?
  17. 17. 17© 2015 Steelwedge Software, Inc. Confidential. Measuring Success Create a baseline
  18. 18. 18© 2015 Steelwedge Software, Inc. Confidential. Measuring Success Receivables Net Sales Accounts Receivable (AR) Turns DSO 2013 $2,064,000,000 $232,270,000 8.886 41.075 2014 $1,783,000,000 $323,710,000 5.508 66.267 2015 $1,733,000,000 $483,030,000 3.588 101.735 Assumptions 105.0% 99.5% (Projected) 2016 >> $1,819,650,000 $480,614,850 3.786 96.406 (Projected) 2016 >> Accounts Receivable (AR) Improvement (%) 0.5% Receivable Revenue $2,415,150 Inventory Turns Inventory Value COGS Turns DIO Inventory Increase PY Inventory 2012 $146,520,000 2013 $122,280,000 $610,330,000 4.991 73.128 ($24,240,000) 2014 $152,720,000 $541,520,000 3.546 102.938 $30,440,000 2015 $163,880,000 $546,740,000 3.336 109.405 $11,160,000 Assumptions 99.5% 101.0% (Projected) 2016 >> $163,060,600 $552,207,400 3.387 107.780 (Projected) 2016 >> Inventory Value COGS Improvement (%) 0.5% 1.0% Revenue $819,400 $5,467,400 Payables Inv Inc + COGS Accounts Payable (AP) Turns DPO 2013 $98,040,000 $52,150,000 0.532 686.186 2014 $183,160,000 $50,040,000 0.273 1335.999 2015 $175,040,000 $44,160,000 0.252 1446.775 Assumptions 100.0% 102.0% (Projected) 2016 >> $175,040,000 $45,043,200 3.886 93.926 (Projected) 2016 >> COGS Improvement (%) 2.0% Payable Revenue $883,200 Cash Conversation Cycle DSO DIO DPO CCC 2015 101.735 109.405 1446.775 -1235.636 Opportunity 96.406 107.780 93.926 110.260 Improvement (%) Improvement ($) Improve AR by: 0.5% $2,415,150 Improve Inventories by: 0.5% $819,400 Improve AP by: 2.0% $883,200 Improve COGS by: 1.0% $5,467,400 Total $9,585,150 Moving Needle 5.0% $479,258 Moving Needle 10.0% $958,515 Assumptions Cash to Cash Cycle Data Input Tab
  19. 19. 19© 2015 Steelwedge Software, Inc. Confidential. Measuring Success 5 Value Questions Growth Profitability Efficiency Demand Planning Total Conservative Opportunity Estimate Range 1. How Do you Measure it? $ Rev Gross Profit Asset Turnover Forecast Accuracy 2. What is it Today? $ -0.05B (2015) - 2.8% Decrease based on 1.79B (2014) COGS $1.19B (2015) 68.5% Gross Margin - 1.2% Decrease based on 1.79B (2014) Ratio 0.29; -0.09 Deteriment YoY based on 0.38 in 2015 3. What would like it to be? 5% Growth rate assumption 2% Target improvement assumption Target 5.89 Revenue growth 5% and 2% asset optimization assumption 4. Value of the Difference $86.65M $10.94M $120.2M $217.79M 5. Value over time? $0.26B - $0.44B $32.81M - $54.68M $360.6M - $601M $0.66B - $1.09B “Moving the needle” just 5%-10% of the % above Opportunity (% of a %) $4.34M - $8.67M $0.55M - $1.1M $6.01M - $12.02M $___ X Factor ___ Multiplier for previous $10.89M - $21.78M Annually Opportunity monthly (Cost of doing nothing each month) $0.37M - $0.73M $0.05M - $0.1M $0.51M - $1.01M $___ X Factor ___ Multiplier for previous $0.91M - $1.82M Monthly IBP, S&OP, Sales Planning,Metrics,Customer Experience, Inventory Op,Demand Planning, Strategic Sourcing
  20. 20. 20© 2015 Steelwedge Software, Inc. Confidential. Real Global Case Study: Prior Solution Status Collaboration Financial Scenario Management Single Source of Truth Tedious mechanisms to support financial alignment and executive reporting Lack of Systemic Flows and Analytics lead to extensive manual processes Silo’d applications Inability to process and analyze daily Point of Sale data Manual, batch oriented communication Retailers EDI Account Manager Sales Manager PoS Data Finance Manager Analysts EXCEL Forecast Home Grown Applications Executive EXCEL Disparate home grown systems and Excel files. Lack of responsiveness, inaccurate data , inconsistencies
  21. 21. 21© 2015 Steelwedge Software, Inc. Confidential. Measuring Success • Define the right metrics • Create a baseline that clearly outlines current state and recent trend • Establish targets • Link desired improvements to the roadmap
  22. 22. 22© 2015 Steelwedge Software, Inc. Confidential. Real Global Case Study: Vision of End State Planning Collaboration Financial Scenario Management Single Source of Truth Financial alignment of Plans Comparison with Budget Proactive what-if scenario analysis Key Quarterly Metrics : • Revenue, Gross Margin, Channel & Own Inventory Faster cross- functional internal and retailer collaboration STEELWEDGE enabled collaborative planning (inter. & external), improved responsiveness, integrated EPOS data & financials, and the decommissioning of legacy systems and i2. Real time Executive dashboard Drilldown, week /week analysis Projected Inventory, Forecast Accuracy reports EDI Account Manager Sales Manager PoS Data Forecast Finance Manager Analytics Executive Retailers
  23. 23. 23© 2015 Steelwedge Software, Inc. Confidential. Stage 1 Collaborative Demand Planning Stage 2 Sales & Operations Planning Stage 3 Decision Data Visibility Stage 4 Demand Intelligence Stage 5 Predictive and Prescriptive Analytics Cloud Systemic Single Source Mobility Big Data Statistics Algorithms What-if Math Real Global Case Study: Maturity Model RETAILERS
  24. 24. 24© 2015 Steelwedge Software, Inc. Confidential. Integrated systems, improved promotions management, EPOS data, responsiveness, and greater channel visibility has provided significant benefits. Real Global Case Study: Results Promotions Inventory Driven Costs Excess & Obsolescence 10%8% 6% Inventory Reduction 5%
  25. 25. 25© 2015 Steelwedge Software, Inc. Confidential. The Bottom Line • Value: There is incredible value, as long as we measure it correctly • Roadmap: Define a clear end state, as well as the stages of maturity to get there and the benefits associated at each stage in order to sustain • Measuring Success: KPI’s must link with strategic goals and be focused on the outcome
  26. 26. 26© 2015 Steelwedge Software, Inc. Confidential. Q&A Contact Us Telephone: North America +1 (855) 980.8800 United Kingdom +44 (0)121.232.4668 Netherlands +31 (0)70.7999.288 Japan +813-6277-8521
  27. 27. 27© 2015 Steelwedge Software, Inc. Confidential.

×