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Who Owns the “S” in S&OP?

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Sales Planning vs. Demand Planning: Getting Sales Back Into S&OP

Featured Presenter:
Danny Smith, Vice President, Industries, Steelwedge Software

In recent years, functions other than Sales – including Supply Chain and Finance – have often taken ownership of predicting future sales. The process has become an aggregation exercise done by specialists, and the name itself – demand management – indicates that the Sales team is not intimately involved. But true S&OP requires Sales to “own their number,” which delivers company-wide benefits because Sales is the closest to the demand signal.

In this webinar you will learn about:

- The Sales Planning Challenges
- The Keys to Success
- How a Sales Planning Platform Can Help You Hit Your Number

Published in: Technology

Who Owns the “S” in S&OP?

  1. 1. Who Owns the “S” in S&OP?
  2. 2. 2 © 2014 Steelwedge Software, Inc. Confidential. Speaker •Danny Smith, VP Industries •Responsibilities/Role •In-house expert on S&OP/IBP •Leads Industries initiatives •Background •BS Industrial Management; MS Decision Sciences •Strategic Planning, Fortune 300: corporate planning efforts (i.e. S&OP) •Career: “an effort to find a better way” •Most recent – global solution champion for Integrated Business Planning at Oracle Management (Georgia Tech); MS Decision Sciences (GSU) a 20+ year effort to find a better way” prior to Steelwedge – global solution champion for Integrated Business Planning at Oracle
  3. 3. 3 © 2014 Steelwedge Software, Inc. Confidential. 3 “The successful business executive is a forecaster first, everything else follows.” Peter Bernstein ‘Against the Gods: The Remarkable Story of Risk’ Predict
  4. 4. 4 © 2014 Steelwedge Software, Inc. Confidential. Our benchmarking studies show that the best forecasters have 15% less inventory, 17% stronger fulfillment, and 35% shorter cash-to-cash cycle times, all having a direct impact to the bottom line. “ ” Who Owns the “S”: Visibility to the Customer Matters Rob Bois, AMR Research (now Gartner) S&OP Benchmarking Report
  5. 5. 5 © 2014 Steelwedge Software, Inc. Confidential. How Often Is Sales Involved in S&OP? 64% Involved NOT Involved AMR Research (Gartner) S&OP Benchmarking Report
  6. 6. 6 © 2014 Steelwedge Software, Inc. Confidential. How Far Can You Forecast? 70% said “one quarter or less” CFO Magazine Survey
  7. 7. 7 © 2014 Steelwedge Software, Inc. Confidential. “Expectation Lead Time” & the Bullwhip Effect Operations Wrong products are deployed Excess inventory; Stock outs Financials Wrong numbers promised to street; Missed results Loss of credibility; Share price impacts Customers Customers don’t receive orders Lost sales; Lost customers Miss on revenue, product, customer, or timing Placing a Bet on the Future Stock market reactions when “supply chain” glitches reported: •Ramp-up/roll-out issues: -11% •Delays in prod. dev.: -10% •Production problems: -10% •Quality problems: -9% •Parts shortage in mfg.: -7.5% Source: Dr. Vinod Singhal, Georgia Institute of Technology Expectation Lead Time: “customers don’t want to wait” vs. Supply Chain Lead Time: “it takes time to supply”
  8. 8. 8 © 2014 Steelwedge Software, Inc. Confidential. Classic Disconnects… Most: Inward Focus but remember… Demand-Driven Leaders (Outward Focus) Out-Perform Competition
  9. 9. 9 © 2014 Steelwedge Software, Inc. Confidential. Everything Is Increasingly Connected Internet of Things
  10. 10. September 2012: • Facebook: 900 Million • LinkedIn: 177 Million • Twitter: 140 Million Today: • Facebook: 1.3 Billion • LinkedIn: 277 Million • Twitter: 646 Million Social Listening for Competitive Advantage: Bruce Richardson, Chief Enterprise Strategist, Salesforce From Steelwedge Webinar April 2014 “Social Supply Chain: Linking Sales Intelligence to Supply Chain and Finance”
  11. 11. 11 © 2014 Steelwedge Software, Inc. Confidential. Are We Using the Information? Customers Traditional Approach: Statistics ?
  12. 12. 12 © 2014 Steelwedge Software, Inc. Confidential. Is this the Answer? missing something?
  13. 13. 3% 5% 5% 8% 10% 13% 12% 15% 22% 3% 6% 5% 5% 6% 7% 10% 9% 12% 8% 14% 16% 3% 7% 7% 6% 8% 10% 11% 6% 12% 14% 13% Other Lack of external cross-functional collaboration Managing relationships + processes with outsourcing partners Cost volatility Logistics constraints, performance, or costs Supplier performance/variability Lack of visibility across supply chain Supply chain talent Lack of internal cross-functional collaboration Supply chain network complexity Difficulty or inability to coordinate and synchronize end-to-end SC processes Forecast accuracy + demand variability Ranked First Ranked Second Ranked Third Sum = 51% 42% 30% 29% 32% 31% 20% 17% 11% 16% Q07. What do you consider to be the top three obstacles to achieving your organization's supply chain goals and objectives? 14% 6% ... and it has been this way for years! Despite Spending All That Money on Planning … Tim Payne, Research Vice President, Gartner From Steelwedge Webinar June 2013 “From Re-think Your Planning Technology Priorities”
  14. 14. 14 © 2014 Steelwedge Software, Inc. Confidential. Poll 1: Who Owns “S” in S&OP? A: Sales B: Supply Chain C: Finance D: Other
  15. 15. 15 © 2014 Steelwedge Software, Inc. Confidential. Who Owns the “S” in S&OP? Purists: SALES Realists: SUPPLY CHAIN Risk – Averse: FINANCE …Humans! Peer Katie Vas Janella
  16. 16. 16 © 2014 Steelwedge Software, Inc. Confidential. Humans Talking to Humans Customers Janella Peer ?
  17. 17. 17 © 2014 Steelwedge Software, Inc. Confidential. Janella Pre-ESOP Trying It With Spreadsheets Demand Planning, SCM/APS Systems ERP, Financial, & Transactional Systems Consolidation, Review, Overrides Data Collection, Reconciliation Consensus Process ESOP Sales Manual Complex Security Risk Not Scalable Does this Give Executives an Agile & Predictable Decision-Making Process? Peer
  18. 18. 18 © 2014 Steelwedge Software, Inc. Confidential. How Long Does it Take? 18+ days 27% 9% 18% 12-17 days 6-11 days 3-5 days Time Required for Exec S&OP Preparation % AMR Research/Gartner S&OP Benchmarking Report
  19. 19. 19 © 2014 Steelwedge Software, Inc. Confidential. Somebody Had to Have Seen it Coming!
  20. 20. 20 © 2014 Steelwedge Software, Inc. Confidential. Humans Talking to Humans Gives Management Great Information Customers Janella Peer Insight When I Need It!
  21. 21. 21 © 2014 Steelwedge Software, Inc. Confidential. Steelwedge: The S&OP Platform Single Cross-Functional Platform for Planning & Analytics APS Systems ERP, Financial, & Transactional Systems SAP, Oracle, etc. Industry Data Product / Sub-Family Customer Revenue Product / Family Territory / Region Revenue Product / Family Promotions Revenue Product / Family Region Units & Revenue Product Stock Locations Units and Inventory Family / Series Territory / Region Revenue, Margin & Cash Family / Series / BU Geo Revenue, Margin & Cash Product Production Site Units and Capacity Family / Series / BU Geo Revenue, Margin & Cash Family / Series / BU Geo Revenue, Margin & Cash Planning Views Stakeholders Account Managers Sales Managers Marketing Demand Planners Supply Planners Production Planners Finance Executives Customers Suppliers Cross-functional Planning Environment Systems Landscape
  22. 22. 22 © 2014 Steelwedge Software, Inc. Confidential. What You Need to Be Successful •Make gathering the information quick and easy •Unify demand streams for single view (big deals/new, run-rate, 3rd party) •Gather & mine sales reps views, but don’t add more work for them! •Facilitate the collaborative vetting process for sales management •Leverage experience of management team for credible numbers •Capture qualitative information •Drive sales planning improvement •Track/monitor, measure, so you can improve process
  23. 23. 23 © 2014 Steelwedge Software, Inc. Confidential. Make it Easy – Pull Pipeline Information Directly from CRM Key Pipeline Information in Salesforce.com Key Information in Salesforce.com
  24. 24. 24 © 2014 Steelwedge Software, Inc. Confidential. Give Sales Management Complete View for Vetting New Opportunities and Run-Rate Drill to Details Quantitative and Qualitative Information
  25. 25. 25 © 2014 Steelwedge Software, Inc. Confidential. Track Everything! Who is More Accurate? Give Leadership the Right Tools to Improve the Business Is there Bias?
  26. 26. Steelwedge Case Study: Microsemi Improving Forecast Accuracy at Microsemi Challenges •Operations was challenged in building the right supply due to manual, ad hoc planning & forecasting tools •Planners couldn’t run their own reports, had no historical information, & didn’t have data at the right granularity •Poor planning visibility led to excess inventory Solutions •Enabled monthly & exception-based forecasting and capacity planning •Ensured all product data, including sales pipeline, is centralized & easily accessible •Adjusted forecast easily on hundreds of part numbers with rationing feature Results •Increased forecasting accuracy •Reduced forecasting time by half •Increased overall fiscal planning accuracy by using Steelwedge to validate numbers •Improved forecasting for inventory and safety stock “We love Steelwedge. It has streamlined our forecasting process, but it goes beyond that. It’s great to have so many systems pulled into one place, and it’s changed our lives. This is a metamorphosis for our company. We’ve taken control of our S&OP process.” Laura Finkelstein Vice President of Product Management Microsemi Company Microsemi (Formerly Symmetricom) Headquarters Aliso Viejo, CA USA Industry High Tech Products and Services Semiconductor and system solutions for communications, defense & security, aerospace and industrial markets Employees 3,000+ Revenue US$984 million Web Site www.microsemi.com 37% reduction in inventory © 2014 Steelwedge Software, Inc. Confidential. 20% improvement in customer order fulfillment Success by the Numbers: 20% reduction in manufacturing lead times
  27. 27. Steelwedge Case Study: Extreme Networks Driving Consistent Growth at Extreme Networks Challenges •Outdated & inaccurate planning data •Delayed orders •Long product life cycles •Excess inventory Solutions •Enabled executive-sponsored collaboration among S&OP departments •Normalized data in Steelwedge •Determined product sales in near real-time & adjusted accordingly Results •Facilitated timely & accurate information through automation •Enabled cross-functional alignment through collaborative planning •Streamlined, end-to-end process: profits up, supply chain cost down •Doubled inventory turns year over year •Created demand-driven, customer-focused, responsive supply chain with visibility, data, & analytics •Forecast error (MAPE): averaging 31% •Revenue impact less than 1% of revenue “A global, collaborative and integrated S&OP process, along with the internal and external alignment of demand and supply, have resulted in revenue growth and increased profitability for Extreme Networks.” Jack Lyon Vice President, Supply Chain Extreme Networks Company Extreme Networks Headquarters San Jose, CA USA Industry High Tech Products and Services Provides high performance, open networking innovations for enterprises, hosting companies and Internet Exchange Points Customers More than 6,000 in more than 50 countries Revenue US$600 million Web Site www.extremenetworks.com 2x inventory turns (Year over Year) © 2014 Steelwedge Software, Inc. Confidential. 97%+ customer fulfillment (ATP) 20% increase in new customers Success by the Numbers:
  28. 28. Steelwedge Case Study: Contech Increasing Demand Planning Visibility at Contech Challenges •Unpredictable pricing and access to raw materials like steel and aluminum •Lack of centralized team approach and consistency throughout the organization (ex: multiple demand plans and fragmented systems) •Lack of ability to respond to marketplace changes with agility Solutions •United the plethora of distributed system data into one cloud-based system for easy integration and access •Created a centralized view of the demand plan •Facilitated the management of forecast, statistical forecast, historical data, and future quotes that inform a single demand plan, and collected and rationalized all of this information in Steelwedge Results •Improved ability to project inventory & impact on financial model •Improved visibility & reporting with process-driven communication & collaboration •Leveraged “what-if” modeling to explore a myriad of business scenarios and improve decision-making “There’s no doubt we’ve got payback. And it isn’t just about discrete financial metrics. There are numerous opportunities we wouldn’t have been able to go after. We wouldn’t have been fast enough, integrated enough, agile enough to capitalize. Today we power more strategic initiatives and grab more market share from our competitors.” Randy Ramsey Director of Supply Chain Contech Company Contech Headquarters West Chester, OH USA Industry Industrial Products and Services Site solution products and services for the civil engineering industry Employees 1,000+ Revenue Private Web Site www.conteches.com 40% decrease in working capital © 2014 Steelwedge Software, Inc. Confidential. 10% increase in on-time customer service 18 month forecast visibility Success by the Numbers:
  29. 29. 29 © 2014 Steelwedge Software, Inc. Confidential. Poll 2: Do Casual Planners Add Value? A: Yes B: No
  30. 30. 30 © 2014 Steelwedge Software, Inc. Confidential. Who Owns the “S” in S&OP? •You Do! •You have good information out there… •…But you’ve got to make it easy to get the data •You need to quickly connect information from the frontlines with decisions in the boardroom •Steelwedge Initiatives: •Sales Pipeline Bridge •Sales Planning •Social Supply Chain
  31. 31. 31 © 2014 Steelwedge Software, Inc. Confidential. Q&A
  32. 32. 32 © 2014 Steelwedge Software, Inc. Confidential.

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