2015 Shanghai S&OP Conference November 13, 2015 Guofeng Hotel Shanghai, China November 13, 2015 Guofeng Hotel Shanghai, China Bob Stahl 508-226-0477 [email protected].

2015 Shanghai S&OP Conference

• November 13, 2015• Guofeng Hotel• Shanghai, China

• November 13, 2015• Guofeng Hotel• Shanghai, China

Bob Stahl508-226-0477

[email protected]

Bob Stahl508-226-0477

[email protected]

Sales & Operations Planning:The Cultural Challenges of Best Practice

mailto:[email protected]

mailto:[email protected]

Bob Stahl www.RAStahlCompany.com Bob Stahl www.RAStahlCompany.com

ObjectiveObjectiveObjectiveObjectiveDesired Outcome:

Gain an informed understanding of some of the “cultural changes” that are required to have S&OP operate as “best practice,” enabling maximum potential benefits to be experienced!

http://www.RAStahlCompany.com/



AgendaAgendaAgendaAgenda• Introduction• “Refresher” on authentic S&OP• Cultural Challenges:

– Top Management’s Role– Conflict Resolution– ‘Catch 22’ of Implementation– Characteristics of Success– Sure Footed Implementation Approach

• How to get started?



Fundamentals of Authentic eS&OP


RoutinelyReActive Behavior

Volume

Mix

•How Much?•Rates•Mkt Facing Families•The Big Picture•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Resp.

•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Mos•Middle Mgt. Resp.

Demand Supply

Balance

Different & separate practices,

but integrated!

Different & separate practices,

but integrated!

Sales & Operations Planning

ProActive Behavior

Planning

Scheduling



What’s Top Management’s Role


Research Reports * . . . Research Reports * . . . Research Reports * . . . Research Reports * . . .

Success with Executive S&OP is:

•60% = Culture/Behavior Change

•30% = Process Definition & Discipline

•10% = TechnologyAltimiter/AMR

Boston, Sept 2010




Making Change . . . Making Change . . . Making Change . . . Making Change . . .

The Hard Stuff (tools, techniques, processes) is EASY

The Soft Stuff (relationships, behavior, culture) is HARD




An Important Point . . . An Important Point . . . An Important Point . . . An Important Point . . .

Success with eS&OP is more

Cultural than Technical




Culture . . . a “fuzzy” wordCulture . . . a “fuzzy” wordCulture . . . a “fuzzy” wordCulture . . . a “fuzzy” word

Here’s a more focused understanding: •Interpersonal relationships reflect the culture of an organization. •The sum of those relationships is the culture! •These relationships reflect a network of implicit and explicit agreements that are the organization (process).




Raising Disagreement . . . Raising Disagreement . . . Raising Disagreement . . . Raising Disagreement . . .

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Revenue)

Product Dev.(New Product Issues)

President




Holistic DisplayHolistic DisplayHolistic DisplayHolistic Display




eS&OP Success . . . eS&OP Success . . . eS&OP Success . . . eS&OP Success . . .

• not only allows disagreement, to work it promotes and requires disagreement

• Learning how to disagree without being disagreeable is paramount to success

• Gaining collaborative consensus from this disagreement makes for best decisions & aligns human energy

• Without a comfortable process to resolve disagreement/conflict, organizations will avoid it – “put the moose under the table”




Top ManagementTop Management’’s Role . . .s Role . . .(among other things)(among other things)


• Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that . . .




The Ugly Moose . . . The Ugly Moose . . . The Ugly Moose . . . The Ugly Moose . . . • Big ugly animal

• All companies have them (under the table)

• Difficult & Contentious

• Good companies know how to disagree without being disagreeable

• Thrive on conflict, not chaos

• Moose is a symbol of agreement to do so

Getting the Moose on the Table









• Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that . . .

• They can completely and effectively resolve disagreement/conflict and set proper:– Policy– Strategy– Risk Assessment

– Performance Measurements

Before it’s in the MIX Space!




Cultural Changes *Cultural Changes *Cultural Changes *Cultural Changes *

Pre-S&OP Culture•Lack of involvement by Top Mgt. •Acceptance of poor data•Silo mentalities that inhibit interdepart-mental collaboration•Reactive instead of proactive decision making

Post-S&OP Culture•Inter-fuctional collaboration, with open trust between departments (+TM)•Data-driven decisions•Higher levels of accountability•Proactive approaches to demand & supply issues

* How S&OP Changes Corporate Culture: Results from Interviews with Seven Companies

Stahl/Mello; Column: Winter 2010




Process versus Personality Driven Process versus Personality Driven OrganizationOrganization

Process versus Personality Driven Process versus Personality Driven OrganizationOrganization

Sales &MarketingSales &

Marketing OperationsOperations R&DNew Prod

R&DNew Prod FinanceFinance

Logistics&

Warehouse

Logistics&

Warehouse

President/General Manager

Supply Chain ManagementExecutive S&OPExecutive S&OP

Managing the White Space




A CEO’S Perspective on S&OP

A CEO’S Perspective on S&OP

• “We spent a lot of time gathering and validating data, which was time well-spent. But that challenge was nothing compared to the people side of things.”

• “The most difficult part was driving . . . constructive conflict in the demand alignment meetings.”

An Interview* with Phil Dolci, President and CEO Jarden Branded Consumables*In Foresight: The International Journal of Applied Forecasting, Winter 2012

(www.forecasters.org/foresight)




ContinuedContinuedContinuedContinued

“The measureable benefits are easy...– Service levels are up and inventory is

down. – For example, the two largest businesses

in my portfolio today each have service levels above 99.5% with inventory that is 20% less than 3 years ago.”




ContinuedContinuedContinuedContinued

• “I could argue, however, that the intangible benefits are just as valuable. We have much better teamwork because of the engagement and constructive conflicts that are natural components of S&OP. This approach has extended to almost every process and function within the business . . .”

• “Moreover, I feel much more in touch with the business without micro-managing it.”



Energy AlignmentEnergy AlignmentEnergy AlignmentEnergy Alignment

Accomplishment

Accomplishment

Before S&OP

After successfulS&OP


A Truth . . . A Truth . . . A Truth . . . A Truth . . . If you align

human energyan organization can do

things not before possible.



Conflict Resolution


Conflict Resolution * . . . Conflict Resolution * . . . Conflict Resolution * . . . Conflict Resolution * . . .

• Disagreement has two parts:– Substantive issue– Emotion behind that issue

• Disagreement becomes Conflict when both parts are not completely addressed

• Lasting Conflict Resolution must deal with BOTH elements of disagreement

• Doing that effectively can be learned:– With a motive to do so &– A framework on which to work

* “Getting to Resolution” – Stewart Levine




Top Management Top Management andand Executive S&OPExecutive S&OP

Top Management Top Management andand Executive S&OPExecutive S&OP

Need to be Hands-On with the Executive S&OP Process

Stewardship & Leadership(Manager/Trustee & Guide/Command)

PresidentPresident

VPOperations

VPOperations

VPSales/Mktg

VPSales/Mktg

VPFinance

VPFinance

VPR&DVP

R&DDemand Supply $$$ Tech

AuthorativeDecider

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month



The ‘Catch 22”Of Implementation


The Challenge . . .The Challenge . . .The Challenge . . .The Challenge . . .

Success with eS&OP is NOT:

•Doing what you do better, but rather from•Doing things differently to be better!

That translates to RISK . . . particularly to Top Management . . .




The Top Management ‘Catch 22’ . . . The Top Management ‘Catch 22’ . . . The Top Management ‘Catch 22’ . . . The Top Management ‘Catch 22’ . . .

Getting Top Management involved from the start:

•If you DON’T – you won’t address the cultural or behavioral changes

•If you DO – they realize that success does not come from doing what they do better, but from doing things differently to be better

•That translates to personal and/or organizational discomfort and risk for those in charge

* Overcoming the "Catch 22" of Implementationby Robert A. Stahl and Joseph F. Shedlawski

Foresight Journal Spring 2012



Characteristics of Success


The Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP Process

Step #1Data

Gathering

End of Month

Decisions &Game Plan

Step #5ExecutiveMeeting

Conflict Resolution, Recommendations &

Agenda for Exec. Mtg.

Sales Actuals, Statistical

Forecasts &Production Actuals

Step #2DemandPlanning

Step #4Pre-S&OPMeeting

Capacity constraints2nd-pass spreadsheets

Management Forecast1st-pass spreadsheets

Step #3Supply

Planning

HeavyLifting

Creates a Disciplined

Rhythm

Creates a Disciplined

Rhythm




Characteristics that make Characteristics that make eS&OP Operate at it’s BesteS&OP Operate at it’s BestCharacteristics that make Characteristics that make eS&OP Operate at it’s BesteS&OP Operate at it’s Best

• Cross-functional, collegial, collaborative, consensus

building mindset, and a disciplined process that aligns

human energy – Step #1 - #4• Holistic ownership (leadership) of demand, supply, and

fiduciary responsibilities, with authoritative decision

making power, creating ONE set of numbers – Step #5• View the implementation of eS&OP as a Strategic

Imperative




““The Big Lie of Strategic Planning”The Big Lie of Strategic Planning”HBR – Jan/Feb 2014 by Roger MartinHBR – Jan/Feb 2014 by Roger Martin

““The Big Lie of Strategic Planning”The Big Lie of Strategic Planning”HBR – Jan/Feb 2014 by Roger MartinHBR – Jan/Feb 2014 by Roger Martin

The Problem: “Executives know that strategy is important. But almost all find it scary, because it forces them to confront a future they can only guess at.” . . . “Strategy making is uncomfortable.”

The Solution: “Reconcile yourself to feeling uncomfortable, and follow three rules:

1. Keep it Simple

2. Don’t Look for Perfection

3. Make the Logic Explicit”

“A detailed plan may be comforting, but it’s not a strategy.”




Characteristics that make Characteristics that make eS&OP Operate at it’s BesteS&OP Operate at it’s BestCharacteristics that make Characteristics that make eS&OP Operate at it’s BesteS&OP Operate at it’s Best

• Cross-functional, collegial, collaborative, consensus

building mindset, and a disciplined process that aligns

human energy – Step #1-#4• Holistic ownership (leadership) of demand, supply, and

fiduciary responsibilities, with authoritative decision

making power, creating ONE set of numbers – Step #5• View the implementation of eS&OP as a Strategic

Imperative• Integrated performance measurements that align with

desired performance – Including Compensation

Incentives




Corporate Role . . .Corporate Role . . .Corporate Role . . .Corporate Role . . .• Mandate only the fundamental concepts and

principles of eS&OP *• Establish a priority to make eS&OP

implementation & use a Strategic Imperative• Demonstrate a willingness to “put the moose”

the table• Assure sufficient resources to develop

necessary and appropriate tools – which may vary

• Measure progress – development and process discipline

• Help address cultural and performance measurement issues

• Reward success * S&OP Principles: The Foundation for SuccessRobert A. Stahl and Thomas F. Wallace

Fall 2012



ImplementationApproach


Implementation AlternativesImplementation AlternativesImplementation AlternativesImplementation Alternatives

“Build it and they will come” Design it first, get the mechanics working, and then

attempt to sell it to top management.= Low probability for success

(because you can’t address the cultural issues without Top Management)

“Hold the high ground” Involve top management at the very outset of the

implementation, and throughout.= High probability for success


• Uninformed (before Go/No-go #1)

Boss: “Okay, let’s do an Executive Briefing.”

• Semi-informed (after Briefing: Go/No-go #1)

Staff: “Okay, let’s do a Live Pilot Demonstration”

• Fully informed (after Pilot: Go/No-go #2)

Staff: “Okay, let’s go to full cutover.”

LowRisk

LowRisk

How to do that . . . How to do that . . . Mitigate RISKMitigate RISK

How to do that . . . How to do that . . . Mitigate RISKMitigate RISK


Implementation PathImplementation PathImplementation PathImplementation Path

1 2 3 4 5 6 7 8 9Months

Bu

sin

ess

Imp

rovem

en

t

Phase IPhase IPilot Demo

Phase IIPhase IIExpansion

Live PilotDemonstrationGo/No-Go #2

Phase IIIPhase IIIFinancial

Integration

ExecutiveBriefing

Go/No-Go #1

KickoffSession

Low CostLow RiskHigh ImpactQuick Results

Low CostLow RiskHigh ImpactQuick Results


How to Engage Top How to Engage Top Management?Management?How to Engage Top How to Engage Top Management?Management?

• Identify and enlist an Executive Champion; someone with executive influence, willing to put skin in the game, confidence of CEO

• Connect the hard benefits of executive S&OP to successful implementation

• Mitigate risk – path of low risk/low cost• Quick results to build confidence – 90 Days• Feedback on progress/success• Generate local ownership and enthusiasm


Parallel PathsParallel PathsParallel PathsParallel PathsRun the Business todayRun the Business todayAA

Business ExcellenceBusiness ExcellenceBB Projects to support ‘A’Projects to support ‘A’

Executive S&OPExecutive S&OPXX

Top Management’s Job:1. Assuring resources for all2. Use Pilot for learning, not benefits3. Gain focus - application of principles

Top Management’s Job:1. Assuring resources for all2. Use Pilot for learning, not benefits3. Gain focus - application of principles


LeadershipLeadership’’s Roles RoleLeadershipLeadership’’s Roles RoleDuring Change• Lead educational process• Manage cultural changes• Assure proper resources• Immerse themselves in the detail• Approve procedures• Insist on clear targets (goals)• Participate• Measure Progress


LeadershipLeadership’’s Roles Role(Continued)(Continued)

LeadershipLeadership’’s Roles Role(Continued)(Continued)

Ongoing• Insist on meaningful participation• Insist proper homework be done• Remove themselves from the detail• Clearly raise & resolve conflict• Make clear decisions• Hold people accountable (process & results)• Encourage & expect realistic improvement• Lead management development• Measure performance


Implementation RolesImplementation RolesImplementation RolesImplementation Roles

• Champion

• Design Team Leader

• Design Team Members(6 to 10 Cross-functional)


ChampionChampion’’s Roles RoleChampionChampion’’s Roles RoleRole:• THE Executive with ‘skin in

the game’ • CEO’s Representative

(if not CEO)

• Mentor to Design Team Leader

• Sell Executive Staff(as required)

• Demonstrate & support the discipline / behavior that is required

• ‘Listen’ to Design Team & the coach

Qualifications: • CEO or member of

Executive Staff• Courage to talk about the

tough issues• 5-10% of time


The Real Challenge . . .The Real Challenge . . .The Real Challenge . . .The Real Challenge . . .Understanding eS&OP is simple.

The hard part is . . .

Behavioral/Cultural

Changechanging the way everyone does their jobs.

Keys: - Full cross functional buy-in-

Counter-experiential/intuitive- Comfort vs Change- Path of low risk


ImplementationImplementation

PitfallsPitfallsImplementationImplementation

PitfallsPitfalls• Middle Mgt. only• It’s a Supply Chain thing• Top Mgt. but not President

(SBU Ldr)• No Education (‘Build It’)• Supply based Families• Too much granularity• No consensus on ‘end

game’• No discipline – mixed

messages• Inadequate

Pre-eS&OP

• Conflict Aversion• eS&OP Meetings:

– Show & Tell– Unfocused– Short Term– Too Much Detail (MS)– Meeting Too Long– Finger Pointing

• Ongoing Data Problems

• Lack of Progress


Success RequiresSuccess RequiresSuccess RequiresSuccess RequiresDesign Team’s Job:

• Defined set of practices (What, How, & Who)

• Accurate, timely, & believed data

• Valid, simplifying assumptions (Dem/Sup/$$)

(Getting out of ‘Suicide Quadrant’)

Leadership’s Job:

• High discipline clear process accountability

• Constant improvement

• Changed performance measures

• Culture/Behavior change (Moose on table)


Gravitational Force Needed . . Gravitational Force Needed . . ..(The definition of eS&OP Success)(The definition of eS&OP Success)

Gravitational Force Needed . . Gravitational Force Needed . . ..(The definition of eS&OP Success)(The definition of eS&OP Success)

Customers

Employees(Suppliers, Community, Country, Planet)

Owners

ExecutiveS&OP

ExecutiveS&OP

Desired Force = CentripetalNatural Force = CentrifugalExecutive eS&OP:

Top Management’s Handle on the Business !(Muting the Ugly Trade-offs)


Done Properly . . . Done Properly . . . Done Properly . . . Done Properly . . .

Simpler(Not Easier)

Better


Closing ThoughtsClosing ThoughtsClosing ThoughtsClosing Thoughts1. DISAGREE WITHOUT BEING DISAGREEABLE

2. ONE SET OF NUMBERS

3. HARD BENEFITS: CUSTOMER SERVICE, PLANT PRODUCTIVITY, INVENTORY, CUSTOMER ORDER LEAD TIMES, TIME TO LAUNCH NEW PRODUCT, ETC.

4. SOFT BENEFITS: ENHANCED TEAMWORK, IMPROVED COMMUNICATIONS, BETTER DECISIONS & FINANCIAL PLANS, GREATER ACCOUNTABILITY, WINDOW INTO THE FUTURE, AND ONE MORE . . .

5. ENERGY ALIGNMENT6. TRANSFORMATIONAL

THE BEST BENEFIT?

Accomplishment


Thanks for ListeningThanks for ListeningThanks for ListeningThanks for Listening

Questions/Comments

2015 Shanghai S&OP Conference November 13, 2015 Guofeng Hotel Shanghai, China November 13, 2015 Guofeng Hotel Shanghai, China Bob Stahl 508-226-0477 [email protected].

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