Integrated Business Planning — Fact Or Fiction?

Copyright © 2011 Kinaxis Inc. All Rights Reserved. 1

Copyright © 2011 Kinaxis Inc. All Rights Reserved. 2 Copyright © 2011 Kinaxis Inc. All Rights Reserved.

Bill DuBois business consulting [email protected]

Integrated Business Planning: Fact or Fiction?


What’s wrong with this picture?


Agenda

•  Market drivers •  IBP = Mature S&OP? •  People, Process, Technology •  Continuous and Collaborative S&OP


Market Drivers


Today’s multi-tier global supply chain

Pervasive, global outsourcing Product portfolio proliferation Shrinking product lifecycles Increasing demand volatility


A volatile economy makes traditional budgets obsolete before they’re even completed.

Source: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009


Using inventory to buffer volatility

Venu Nagali , Procurement Risk Management (PRM) at Hewlett-Packard Company, Stanford Risk Management Roundtable, November 13, 2006 http://www.gsb.stanford.edu/scforum/login/pdfs/HP%20%20PRM%20Nov%2006%20Venu%20Nagali.ppt

Flexible quantity contract

Demand forecast (units)

Time

Fixed quantity contract

0

100

200

300

400 Uncommitted

Hi scenario

Base scenario

Lo Scenario

•  These are primarily financial decisions

•  They have impact on –  Investment –  Revenue –  Margin –  Market share –  …

•  Yet they are expressed in Units


How the CEO/CFO sees the business

How to Master Analyzing the Income Statement, Old School Values blog, January 20th, 2009


How the CEO/CFO sees the business

How to Master Analyzing the Income Statement, Old School Values blog, January 20th, 2009


S&OP – Bridging the gap between functions

11

Goal: Make the financial budget. Top-down focus.

Wants: Control and predictability of operations Forecast: The budget/annual operating plan

Finance Su

pply

C

hain

Operations Sales and Marketing

Goal: A feasible plan. Bottom-up focus

Wants: Minimize risk and disruption Forecast: The demand plan

Goal: Maximize revenue and market share

Wants: Guaranteed product availability

Forecast: Sales plan

Goal: Minimize supply chain costs, often inventory

Wants: Minimum demand uncertainty

Forecast: Supply plan

Demand Side

Supply Side


S&OP – Bridging the gap between functions

12

Goal: Make the financial budget. Top-down focus.

Wants: Control and predictability of operations Forecast: The budget/annual operating plan

Finance Su

pply

C

hain

Operations Sales and Marketing

Goal: A feasible plan. Bottom-up focus

Wants: Minimize risk and disruption Forecast: The demand plan

Goal: Maximize revenue and market share

Wants: Guaranteed product availability

Forecast: Sales plan

Goal: Minimize supply chain costs, often inventory

Wants: Minimum demand uncertainty

Forecast: Supply plan

Demand Side

Supply Side


IBP = Mature S&OP?


Gartner Perspective


Gartner Perspective


Traditional Planning Process Segmentation


Traditional Planning Process Segmentation


Continuous and Collaborative S&OP




Process, People, Technology


Larry Lapide – Demand Management Solutions Group – 2008 Gartner: Most companies stuck at stage 1 or 2


Larry Lapide – Demand Management Solutions Group – 2008

Relative importance of technology

Gartner: Most companies stuck at stage 1 or 2




“If I had asked people what they wanted, they would have said faster horses.” ��- Henry Ford



AND, not OR

Collaborative, not linear

Event-driven, not calendar-driven

What If Anytime


Thank you! Questions? Trevor Miles | e: [email protected] | m: +1.647.248.6269 | t: @milesahead


TOP 5… Top 5 signs your S&OP process is in trouble…

1. You hold a “tribal council” to vote off the customers who won’t be getting their orders. 2. You’ve just hired a new S&OP consultant: Zelda the online psychic. 3. Your CEO pronounces it “Sales and Oooops?!” 4. Your IT Director is extremely excited about the new S&OP tool he just purchased. It’s called Excel. 5. Your VP of Manufacturing calls it “Sales OR Operations Planning.”


Integrated Business Planning — Fact Or Fiction?

Technology

collaborative sop copyright

milesahead copyright

market drivers copyright

supply plan supply chain

sales plan forecast

mature sop

disruption forecast

sop processis