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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Sales & Operations Planning (S&OP)Introduction & Overview of the Process /
My Implementation Approach
Wednesday, January 18, 2012
Jim BielManagement Consultant
E-Mail: [email protected] : 847.687.5379
LinkedIn Profile: http://www.linkedin.com/in/jimbielS&OP Writings: http://www.slideshare.net/jimbiel
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Professional Biography – Jim BielPhone: 847.687.5379, Chicago, ILE-Mail: [email protected]
LinkedIn Profile: http://www.linkedin.com/in/jimbielSlideShare Profile: http://www.slideshare.net/jimbiel
• Multi-Functional Experience, Concentrated in Consumer Product Goods (CPG) Industry (Sara Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B
• Core understanding of multiple supply chains – frozen, fresh, cold, dry, liquid
• Adept at integrating relevant business concepts and processes with enterprise-wide systems, a strong business process understanding and acumen including S&OP (boot strap and retrofit S&OP implementations).
– Demand Planning / S&OP Writings Available Here: http://www.slideshare.net/jimbiel
• Experience in Business Forecasting, Sales Operations & Planning, S&OP, Sales Systems, ERP, CRM, Demand Planning, Business Information Management, Supply Chain, Trade Promotion Management, IT, HR, Training & Development, and Finance (Corporate FP&A & Public Accounting, CPA)
• Independent Management Consulting for large and small entities• Client Services position with a SaaS (software as a service) provider of trade promotion
software (Adesso Solutions)
• Practiced public accounting as a CPA with McGladrey; Corporate Finance Financial Planning & Analysis (FP&A) Roles
• Project Management Capabilities (PM Certification – Loyola, Chicago)
• Network of Resources (Can bring additional experts to the table)
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Business Drivers / Pain PointsThe Why
• Implement Concepts & Tactics To:
– Improve Demand Forecasting Accuracy– Reduce Supply Chain Volatility– Improve Working Capital (Inventory)– Improve Decision Making
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• A Blend of Concept & Tactics
• The Recipe: Process, People, Performance (Metrics), Platform (Systems)
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
My Bias – S&OP(Sales & Operations Planning)
• My Preferred Business Model To:– Improve Forecast Accuracy– Reduce Supply Chain Volatility– Improve Customer Service Levels– Drive Decision Making
The Concept is Easy, Execution Can Be Challenging
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Note: S&OP may also be known as IBF (Integrated Business Forecasting), SIOP (Sales, Inventory, & Operations Planning), and other names.
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Top Business Benefits of Best-in-Class S&OP
• Increasing revenue• Improving forecast accuracy• Improvements in the perfect order/ customer service• Better supply planning/scheduling adherence• Improving new product launch• Reduction of inventory
Source: “Demand Driven Sales and Operations Planning”, One Network Enterprises (Downloaded from CGT E-Mail, 8/22/11)
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Key Learnings / Observations• Key Learnings From My Experience
– The Concept is Easy
– The Initial Buy-In is Fairly Easy
– The Change Management Required Can Be Hard• New Process (Includes Collaboration)• New Technologies / Systems• New Accountabilities / Roles• Traditional Functional Ownership Dies Hard – Silos• Transparency Hard For Some to Swallow
– Consistency & Month-to-Month Execution is Hard
– Leader Needs to Keep Functional Leads Feet to the Fire
– May Need a Process Coach
– Treat Implementation as a Project
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
S&OP Defined
• APICS defines S&OP as the function of setting the overall level of manufacturing output(production plan) and other activities to best satisfy the current planned levels of sales (sales plan and/or forecasts), while meeting general business objectives of profitability, productivity, competitive customer lead times, etc., as expressed in the overall business plan.
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
The S&OP FlowDemand
SupplyDaily
WeeklyMonthly
Balancing
FinanceGenerates Proformas,Cost, Risk /
Ops Monthly;As Needed In
Interim
Utilize DemandOutputs as BasisFor Forecasts,Annual Plans,
Strategic Plans, Add Risks / Opps /
Other Lifts / Discount Factors
As Needed
GMControls Monthly
S&OP
+ Results+ Metrics Review+ Var to Bus Pl+ Future Frcst+ Assumptions
+ Bulk of Meeting:Gaps, Opps in
Future Frcst
+ Create Business Rules (Between Demand/Supply)+ Forecast Time Fence: Rolling 12-24-36 Months (“Rolling Forecasts”)+ Functional Leads & Leader Participate in Monthly S&OP Review
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Best Practices• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics
(Performance) – Start with Baseline• One System of Record (Platform)• All Demand Streams (Demand Supply)• Integrate All Available Data (Internal &
External) - Collaboration• One Forecast (Used by All Functions * )
* With Some Caveats
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
S&OP • Process Alignment / Integration
– (Demand-Supply-Finance-GM)• “Connect the Knobs” for Leadership
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Dem Pl
Supp PlFinance
GM Owner
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
“Connecting the Knobs”(Why Integration is Important)
• “Before we had Executive S&OP in the Company, I Spent A Lot of Time Turning Knobs That Weren’t Connected To Anything”
– VP & GM Quote From Tom Wallace’s Book, Sales & Operations Planning, The Executive’s GuidePage 24
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Process, Metrics, Results
PROCESS
Leadership(Strategic Direction)
Demand FeedsSupply; Balancing /
Capacitization / Shipment(Ops Execution, Future Forecast)
Finance($ Scorekeeper, Forward Looking
Economic Advisor)
Leadership(S&OP Process Owner)
DESIRED RESULTSPositive P&L Outcomes
Positive Working Capital OutcomesCustomer Service Levels
Productivity ImprovementsDecision Making Improvements
PERFORMANCE METRICSRevenue, Cost Targets
Forecast Accuracy,Working Capital Targets,
Inventory TargetsNew Product Launch Success
Service Level TargetsCycle Time / Quality - Processes
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Metrics
– 5 Basic Metrics:• Forecast Accuracy (Demand Owner)• Perfect Orders (Cust Serv, Supply)• Revenue (Units & Mix)• Profitability (Mix, Margins, Costs)• Inventory (Demand Owner + Supply Owner)
– Simple Scorecard– Improvement From a Baseline
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Accountability Systems For Internal Stakeholders
• Metrics – Common– 5 Basic Metrics:
• Forecast Accuracy (Demand Owner)• Perfect Orders (Cust Serv, Supply)• Revenue (Units & Mix)• Profitability (Mix, Margins, Costs)• Inventory (Demand Owner + Supply Owner)
– Simple Scorecard– Improvement From a Baseline
• Active Involvement By All Functions –– Accountability & Roles / Responsibilities
• Daily• Weekly• Monthly (Decisions Made + Follow-Up Assigned)
• Transparency Through Dynamic Communication Flow
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Cross Functional Alignment
Provides P&L Proformas & Risk / Opportunity Assessment
Counsel, Input, Risk Assessment, Pro-Formas of Future Forecasts
Economic Oversight / Counsel
Finance
Daily, Weekly Interaction with Demand & Finance; Owns Monthly Supply Component of S&OP
Owns the Fulfillment of the” Constrained”Demand Forecast at Least Cost (Balancing with Demand Planning)
Fulfillment of “Constrained Demand”, Least Cost
Supply > Finished> Raw
Daily, Weekly Interaction with Supply & Finance; Owns Monthly Demand Component of S&OP
Owns the Demand Forecast; Accountable for Excess Inventory Generated by a Forecast Miss
Translates Strategy intoDemand Generation; Dem Planning Reports to a Demand Leader;Unconstrained Demand
Demand > Sales> Marketing
Owns Monthly S&OP Meeting; Consulted Daily/Weekly as Needed (Exception)
Owns the Overall Process – The Process Owner
Strategic DirectionGeneral ManagerCommunicationS&OP RoleBusiness RoleFunctional Role
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Cross Functional Alignment / Effective Communication – The S&OP Communication Flow
Owns Financial Component
Consulted As Needed
Consulted As Needed
Finance
Owns Supply Component
Active w/ Demand Planning
Active w/ Demand Planning
Supply Planning
Owns Demand Component
Active w/ Supply Planning; Sales;
Marketing;Customers
Active w/ Supply Planning; Sales;
Marketing; Customers
Demand Planning
Owns the Meeting
RarelyRarelyGMMonthlyWeeklyDailyRole
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Methodological Approach Measuring, Managing, Executing Strategies
S&OP Meeting:MetricsBest FrcstAssumptionsNew ProductsGaps / OppsStrategic Issues
P&L Proforma with Gaps / Opps; Risks
Demand to Supply; Supply Back to Demand; Finance P&L w/ Risks / Opps
+ Demand Pre-Meeting+ Supply Pre-Meeting+ Capacitization
Monthly
If Needed, very rare
When needed, exception basis
Same as Above
Demand Planning:+ Same as
Above
Weekly
If Needed, very rare
When needed, exception basis
Dem Pl with System & Sources;Dem Pl w/ Supply –BalancingSupply Metrics
Demand Planning:+ Dem Planners+ Sales+ Marketing+ Customers+ Synd Data
Daily
GMFinanceTypical Interactions
ActivityFrequency
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
S&OP• Improve Demand Forecasting Accuracy
• Process, Structure, & Ownership• Tools, Metrics
• Reduce Supply Volatility• Process, Structure, & Ownership• Tools, Metrics
– Drive Decision Making• Process Alignment / Integration
– (Demand-Supply-Finance-GM)• “Connect the Knobs” for Leadership
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
S&OP (The Recipe / A Holistic View)
Process, People, Performance, Platform
• DP Starts the Process (Demand-Supply-Finance)• Business Intelligence / Collaboration Essential• Defines Units, Revenue, Margin $ Can Be Derived• Ownership of Forecast: Demand Owner• Unconstrained Demand / Constrained Demand• One Forecast (Demand/Supply/Finance/GM Consensus)• Metric Driven: Forecast Accuracy (Level/Time Fence)• Metric Driven: Supply Fulfillment• Tool / System – Foundation For Demand Forecast• Tool/ System – Rough Cut Capacity• Tool/ System – Detailed Supply Planning• How (Demand Management): Tools, Collaboration, and
Assumptions Managed By Demand With a Defined Accuracy Metric (Start With Baseline)
• Debate the Assumptions Not the Number
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Process / People
Performance
Platform / Process
Summary
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
One Forecast(Linkage – S&OP to Other Plans)
Latest Est / Frcst
S&OP
Business Plan
Demand Plan
SupplyPlan Financial
StrategicTarget /
Intent
StrategicPlan
Demand Plan
SupplyPlan FinancialAnnual
Plan
Demand Plan
SupplyPlan FinancialInterim
Forecasts
Future Execution/ Forecast
FinancialSupplyPlan
Demand Plan
Use S&OPAs a GutCheck
Use S&OPAs Key
Input / Core, Plus Risks/Ops
Use S&OPAs Key
Input / Core, Plus Risks/Ops
Future ExecutionForecast / Details, Active Risk / Ops
Discussion
S&OP Outputs Validate, Support Other Planning Processes
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Alignment Between Corporate Strategy and Operational Execution
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Corporate Strategy Business Plan S&OP
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Strategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review
Amount of Detail (Increases through various processes)
> Working Backwards from S&OP, Provides Validation of Plan & Strategy> S&OP Focuses on Gap / Opportunity Assessment vs. Plan
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
S&OP Time Fences
Short-Term
(1-3 Months)
Mid-Term
(4-12 Months)
Long-Term
(13-36 Months)
DemandDem Pl – SKUs
All Demand Streams
Sales
Customers
Promotions
New Products
SupplyFulfillment
Cust Serv
Finished Goods
Supply Contracts
DemandDem Pl – Prod Fam
All Demand Streams
Marketing
Customers
Promotions
New Products
SupplyFulfillment
Finished Gds, Raw
Supply Contracts
Demand - StrategyDem Pl – Prod Fam
All Demand Streams
Marketing
Customers
Promotions
New Products
Supply - StrategyFulfillment & Sourcing
Ingred Contracts
Plant/Cap Network/Invest
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Tool Box Needed to Execute
Systems of Record & Collaboration Tools- Spreadsheets- ERP System- Collaboration Tools - Purpose Built S&OP System Capability (i.e. SteelWedge)- Inventory Management System (i.e. SmartOps) - Metrics Scorecard Capability
Need a well thought-out and efficient S&OP Reporting Toolto support Meetings and interactions
> Numbers> Metrics Reporting> Assumptions
Make your analysts “analysts” – not data and report generators
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Implementation Steps• Education• Assessment / Discovery• Project Planning• Process Design• Roles / Responsibilities• Metrics• Tools / IT Solutions• Execution / Implementation• Process Improvement• Business Performance Improvement
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected] , http://www.linkedin.com/in/jimbiel (January 18, 2012)
Resources• A Book: Sales & Operations Planning,
The Executive’s Guide, Thomas Wallace & Robert A. Stahl
• Expanded Library of Resources Available Here, – http://www.slideshare.net/jimbiel/sampop-resource-guide-biel-04-19-11
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