Oracle & USJade Power Breakfast Presentations: Sales & Operations Planning
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This document outlines the strategic overview of Oracle's next generation Sales and Operations Planning (S&OP) presented at a 2010 executive breakfast, highlighting customer case studies and solutions aimed at enhancing demand management and supply chain agility. It emphasizes the importance of integrating finance and operational planning to address challenges such as demand volatility and inventory optimization, while providing best practices for effective S&OP implementation. The document also showcases the significance of real-time data and responsive processes to meet evolving business needs.
![Integrated Business Planning (IBP)
Typically, planning is done at department level. Often depends on emails/spreadsheets to bridge siloed planning systems.
Finance sets revenue / profit goals without validation from Mfg (i.e., resources, capacity to meet goals.)
Mfg balances demand / supply with little visibility to whether resulting “plan” will be meet budgets on which the company’s revenue
and profit goals are based.
Sales commits to meet revenue goals without complete understanding of what Mfg can deliver.
DISCONNECTS / GAPS ACROSS DEPARTMENTS AND
ENTERPRISE
KEY CHALLENGES
Oracle IBP bridges gaps by integrating financial planning with operations planning
Revenue goals and budgets validated against a bottom-up operating plan thro’ S&OP. The operating plan is
reconciled against financial goals from Hyperion Planning.
Detailed changes to the plan can be immediately see the big picture impact of the changes. Significant differences
between the current plan and goals can be escalated to Executive Team for resolution.
Addresses one the CFO’s big concerns—the reliability of the revenue forecast. In Oracle S&OP, plans are updated
daily or weekly from a precise forecast based on current market conditions. This updated plan is published to
Hyperion Planning so that financial analysts are working with data that best represents what is going to happen – not
what they projected would happen based on last quarter’s data.
The whole company is operating to one, current and accurate plan. Company executives have the critical
information they need to make the right business decisions.
The “reconciliation process that closes the gap between
[business] strategy and operations.” (Gartner)](https://image.slidesharecdn.com/oracleusjadesopmeetingpresentations-101123143748-phpapp01/85/Oracle-USJade-Power-Breakfast-Presentations-Sales-Operations-Planning-9-320.jpg)
Oracle & USJade Power Breakfast Presentations: Sales & Operations Planning
- 1. <Insert Picture Here> Oracle Executive Power Breakfast: Next Generation Sales & Operations Planning November 18, 2010
- 2. The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle. Safe Harbor Statement
- 3. <Insert Picture Here> Agenda 8:00- 8:10 Kickoff/Welcome Layne Devereaux 8:10-8:40 Next Generation S&OP - Customer Case Studies Gerald O'Sullivan 8:40-9:10 Oracle S&OP Supply Side Customer Case Study Steve Zadig 9:10-9:50 S&OP Best Practices Mel Nelson 9:50-10:00 Summary/Q&A Facilitation Rosan Primeau, USJade
- 4. <Insert Picture Here> Oracle’s Next Generation S&OP Customer Case Studies • Business Case for Next Generation S&OP • Oracle Solution Overview • Customers Achieving Next Generation S&OP • Summary
- 5. Challenges Demand uncertainty and volatility Lack of responsiveness and inflexibility in supply network Misalignment of financial and operational plans in continuously changing business conditions Strategies Lack of proactive insight into the impact of your decisions • Sense demand in real-time and shape for revenue growth • Improve agility and react quickly to supply chain events • Profitably align demand and supply to corporate goals • Continuously monitor enterprise and supply chain performance Managing the New Normal
- 6. Demand Signal Management Demand Management Collaboration and Vendor Managed Inventory Plant Scheduling and Monitoring Order Promising Service Parts Planning Trade Promotion Management Supply and Distribution Planning Risk Management Sales and Operations Planning Performance Management Single source of truth Value Chain Planning excels in Semiconductor Industry Challenges • Demand volatility • Difficult coordination of supply chain execution • Latency and variability in decision making • High risk of product obsolescence VCP Benefits • Comprehensive integrated planning suite enables timely, consistent, fact based decision making • Demantra provides best in class forecast accuracy to reduce impact of demand volatility • Rapid “What-If” scenario planning enables well coordinated response to supply chain events • Maximize profitability with integrated, collaborative Sales and Operations Planning • Reduce “perceived” lead time while minimizing product obsolescence with Inventory Optimization • Advanced Planning Command Center provides ability to balance short term requirements with long term business objectives • Reduce time and increase consistency of NPI “ramp to volume” to deliver in the “sweet spot” of market window for maximum profitability • Relentless pressure on margins, customers expect more powerful products at lower costs Rapid Planning
- 7. FACTORS ENABLING ATTAINMENT OF PRIMARY BUSINESS GOALS Which of the following are you looking to accomplish as a result of your S&OP? Percentage of Survey Respondents Companies are Turning to S&OP to Reduce Costs while Maintaining/Improving Customer Service • Overall the recession has prompted 63% of companies to consider changes to their supply chain networks • Greatest focus of S&OP on cost and inventory management, and on improved customer service levels • Overall, 60% of companies view S&OP as more important this year than last (vs. 3% claiming it’s less important) 52% 50% 49% 46% 43% 41% 39% 36% 35% 35% 30% 29% 22% 19% 35% Improve inventory optimization Cut costs without reducing customer service Improve forecast accuracy Gain better balance of supply and demand Improve customer service Increase profits Ability to make more changes/Be more flexible Reduce lost sales opportunities Minimize out-of-stock situations Minimize risks Provide real-time visibilty into the supply chain Improve ROI on assets Improve customer retention Produce/Introduce new products Greater network optimization Source: “Recession Survival Kit; cross-industry survey conducted for Supply Chain Management Review, on behalf of Oracle and IBM, by Reed Business Information; February, 2009. Response to question: “Which factors will enable your organization to achieve your primary business goal?” n = 430 responses.
- 8. Best Practices S&OP • Often owned by supply chain group with limited involvement by others • Focused on balancing supply and demand • Too much focus on explaining the past • Standalone process not easily integrated with operational planning and execution S&OP as Typically Implemented • Owned and driven by executives, and a cross-functional and highly interactive and iterative process • Focused on meeting overall operating goals including financial goals, such as revenues, costs, and profits • Forward looking based on predictive analytics • Monitoring of operating performance linked with planning processes allowing companies to drive decisions into operations Best Practices S&OP © 2010 Oracle Corporation – Proprietary and Confidential
- 9. Integrated Business Planning (IBP) Typically, planning is done at department level. Often depends on emails/spreadsheets to bridge siloed planning systems. Finance sets revenue / profit goals without validation from Mfg (i.e., resources, capacity to meet goals.) Mfg balances demand / supply with little visibility to whether resulting “plan” will be meet budgets on which the company’s revenue and profit goals are based. Sales commits to meet revenue goals without complete understanding of what Mfg can deliver. DISCONNECTS / GAPS ACROSS DEPARTMENTS AND ENTERPRISE KEY CHALLENGES Oracle IBP bridges gaps by integrating financial planning with operations planning Revenue goals and budgets validated against a bottom-up operating plan thro’ S&OP. The operating plan is reconciled against financial goals from Hyperion Planning. Detailed changes to the plan can be immediately see the big picture impact of the changes. Significant differences between the current plan and goals can be escalated to Executive Team for resolution. Addresses one the CFO’s big concerns—the reliability of the revenue forecast. In Oracle S&OP, plans are updated daily or weekly from a precise forecast based on current market conditions. This updated plan is published to Hyperion Planning so that financial analysts are working with data that best represents what is going to happen – not what they projected would happen based on last quarter’s data. The whole company is operating to one, current and accurate plan. Company executives have the critical information they need to make the right business decisions. The “reconciliation process that closes the gap between [business] strategy and operations.” (Gartner)
- 10. <Insert Picture Here> Oracle’s Next Generation S&OP Customer Case Studies • Business Case for Next Generation S&OP • Oracle Solution Overview • Customers Achieving Next Generation S&OP • Summary
- 11. Oracle Addresses the Entire S&OP Process Most S&OP software applications are limited to enabling high level S&OP process Only Oracle links monitoring with supporting planning applications to drive decisions into operations S&OP detailed analysis and simulation Product Planning Supply Planning and Simulation Financial Planning Demand Management Supporting planning processes Executive Review Demand Review Supply Review Financial Review © 2010 Oracle Corporation – Proprietary and Confidential
- 12. Oracle’s Complete S&OP Solution • Interactively engage management • Move from a periodic reactive to a real time, iterative and proactive process – Reduce cycle time and improve alignment by automating the consensus process – Profitably balance supply, demand, and budgets • Drive decisions into operational planning and execution, and monitor performance • Start quickly with best practice templates and easily adapt to your business – evolve at your own pace Start anywhere, progress at your own pace Finance (Hyperion) Supply (ASCP, RP, SNO, IO) Product (Agile)* Demand (DM) Executive S&OP Dashboards Detailed planner workbenches Real-Time S&OP * Integration planned for future S&OP Demand Supply Trade Finance Design Risk © 2010 Oracle Corporation – Proprietary and Confidential
- 13. Dashboards Offer Visibility Across S&OP Process © 2010 Oracle Corporation – Proprietary and Confidential
- 14. Pre-Configured Views Accelerate Time to Value More than 300 KPIs to Choose From • Executive Summary • Top Difference – Operating Plan and Budget by Category • Consensus Change by Customer • Consolidated Analysis • Profit and Loss Statement • Constrained Forecast Comparison • Budget Analysis • KPI reports: Forecast Accuracy; Customer Service; Inventory and Production Executive Review Tab • Demand Summary • Top Absolute Difference – Consensus and Budget by Category • Consensus Change by Customer and Category • Forecast Comparison • Forecast Accuracy (MAPE) • Projected Backlog • Consensus Tracking • Forecast Scenario Comparison Demand Review Tab • Supply Summary • Bottom Demand Fill % by Customer • Supply Change by Category • Consolidated Analysis • Demand Fill • Production Plan • Production Plan by Organization • Top Resource Utilization by Organization • Top Resource Utilization • Top Supplier Item Utilization • Consolidated – Scenario Comparison Supply Review Tab • Financial Summary • Operating Plan and Financial Forecast Comparison • Top % Difference - Operating Plan and Budget by Category • Margin Difference by Category • Year-over-Year Financials • Financial Forecast and Budget Comparison • Revenue / Cost / Margin by Category / Organization / Zone / Customer Financial Review Tab Note: Above highlights just a sample of the available pre-configured views in each tab
- 15. Drive Decisions into Operational Planning Executive S&OP Dashboards • Enable key managers to continuously monitor S&OP performance • Evaluate alternative business scenarios • Power users can leverage direct links to RTS&OP to perform detailed analysis and simulation • Approve and drive into execution with direct linkage into tactical and operational planning processes • Supported by best in class product to sense and shape demand, and perform supply simulation Demand Supply Finance Business scenarios Assigned activities Planners execute assigned activities Suggested alternatives for evaluation © 2010 Oracle Corporation – Proprietary and Confidential
- 16. Solution Spans Strategic, Tactical, and Operational Issues Operational Events Tactical Decisions Strategic Decisions • Track orders • Track shipments • Alert issues • Balance capacity • Rebalance inventory • Allocate products • Shape demand • Service levels • Inventory policy • Carrier contracts • Product mix • Supply network sourcing Continuous S&OP Process Execution
- 17. Connect Finance and Operations Challenge: misalignment between financial and operational plans Financial Planning – Financial plans do not reflect operational realities – Revenue forecast is unreliable as it not adjusted to reflect operating forecast – Strategic financial plans lack bottom up validation – Financial planning uses discrete periods and looks backwards Sales and Operations Planning – Operating plan not directly aligned to financial targets – Impact of demand and supply changes not visible to finance – Operating plan has little top-down validation and decisions made without considering financial impact – Operating plan is continuous and forward looking
- 18. Integrated Business Planning * Coming in Demantra 7.3 Leverage AIA-based integration to Hyperion Planning* for financial reconciliation Revenue less than expected Publish Financial Plan to Demantra Assess supply constraints Publish consensus revenue, promotion expenses and COGS to Hyperion Simulate adjusted or new promotion to Increase revenue
- 19. Why Oracle Integrated Business Planning Replace manual, intermittent, and disconnected process with a continuous, interactive, holistic Integrated Business Planning process Validate revenue goals and budgets against a bottom-up operating plan thro’ S&OP Reconcile the Operating Plan with financial goals Inject operational reality into Financial Plans Eliminate CFO’s big concern — deliver a reliable forecast Ensure financial viewpoint is embedded in the Operational Planning process Quickly examine alternative scenarios and evaluate financial impact of decisions Deliver executives the 360-degree visibility to make the right business decisions Operate the whole company based on one, current and accurate plan
- 20. <Insert Picture Here> Oracle’s Next Generation S&OP Customer Case Studies • Business Case for Next Generation S&OP • Oracle Solution Overview • Customers Achieving Next Generation S&OP • Summary
- 21. CUSTOMER PERSPECTIVE We wanted to choose a player that would be in the game for the long haul, so we looked at Oracle's investment in the outsourcing model and its expertise in technology. Simply put, Oracle provides us with the best technology available.” - Tim Roessler ,CIO User adoption happened very quickly, almost automatically, we were surprised how easily it went with no complaints from the field. - James Dillon, Director Global Sales Operations and Customer Service COMPANY OVERVIEW • Develop, manufacture and market high performance Chemical Mechanical Planarization (CMP) polishing slurries for advanced semiconductor devices • #1 Supplier of CMP Slurries — Cabot Microelectronics believes it has approximately three times the annual revenue of the next largest CMP slurry competitor • Industry: Chemicals • Employees: 1000 • Revenue: US$500M CHALLENGES/OPPORTUNITIES • AsiaPac customers increased to 71% in 2007 from 53% in 2002 • 70% market share through technology leadership • CMP is an enabling technology • One of the fastest growing sectors in the semiconductor industry • Track record of profitable growth, despite semiconductor cycle • Pursuing multiple new market and product opportunities - acquisitions SOLUTIONS • Demantra DM and RTSOP • Advanced Supply Chain Planning/CBO • Inventory Optimization • Global Order Promising • Hyperion Planning • All deployed OnDemand • OPM backbone RESULTS • Reduced Monthly forecasting cycle 48% from 21 to 11 days • Reduced Forecast error (MAPE) from 50% to 20% and falling • Full enterprise planning solution with Hyperion integration • Enabled live on-line consensus ability • Saved $2-$4 million in hardware and facility expenses (on demand) • Saved $1 million in compensation costs (on demand) • Improved employee morale Cabot Microelectronics Integrates Value Chain Planning with Hyperion
- 22. What Semiconductor Customers are Achieving with Oracle’s Value Chain Planning Solutions… Increased on-time delivery to 90% and improved manufacturing planning by 50% reduced inventory levels 40% & time-to-market 30% increased supply chain response time by 92% reduced raw material inventory by 17% and improved efficiency per buyer by 25% Improved the order-promising automation by 600% and increased the On-time-Delivery to 98%
- 23. • Demand Management • Sales & Operations Planning • Demand Management • Sales & Operations Planning Customer Fulfillment – Recent Wins • Demand Management • Sales & Operations Planning • Warehouse Management • Transportation Management • Demand Management • Sales & Operations Planning • Supply Chain Planning Internal Only
- 24. Emerson Real-Time Sales & Operations Planning SOLUTIONS • Demand Management • AF&DM • RT S&OP • ASCP/CBO • IO • GOP • Hyperion COMPANY OVERVIEW • Emerson is a diversified global manufacturing & technology company offering a wide range of products & services in the areas of process management, climate technologies, network power, storage solutions, professional tools, appliance solutions, motor technologies, industrial automation. • Revenue: $24.8B • 140,000 Employees • 265 Manufacturing Sites CHALLENGES/OPPORTUNITIES • Decentralized and non-formal S&OP Processes • Manual & inconsistent forecasting process across sites. • Difficulty measuring forecast accuracy :SKU & Piece Part • Forecasting performed qualitatively, without a solid statistical basis for decisions. • Multiple Master Schedulers for the same product group; difficult to get global roll up view • Communication of forecast decisions within and across sites was sporadic and typically not timely • Each site is on a different legacy system • Lack of Forecast ownership: Marketing & Sales provide dollarized annual amount as forecast • Lack of Global Visibility • No Bottoms up fcstng & reconciliation to upper levels RESULTS • Single Global Master Scheduler per Product Line • Centralized Planning Process for Collaboration and Consensus. • Demand Capture at Model and Options level for Independent and Dependent Demands • Integrated Planning Process for the entire ‘Model Option Tree’ • Enhanced Service Levels, Superior Forecast Accuracy • 43% reduction in Inventory Month 2008
- 25. VTech Builds a Consumer Driven Supply Chain with Oracle CUSTOMER PERSPECTIVE Demantra's solution allows us to collaborate with our customers in a single, consistent planning environment where changes in forecasts dynamically update replenishment and shipment plans. This next generation CPFR solution allows VTech to maintain its lead in the consumer electronics business by delivering the highest possible service levels, while reducing current inventory levels. - Nick Delany, Senior Vice President VTech Telecommunication Products Business COMPANY OVERVIEW VTech is one of the world’s largest suppliers of corded and cordless phones and a leading supplier of electronic learning products. Founded in 1976, VTech manufacturers innovative, high quality consumer electronics products, and distributes them to markets worldwide in the most efficient manner. RESULTS • Increased order fill rate from 55% to over 95% • Increased inventory turns from 3x to 6x per year • Reduced logistics costs by 65% • Reduced retail compliance fines by 85% • Reduced price protection claims by 40% • Rapid time-to-benefit with implementation in 90 days CHALLENGES/OPPORTUNITIES • Legacy systems a hodge-podge of incompatible hardware and software • Inefficient planning and execution leading to rising costs • Excess inventory; poor response to market requirements SOLUTIONS • Real-time Sales and Operations Planning
- 26. <Insert Picture Here> “To advance our successful business process transformation, we leveraged best-in-class technology from Oracle, as well as industry best practice expertise from Oliver Wight. Together, Oracle and Oliver Wight have enabled us to transform our planning systems to next-generation sales and operations planning that support significantly improved decision making.” Randall Wood Vice President, Leggett & Platt Oracle and Oliver Wight Work Together for Success at Leggett & Platt
- 27. <Insert Picture Here> Oracle’s Next Generation S&OP Customer Case Studies • Business Case for Next Generation S&OP • Oracle Solution Overview • Customers Achieving Next Generation S&OP • Summary
- 28. Achieving Next Generation S&OP is a Journey Oliver Wight S&OP Maturity Model Mature Integrated Business Planning • Drives responsive optimization of the business in pursuit of business strategy • Continuous Reconciliation, managing gaps and alternative scenario planning Integrated Business Planning • Rolling business management process including gap analysis versus strategy and focus on competitive priorities • Integrated Reconciliation is the driver: business analysis provides underlying understanding, drives improvement priorities and gap closing actions • Process frequently reshapes to meet changing organizational structure • Used to deploy and drive the value proposition Capable S&OP • Process is established driving integrated operational and financial planning • Full suite of KPI’s to drive operational effectiveness, achieving 95%+ capability • Issues are identified and this is the decision making process • Annual budgeting process removed – S&OP numbers drive forward plans • Team working behaviors are demonstrated throughout the process Foundation S&OP • All elements defined with correct accountability, KPI’s and structure • Focus is demand /supply tactical balancing • Initiate integrated supply chain KPI’s • Challenging behaviors but not yet working Disconnected Management Processes • Traditional management meeting focused on the past • Annual budgeting process with poor basis for forward projections • Functional/silo management – few/unaligned objectives & measures • Defensive functional behaviors Note: Model courtesy of Oliver Wight Phase 1 Phase 2 © 2010 Oracle Corporation – Proprietary and Confidential
- 29. Summary How Oracle Enables Next Generation S&OP 5-Step S&OP Process Management Review Product Review Demand Review Supply Review Financial Review Supporting Planning Processes • Supply Planning • Long-Term Capacity Planning • Financial Planning • What-If Simulation • S&OP Process Management • Demand Management • Performance monitoring integrated with planning applications so that decisions can be driven into operations • Aligns value chain planning and operations with strategic financial plans and budgets • Built-in forward looking analytics so executives can see where the business is heading and make informed decisions • Rapid, robust, constrained and profit-optimized "what if" capabilities to enable event-driven S&OP
- 31. What Analysts are saying Oracle rated a Leader in Gartner’s Magic Quadrant for Supply Chain Planning Process Automation Gartner: MarketScope for Supply Chain Planning: Process Automation, 2009 By: Tim Payne Published September 3, 2010 The Magic Quadrant is copyrighted September 3, 2010 by Gartner, Inc. and is reused with permission. The MagicQuadrant is an evaluation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the MagicQuadrant, and does not advise technology users to select only those vendors with the highest rating. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. Note: “This MagicQuadrant graphic was published by Gartner, Inc. as part of a larger research note and should be evaluated in the context of the entire report. The Gartner report is available upon request from Oracle.” Leaders •Have multi-industry domain expertise •Full offerings covering the entire supply chain •Offer a upgrade path for users •Have evolving strategies to meet emerging requirements
- 33. Steve Zadig, background • Avowed Start‐up Junkie • 40 years of experience in Semiconductor Industry Engineering and Operations • Core competency is start‐up to IPO stage – Build teams – New Product Development – Establish scalable infrastructure • 2 of 3 fastest growing private companies in semi history
- 34. Steve Zadig, con’t • 3 IPO’s (would have been 4 had it not been for the 2008 Global Economic Crisis) – C‐Cube Microsystems – Paradigm – Marvell – Telegent (should have gone spring ’09) • Principal founder of the Fabless Semiconductor Association (now GSA) • Advisory Board Member (SiTime, Clariphy, NewCo)
- 35. Start‐up lifecycle • Idea / formation • Engineering / business development phase • Revenue begins – Simple finance controls in place – Formal Operations started • Revenue grows – Higher level of control required – Strategic infrastructure growth planning required – QuickBooks no longer sufficient – Midsize or Big Box?
- 36. Define, Design, Build, Sell (Business 101) • Define – What is your business (regional, global?) – How big and how fast will it grow? – What business processes to you need to support? • Finance (# of Orgs, currencies, reporting) • Ops (Supply Chain, Costing, B2B) • Sales (CRM) – What is your confidence level / budget to support tools? – Vendor selection • Big box? Mid‐size? • Implementation support • timeline
- 37. Define, Design, Build, Sell • Design Phase – What are your business processes? (now / later) • KISS (Keep it simple stupid! It will get more complex) • Minimize customization (upgrades will kill you) • Minimize mix and match systems – What are your current and future requirements? • Financial accounting / reporting • Vendor management / cost accounting(OSFM / B2B?) • Part numbering / Marking / traceability • Integrated Purchasing (iProcurement) • ASCP • CRM • Doc Control
- 38. Define, Design, Build, Sell • What is your internal resource commitment? – You must feed the beast or it will eat you! • Selection of Implementer – Business experience / matched resources – Long term support / offshore back office – Schedule / ‘go live’ expectations • Build out (resource, resource, resource) • In house expertise • User training (adequate support?) • Testing or jump and learn to fly?
- 39. Define, Design, Build, Sell (run) • O.K., you’ve gone live and survived, now what? • More functionality (return to Define) – Upgrades / new functionality /requirements – Productivity enhancement / utilization – Training – Offshoring
- 40. Telegent – case study • Offshore Business model • Watching costs – QuickBooks early on • Revenue business complexity exceed early expectations • Oracle and USJade selected October ’07 • OSFM added in November (real time costing) • ‘Go live’ end of January ‘08 • Fiscal year end March 31st ‘08 completed with zero issues • B2B goes live August ’08 – 99% transaction accuracy, OTD >99% • 3 Day Financial closes the norm • Operational closes with near zero variances by 5 pm US time on last day of Quarter. Near perfect inventory reconciliations • iProcurement implemented early ’09 • Seamless upgrade to 12.05 • ASCP implemented FYQ1’10
- 41. Lessons learned • Understand your business • Implement ERP Systems earlier than later – Changing horses mid‐stream can be very painful – Vendors offer pay as you grow support models • Choose your Implementation partner carefully – Like a marriage, you will be together for a long time and divorce can be painful • This is an investment, you get what you pay for • There is no free lunch, do the work
- 42. Sales & Operations Planning: Tool or MIA? Oracle Executive Power Breakfast November 18, 2010 Mel Nelson, CFPIM, CIRM, CSCP M.N. Nelson & Associates, Inc.
- 43. M.N. Nelson & Associates, Inc. 2 Symptoms of S&OP Problems • High level of late shipments/backorders • High volume of orders that do not allow enough lead time • Inventory imbalance / excess • Shipments heavy at month end • Finger Pointing
- 44. M.N. Nelson & Associates, Inc. 3 Our S&OP Journey • What is Sales and Operations Planning • Basics of How to Make it Work • The 4 Necessary Steps
- 45. M.N. Nelson & Associates, Inc. 4 Our S&OP Journey • What is Sales and Operations Planning • Basics of How to Make it Work • The 4 Necessary Steps – Recommendation 1. Take Some Notes 2. Make it Work Back at Work The Monthly 4 Step S&OP Process M.N. Nelson & Associates, Inc. Run Month End Reports End of Month •Statistical Forecasts •Field Sales Worksheets Executive S&OP Meeting •Decisions •Authorized Game Plan Pre-SOP Meeting • Recommendations & Agenda for Exec Meeting • 3rd-pass spreadsheets (consensus, alternatives, what-ifs) Demand Planning • Management Forecast • 1st-pass spreadsheets (with new forecast) Supply Planning • Capacity constraints • 2nd-pass spreadsheets (with new production plan) Step 1 Step 2 Step 3 Step 4
- 46. M.N. Nelson & Associates, Inc. 5 Planning & Scheduling Disconnect Strategic Planning Business Planning
- 47. 6 WE THINK OUR MASTER SCHEDULERS KNOW WHAT THE HELL THEY’RE DOING !
- 48. M.N. Nelson & Associates, Inc. 7 Strategic Planning Planning & Scheduling Business Planning Sales & Operations Planning
- 49. M.N. Nelson & Associates, Inc. 8 Resource Planning Model Business Planning Strategic Planning FORECAST&DEMANDMGMT. Volume SALES & OPERATIONS PLAN Sales Plan Operations Plan CAPACITYPLANNING SupplyDemand Mix Master Scheduling Detailed Planning & Execution Systems: MRP, Plant Scheduling, Supplier Scheduling, etc.
- 50. M.N. Nelson & Associates, Inc. 9 S&OP MPS MRP00000’s 000’s 10 - 20 Product Families End-Items Discrete Items Sales & Operations Plan
- 51. M.N. Nelson & Associates, Inc. 10 MPS - End Products (Mix & Modular) CRT (Name Brand/Generic) 25 Possible Models Model #1 Model #2 Model #3, etc. Generic Models Containers (Generic/Name Brand) Drums Plastic Tubes Bottles Glass Bottles Plastic Product Lines ($) CONTINUOUSDISCRETE TELEVISIONS, Refrigerators S&OP - Product Families (Rate) CONDIMENTS, Frozen Foods CRT Plasma/LCD Rear Projection Ketchup Flow Line
- 52. The Executive S&OP Meeting • Sales/Marketing (Forecast & Safety Stock) • Finance (Dollar Guidelines) • Operations (Current Production, Maximum Production and Ramp) M.N. Nelson & Associates, Inc. 11
- 53. YOU CAN GET A LOT FARTHER WITH A KIND WORD AND A GUN THAN YOU CAN WITH A KIND WORD ALONE …AL CAPONE
- 54. M.N. Nelson & Associates, Inc. 13 Sales & Operations Plan Current Future Dec Jan Feb Mar Apr May Jun Jul Aug Sep Forecast Beginning Inventory Ending Inventory Production Plan Product Family 101 Firm Orders and Forecast Demand Forecast Demand and Personnel Planning Forecast Demand and Capital Planning Mktg/Sales: 40 Safety Stock plus the Forecast Finance: Never more than 65 Production: Current O/H: 40 Maximum: 55 Ramp: 5
- 55. M.N. Nelson & Associates, Inc. 14 Current Future Dec Jan Feb Mar Apr May Jun Jul Aug Sep Forecast 40 40 45 50 70 40 40 40 40 40 Beginning Inventory Ending Inventory Production Plan Product Family 101 Firm Orders and Forecast Demand Forecast Demand and Personnel Planning Forecast Demand and Capital Planning Sales & Operations Plan
- 56. M.N. Nelson & Associates, Inc. 15 Current Future Dec Jan Feb Mar Apr May Jun Jul Aug Sep Forecast 40 40 45 50 70 40 40 40 40 40 Beginning Inventory 40 40 Ending Inventory 40 Production Plan 40 Product Family 101 Firm Orders and Forecast Demand Forecast Demand and Personnel Planning Forecast Demand and Capital Planning Sales & Operations Plan
- 57. M.N. Nelson & Associates, Inc. 16 Current Future Dec Jan Feb Mar Apr May Jun Jul Aug Sep Forecast 40 40 45 50 70 40 40 40 40 40 Beginning Inventory 40 40 45 50 55 40 Ending Inventory 40 45 50 55 40 40 Production Plan 40 45 50 55 55 40 Product Family 101 Firm Orders and Forecast Demand Forecast Demand and Personnel Planning Forecast Demand and Capital Planning Sales & Operations Plan
- 58. M.N. Nelson & Associates, Inc. 17 Resource Requirements Plan Tolerance = plus or minus 7% Fam 1 Fam 2 Fam 3 Fam 4 Total Hrs. Capacity Required Hours Demonstrated Capacity Res 1 350 120 70 300 840 780 Res 2 160 300 800 175 1435 1800 Res 3 200 75 175 200 650 700 Res 4 220 50 100 250 620 310 Res 5 50 60 55 100 265 250 Period: July
- 59. M.N. Nelson & Associates, Inc. 18 WHAT THEY DO • Sales & Operations Planning: balances demand and supply at the aggregate, volume level • Master Scheduling: balances demand and supply at the detailed, mix level • Sales Forecasting: provides future demand information to both S&OP and Master Scheduling
- 60. M.N. Nelson & Associates, Inc. 19 Trilogy of Integrated Activity Sales & Operations Planning Sales Forecasting Master Scheduling
- 61. M.N. Nelson & Associates, Inc. 20 Demand Planning Any Independent Demand Item • Family Forecast • Option Forecast • Spares and Service Parts • Engineering Requirements • Promotional Demands • Inventory Build-Aheads
- 62. The Supply Planning Process 1. Develop New Production Plan 2. Translate New Production Plan: - from product families to resources - from units of product to units of workload req’d 3. Compare required workload (demand for capacity) to demonstrated capacity (proven supply of capacity) 4. Adjust where necessary and practical 5. Where not practical, elevate to Pre-SOP Meeting
- 63. M.N. Nelson & Associates, Inc. 22 S&OP Review Resources Performance Measurement Demand Planning Supply Planning Financial Review Start Here Process Inputs Organization • Volume and Mix Forecast • Verification of Release • Capacity / Capability • Financial Resources Sales and Marketing Engineering Manufacturing Finance Process Outputs Organization • Sales Plan • Design Accountability • Rate of Production • Financial Plan • Backlog Projection • Inventory Projection Sales and Marketing Engineering Manufacturing Finance General Manager General Manager Action plans at an appropriate time to keep demand & supply in balance. The Result? Sales and Operations Planning Monthly Meeting Directors
- 64. M.N. Nelson & Associates, Inc. 23 The Monthly 5 Step S&OP Process Run Month End Reports End of Month •Statistical Forecasts •Field Sales Worksheets Executive S&OP Meeting •Decisions •Authorized Game Plan Pre-SOP Meeting • Recommendations & Agenda for Exec Meeting • 3rd-pass spreadsheets (consensus, alternatives, what-ifs) Demand Planning • Management Forecast • 1st-pass spreadsheets (with new forecast) Supply Planning • Capacity constraints • 2nd-pass spreadsheets (with new production plan) Step 1 Step 2 Step 3 Step 4
- 65. M.N. Nelson & Associates, Inc. 24 Benefits of S&OP • Higher Customer Service • Lower Finished Goods Inventories • Shorter Customer Order Leadtimes • More Stable Production Rates • Less Unplanned Overtime • Higher Productivity Top Management’s Handle on the Business
- 66. M.N. Nelson & Associates, Inc. 25
- 67. About USJade A Complete Solutions Provider • Enterprise System Integrator • Served more than 50 customers for over 10 years • Rigorous Staff Certification Process • Platinum Oracle Certified Accelerate Solution Provider • Strategic Partnerships • Experience with Global Implementations • Global Delivery Capability – US, India, China, Israel • Right Shore Delivery Model • Right Size • SAS 70 Type II Certified © 2010 USJade Corp. www.usjadecorp.com 408-899-7212
- 68. Delivery Model We Deliver Faster, Better, and more Economically • Planning • Assessment • Strategy • Architecture • Requirements • Design • Pilots • Training On-Site • Prototyping • Proof of Concept • Development • Testing • Conversion • Maintenance/ Enhancement • Support Offshore © 2010 USJade Corp. www.usjadecorp.com 408-899-7212 Pune, India San Jose, CA Boston, MA Beijing ,China Tel Aviv, Israel Delhi, India
- 69. Complete IT Solutions Robust State-of-Art Infrastructure Large Depth of Technical Competencies Transform Domain Knowledge into Industry Leading Solutions Partner in Executing Customer’s Growth Strategy Mergers & Acquisitions Process Improvement Industry Specific Portfolio Management Enterprise Roadmap IT Strategy Systems Integration Gardian™ Hosting & Managed Services Business Process Outsourcing Application Management Services Business Continuity & Disaster Recovery Business Intelligence Packaged Solutions Web Technologies Upgrades and Patching Assurance Services Solution Center Knowledge Library 24X7 Delivery Capabilities SAS Certified Operations Alliances and Partners Global Service Delivery Model RDBMSMiddleware Technology © 2010 USJade Corp. www.usjadecorp.com 408-899-7212
- 70. Some of our Customers © 2010 USJade Corp. www.usjadecorp.com 408-899-7212
- 71. Upcoming Events: usjadecorp.com/events December 9th: “SOA Case Study: How Silver Spring Networks Stays Connected to Their Supply Chain” (webcast) December 16th: “Transform Your Planning Process with Oracle ASCP” (webcast) Any Time: Complimentary Personalized Workshop on Oracle Planning (contact us to schedule) Rosan Primeau rosan@usjadecorp.com 408.899.7212