From Surviving to Thriving - Leveraging People, Process and Systems to Achieve S&OP Excellence- Contech Engineered Solutions
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The document discusses the evolution and current challenges of Sales and Operations Planning (S&OP), emphasizing the importance of executive engagement for maximizing its benefits. It includes a case study from Contech Engineered Solutions, highlighting their journey towards improving S&OP processes for better agility and decision-making. The findings suggest that aligning systems and practices with business needs is critical for achieving operational excellence and financial improvements.
From Surviving to Thriving - Leveraging People, Process and Systems to Achieve S&OP Excellence- Contech Engineered Solutions
- 1. 1© 2014 Steelwedge Software, Inc. Confidential. Single Line of Sight: Plan, Perform, Profit SCOPE Spring 2014 From Surviving to Thriving Leveraging People, Process and Systems to Achieve S&OP Excellence Danny Smith – Vice President Industries, Steelwedge Software Randy Ramsey – Director of Supply Chain, Contech Engineered Solutions
- 2. 2© 2014 Steelwedge Software, Inc. Confidential. Agenda • S&OP: Current State and Challenges • Realizing the Business Value from S&OP • Contech Engineered Solutions Case Study
- 3. 3© 2014 Steelwedge Software, Inc. Confidential. A Brief History & Review of S&OP • S&OP: “a better way to run your business” • Evolved out of early work in Material and Production Planning in the 1970s (by thought leaders like Oliver Wight, TF Wallace, others) • Expanded to include Sales, other groups in 1980s • Continually evolving - latest version rebranded as “Integrated Business Planning” (IBP) in 2000s • Integrates Finance, R&D • Executive value (i.e. risk mitigation; “what-if” simulations) • Extended to external processes
- 4. 4© 2014 Steelwedge Software, Inc. Confidential. S&OP: Process Led by and Primarily for Executive Mgt.
- 5. 5© 2014 Steelwedge Software, Inc. Confidential. S&OP Accelerates Performance “What kind of benefits is S&OP delivering?” 0% 10% 20% 30% 40% 50% Forecast Accuracy Customer Satisfaction Asset Utilization Inventory Value Order Fill Rate Revenue Working Capital Perfect Order Return on Assets Gross Margin Inventory Turns Substantial Overwhelming Sales and Operations Planning Research Study 2006: Ventana Research
- 6. 6© 2014 Steelwedge Software, Inc. Confidential. Why Isn’t Everyone Benefiting From S&OP? A different perspective… 0% 20% 40% 60% 80% 100% Forecast Accuracy Customer Satisfaction Asset Utilization Inventory Value Order Fill Rate Revenue Working Capital Perfect Order Return on Assets Gross Margin Inventory Turns Substantial Overwhelming Sales and Operations Planning Research Study 2006: Ventana Research ?
- 7. 7© 2014 Steelwedge Software, Inc. Confidential. Great Results When Executives Are Fully Engaged “How involved is your executive team?” Closing the Gaps in S&OP Study 2013: CSCO Insights
- 8. 8© 2014 Steelwedge Software, Inc. Confidential. Reality: Most Execs NOT Engaged in S&OP Process “Does your executive team own the S&OP process?” Closing the Gaps in S&OP Study 2013: CSCO Insights
- 9. 9© 2014 Steelwedge Software, Inc. Confidential. Most Efforts NOT Supporting Executive Needs “Rate your S&OP capabilities” 16.7% 25.4% 29.4% 35.1% 45.0% 57.4% 55.7% 57.3% 54.2% 46.1% 25.9% 18.9% 13.4% 10.7% 8.9% Integrated Supply/Demand Integrated Financial Plans Strategy Deployment Strategic Initiatives Scenario Planning Low Medium High Closing the Gaps in S&OP Study 2013: CSCO Insights
- 10. 10© 2014 Steelwedge Software, Inc. Confidential. Most Missing BIG Opportunities “Describe your S&OP approach” 12.5% 70.8% 16.7% Focus Backward Results In-Between Forward Planning 29.5% 65.2% 5.3% Strategic Perspective Short-Term Problem Solving In-Between Exploiting Opportunities 18.9% 67.8% 13.3% Approach to Results Passive In-Between Actionable Closing the Gaps in S&OP Study 2013: CSCO Insights
- 11. 11© 2014 Steelwedge Software, Inc. Confidential. 34.2% 25.7% 28.4% 46.7% 44.4% 50.2% Hit Financial Targets Synch Operating Strategies Ensure Execution of Strategies Current Benefits Future Desired Executives Want More “Rate your current vs. desired capabilities” Closing the Gaps in S&OP Study 2013: CSCO Insights
- 12. 12© 2014 Steelwedge Software, Inc. Confidential. Gap Between Best Practices & Current Situation “Rate your S&OP process” (maturity) Closing the Gaps in S&OP Study 2013: CSCO Insights 32.2% 14.7% 8.4% 1.7% Below Average Only Adequate Excellent World Class
- 13. 13© 2014 Steelwedge Software, Inc. Confidential. Agenda • S&OP: Current State and Challenges • Realizing the Business Value from S&OP • Contech Engineered Solutions Case Study
- 14. 14© 2014 Steelwedge Software, Inc. Confidential. Best Practice S&OP Aligns People, Process & Systems “We continue to look at S&OP as an aspect of business that needs terrific improvement… It’s hard to argue that this shouldn’t be a central piece of management software.” –Rob Kugel, Ventana Research
- 15. Aligning Planning Horizons and Capabilities … (It's Not the Same as Integrating!) Time Horizon Resolution Execution Operational Planning S&OP Stage 4 or 5 Strategic Plan/Goals 4 wks 12 mths 2 yrs 5 yrs >5yrs Current Op. Model Future/Alternative Op. Model Respond Optimize Design Financial Budget/AOP S&OP Stage 3
- 16. 16© 2014 Steelwedge Software, Inc. Confidential. Blocking S&OP Results: Gaps With Existing Systems “How satisfied are you with your current systems capabilities?” Source: Executive Sales & Operations Planning: Process & Technology Strategies. Survey of 380 companies. Aberdeen Group 2007+ 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Demand Supply Matching (entry level) What-if Analysis (exec) S&OP Plan Quality & Metrics (exec) Role Based (x-functional collab) Alerts & Exceptions (make it easy) Fully Meets Needs Doesn't Fully Meet Needs
- 17. 17© 2014 Steelwedge Software, Inc. Confidential. Gap Between Best Practices & Current Situation “What tools do you use for S&OP?” Closing the Gaps in S&OP Study 2013: CSCO Insights
- 18. 18© 2014 Steelwedge Software, Inc. Confidential. Pre-ESOP Ground Reality: Trying It With Spreadsheets Demand Planning, SCM/APS Systems ERP, Financial, & Transactional Systems SAP, Oracle, etc. Industry Data Consolidation, Review, Overrides Data Collection, Reconciliation Consensus Process ESOP Operations Marketing Sales Finance Manual Complex Security Risk Not Scalable Does this Give Executives an Agile Decision Making Process? Systems Landscape
- 19. 19© 2014 Steelwedge Software, Inc. Confidential. Change Your Reality: Drive & Sustain S&OP Adoption & Values Time L1 L2 L3 L4 Q1 Q2 Q3 Step Change Maturity & Performance Avoid Process Failure Q4 Value Accelerated Time to Value “Companies can have a hard time getting past basic levels of S&OP without technologies like Steelwedge to support the process.” -Tim Payne VP Supply Chain Analysis, Gartner
- 20. 20© 2014 Steelwedge Software, Inc. Confidential. Return on Investment Is Substantial Typical: $5M to $10M in Committed Savings per $1B in Revenue Value Levers 50-70% Reduction 15-30% Improvement 20%-25% Reduction 25% Reduction in Stock-outs 1-2% Lift in Revenue Typical Results Customer Example
- 21. 21© 2014 Steelwedge Software, Inc. Confidential. What Your System Needs to Deliver to Support S&OP • S&OP is about human collaboration • Handle the translation between functions • Automate and enforce the process • S&OP needs engaged participants • Make it easy for stakeholders to participate • Give participants access to information they haven’t had before • S&OP is a tool for leadership to manage the business • Give executives the information they need: forward-looking KPIs • Let executives ask “what-if” questions • Make it actionable
- 22. 22© 2014 Steelwedge Software, Inc. Confidential. Tom Wallace – Godfather of S&OP “Sometimes people ask me about the S&OP module from their ERP provider. I respond that the next really good S&OP software package that comes from a main line ERP vendor … will be the first. We have yet to see that happen. You need to look at best-of-breed. And the best of the best-of-breed is Steelwedge.” Tom Wallace, Founder, T. F. Wallace & Co Watch the video: http://www.youtube.com/watch?v=SVWaNiBC4Jo&index=4&list=PLF5EAC415A68DC43B Integrated Business Planning for S&OP – Master Class with Tom Wallace: http://www.youtube.com/playlist?list=PLF5EAC415A68DC43B
- 23. 23© 2014 Steelwedge Software, Inc. Confidential. Agenda • S&OP: Current State and Challenges • Realizing the Business Value from S&OP • Contech Engineered Solutions Case Study
- 24. © 2012 Contech Engineered Solutions LLC • Leading provider of site solution products & services • Sell into Agricultural, Military, Airports, Commercial & Residential, Rail, Government, Wind Farms, Mining, Recreational markets • Bridges, drainage products, retaining walls, sanitary sewer, stormwater, erosion control, soil stabilization solutions • Sales Offices (US, Mexico, Australia, Canada, China, Central America) • 40+ mfg facilities US Mexico Australia Canada Who We Are
- 25. © 2012 Contech Engineered Solutions LLC Structures
- 26. © 2012 Contech Engineered Solutions LLC Drainage Solutions
- 27. © 2012 Contech Engineered Solutions LLC Filtration / Separation
- 28. © 2012 Contech Engineered Solutions LLC Erosion Control
- 29. © 2012 Contech Engineered Solutions LLC
- 30. © 2012 Contech Engineered Solutions LLC Our Competitive Environment • Unpredictable demand Make to Stock Make to Order – Project Based Configure to Order • Competing against smaller competitors • Global business, global impacts • Rapidly changing commodity supply situation – varying prices and government regulated • Need for “Immediacy” – capability to respond quickly to opportunities
- 31. © 2012 Contech Engineered Solutions LLC Our Business Environment • Expansion through acquisitions and organic growth • Fragmented systems (5 different ERP systems) • No centralized supply chain team • No Formal Sales & Operations Planning Process • Disjointed Planning process Multiple Demand Plans No formal Production Plan No formal Inventory Strategy
- 32. © 2012 Contech Engineered Solutions LLC • Find Leadership Champions • Training, Education, and Gain Buy-in • Develop Proof of Concept • Partner search • Cross-functional involvement • Solid implementation team Our Journey for Success
- 33. © 2012 Contech Engineered Solutions LLC Our Focus • The Goal – GROWTH & OPTIMIZATION • Leverage lead time (manufacture to delivery) • Leverage working capital • Optimize the supply chain network • Become more agile as an organization – analyze opportunities quickly • Gain market share • MAKE MORE MONEY!!!!! • More robust, systematic process to planning: S&OP • Put a centralized team in place • Hire the right people – change agents • Get the team collaborating with discipline • GAIN CONTROL!!!! • System to empower the team (Steelwedge) • Holistic view of demand, supply and inventory • Facilitates collaboration • Enforcement of the process • Quick analysis of opportunities for executives
- 34. © 2012 Contech Engineered Solutions LLC Our Process People Systems Process
- 35. © 2012 Contech Engineered Solutions LLC SOIP Powered by…
- 36. © 2012 Contech Engineered Solutions LLC Agility & Discipline Provides Results • 5+ year journey • 5-10% increase in customer service levels • 30-40% reduction in working capital needs • Examine “what-if scenarios” for opportunities and business planning • Ability to capitalize on opportunities that we couldn’t respond quickly enough to before
- 37. © 2012 Contech Engineered Solutions LLC Our Improvements & Future Vision • Network Optimization • A look at a raw material network not seen before • Analyzing distribution/inventory cost dynamically • Metrics • Unique site-level metrics for the entire supply chain picture • Network optimization metrics, distribution plans tied to lowest total landed cost • Agility • Tying of multiple systems for visual indicators
- 38. © 2012 Contech Engineered Solutions LLC Network Optimization • Analyzed the entire North American network from a lowest total landed cost perspective and built a “reverse” hub and spoke system for our raw material network • Built a system tool that auto-populated raw material requirements (kanban & order driven) for each site that maximized outgoing TL’s on a daily basis
- 39. © 2012 Contech Engineered Solutions LLC Metrics • Created a supply chain optimization metric at the site level known as the Supply Chain Excellence Site Rankings • Each site’s daily inventory, inbound supplier freight, intra-network freight (site to site), outbound freight and slow moving inventory was ratio’d to their COGs • Metrics are cumulative to account for day-to-day issues such as order holds, strategic inventory decisions, etc. • These ratios were compared to best-in-class ratios and weighted in terms of financial cost to Contech for each category • Weighted scores were added to come up with an SCE Score and sites are ranked top to bottom • Created a “BCS” like atmosphere for Supply Chain and we award a specific site with a “Supply Chain Plant of the Year Award”
- 40. © 2012 Contech Engineered Solutions LLC Excellence & Financial Influence
- 41. © 2012 Contech Engineered Solutions LLC Agility in the Future • Swings to a Make-To-Order business with short customer lead times are causing the need for constant network analysis, accounting for mix/volume changes, new distribution points, and strategic stocking decisions • Agility in the future is obtained by: • Centralizing our planning/forecasting systems with our ERP and CRM systems to give a dynamic view of supply chain that allow us to make decisions on the fly • Giving visual metrics and indicators to all areas of supply chain involvement • The continued increase in upper management support and one forecast now, the rest are run-rate projections and scenarios
- 42. 42© 2014 Steelwedge Software, Inc. Confidential. Q&A
- 43. 43© 2014 Steelwedge Software, Inc. Confidential. Danny Smith VP, Industries www.steelwedge.com dsmith@steelwedge.com Today’s presentation is on SlideShare http://slidesha.re/OtpcwI Stay connected on social media! Twitter ● LinkedIn ● Google+ ● Facebook