S&OP Overview Implementation Approach Biel 06-15-12
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The document provides a comprehensive overview of sales and operations planning (S&OP) and its importance in business forecasting to improve demand accuracy and reduce supply chain volatility. Key discussion points include implementation steps, best practices, and the significance of cross-functional alignment in achieving effective S&OP processes. It emphasizes the necessity of collaboration, data integration, and performance metrics for successful execution of S&OP initiatives.
S&OP Overview Implementation Approach Biel 06-15-12
- 1. 1 Business Forecasting 2012 Predictive Intelligence Summit Demand Planning & Forecasting Implementing Demand & S&OP Processes Hyatt Regency McCormick Place Chicago, IL Friday, June 15, 2012 Discussion Facilitator Jim Biel Management Consultant E-Mail: bielconsulting@gmail.com Phone: 847.687.5379 LinkedIn Profile: http://www.linkedin.com/in/jimbiel S&OP Writings: http://www.slideshare.net/jimbiel Note: S&OP may also be known as IBF (Integrated Business Forecasting), SIOP (Sales, Inventory, & Operations Planning), and other names. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 2. 2 Professional Biography – Jim Biel Phone: 847.687.5379, Chicago, IL E-Mail: bielconsulting@gmail.com LinkedIn Profile: http://www.linkedin.com/in/jimbiel SlideShare 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) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
- 3. 3 Discussion Topics “An Interactive Discussion” • Survey Results • Your Implementation Questions / Concerns • Implementation Topics • My Thoughts / Overview • Q&A • One-on-One Discussions Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 4. 4 Implementation Topics • The Why / Rationale • Ownership / Sponsorship / Stakeholders • Education • Metrics • Assessment / Discovery • Project Planning • Change Management • Process Design – One Forecast – What IF’s / Scenarios – Unconstrained / Constrained Demand • Roles / Responsibilities • Tool Box / Systems • Execution / Implementation • Process Improvement • Business Performance Improvement Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 5. 5 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. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 6. 6 Implementation Steps • Ownership / Sponsor / Key Stakeholder • Education (at least 2 levels) • Metrics • Assessment / Discovery • Project Planning (Includes Change Management) • Process Design • Roles / Responsibilities • Data Management • Tools / IT Solutions • Execution / Implementation • Process Improvement • Business Performance Improvement Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 7. 7 Business Drivers / Pain Points The Why • Implement Concepts & Tactics To: – Improve Demand Forecasting Accuracy – Reduce Supply Chain Volatility – Improve Working Capital (Inventory) – Improve Decision Making – Stabilize / Improve Customer Service Levels • A Blend of Concept & Tactics • The Recipe: Process, People, Performance (Metrics), Platform (Systems) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 8. 8 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 – Stabilize/ Improve Customer Service Levels ► The Concept is Easy, Execution Can Be Challenging Note: S&OP may also be known as IBF (Integrated Business Forecasting), SIOP (Sales, Inventory, & Operations Planning), and other names. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 9. 9 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) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 10. 10 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 – S&OP Could / Should Be the Way You Run Your Business Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
- 11. 11 Best Practices • One Common Set of Metrics (Performance) – Start with Baseline • One Integrated Process (Process) – Rolling Forecasts • All Demand Streams (Demand Supply) • Integrate All Available Data (Internal & External) – Collaboration (Data Management is Key) • One Forecast (Used by All Functions * ) • Incorporate “What-If” / Scenario Processes • People/Functional Alignment (People) • One System of Record (Platform) * With Some Caveats Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 12. 12 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 – More Holistic Metrics: Total Cost to Serve, etc. Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 13. 13 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 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 14. 14 S&OP • Process Alignment / Integration – (Demand-Supply-Finance-GM) • “Connect the Knobs” for Leadership GM Owner Dem Pl Finance Supp Pl Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 15. 15 “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 Guide Page 24 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 16. 16 The S&OP Flow Demand Finance GM Generates Controls Monthly Proformas, S&OP Cost, Risk / Ops Monthly; + Results As Needed In + Metrics Review Interim + Var to Bus Pl + Future Frcst Utilize Demand + Assumptions Supply Outputs as Basis For Forecasts, + Bulk of Meeting: Daily Annual Plans, Gaps, Opps in Strategic Plans, Weekly Add Risks / Opps / Future Frcst Monthly Other Lifts / Discount Factors Balancing As Needed + 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 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 17. 17 One Forecast (Linkage – S&OP to Other Plans) Strategic Use S&OP Strategic Demand Supply Target / Financial As a Gut Plan Plan Plan Check Intent Use S&OP Business Annual Demand Supply As Key Financial Plan Plan Plan Plan Input / Core, Plus Risks/Ops Use S&OP Latest Interim Demand Supply As Key Financial Est / Frcst Forecasts Plan Plan Input / Core, Plus Risks/Ops Future Future Execution Demand Supply Forecast / Details, S&OP Execution Financial Active Risk / Ops Plan Plan / Forecast Discussion S&OP Outputs Validate, Support Other Planning Processes Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 18. 18 Alignment Between Corporate Strategy and Operational Execution Corporate Strategy Business Plan S&OP Revenue Targets Revenue Targets Revenue Targets Margins Margins Margins Working Capital Working Capital Working Capital New Products New Products New Products New Markets New Markets New Markets New Customers New Customers New Customers New Channels New Channels New Channels Exit Strategies Exit Strategies Exit Strategies Capital Investment Capital Investment 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 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 19. 19 Cross Functional Alignment Functional Role Business Role S&OP Role Communication General Manager Strategic Direction Owns the Overall Owns Monthly S&OP Process – The Process Meeting; Consulted Owner Daily/Weekly as Needed (Exception) Demand Translates Strategy into Owns the Demand Daily, Weekly > Sales Demand Generation; Forecast; Accountable Interaction with Supply > Marketing Dem Planning Reports for Excess Inventory & Finance; Owns to a Demand Leader; Generated by a Monthly Demand Unconstrained Demand Forecast Miss Component of S&OP Supply Fulfillment of Owns the Fulfillment of Daily, Weekly > Finished “Constrained Demand”, the” Constrained” Interaction with > Raw Least Cost Demand Forecast at Demand & Finance; Least Cost (Balancing Owns Monthly Supply with Demand Planning) Component of S&OP Finance Economic Oversight / Counsel, Input, Risk Provides P&L Counsel Assessment, Pro- Proformas & Risk / Formas of Future Opportunity Forecasts Assessment Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 20. 20 Cross Functional Alignment / Effective Communication – The S&OP Communication Flow Role Daily Weekly Monthly GM Rarely Rarely Owns the Meeting Demand Active w/ Supply Active w/ Supply Owns Demand Planning Planning; Sales; Planning; Sales; Component Marketing; Marketing; Customers Customers Supply Planning Active w/ Active w/ Owns Supply Demand Demand Component Planning Planning Finance Consulted As Consulted As Owns Financial Needed Needed Component Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 21. 21 Methodological Approach Measuring, Managing, Executing Strategies Frequency Activity Typical Finance GM Interactions Daily Demand Dem Pl with When needed, If Needed, very Planning: System & exception rare + Dem Planners Sources; basis + Sales Dem Pl w/ + Marketing Supply – + Customers Balancing + Synd Data Supply Metrics Weekly Demand Same as When needed, If Needed, very Planning: Above exception rare + Same as basis Above Monthly + Demand Pre- Demand to P&L Proforma S&OP Meeting: Meeting Supply; Supply with Gaps / Metrics + Supply Pre- Back to Opps; Risks Best Frcst Demand; Assumptions Meeting New Products Finance P&L w/ + Capacitization Risks / Opps Gaps / Opps Strategic Issues Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 22. S&OP Time Fences 22 Short-Term Mid-Term Long-Term (1-3 Months) (4-12 Months) (13-36 Months) Demand Demand Demand - Strategy Dem Pl – SKUs Dem Pl – Prod Fam Dem Pl – Prod Fam All Demand Streams All Demand Streams All Demand Streams Sales Marketing Marketing Customers Customers Customers Promotions Promotions Promotions New Products New Products New Products Supply Supply Supply - Strategy Fulfillment Fulfillment Fulfillment & Sourcing Cust Serv Finished Gds, Raw Ingred Contracts Finished Goods Supply Contracts Plant/Cap Network/Invest Supply Contracts Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 23. 23 Process, Metrics, Results PROCESS PERFORMANCE METRICS Leadership Revenue, Cost Targets (Strategic Direction) Forecast Accuracy, Working Capital Targets, Inventory Targets New Product Launch Success Demand Feeds Service Level Targets Supply; Balancing / Cycle Time / Quality - Processes Capacitization / Shipment (Ops Execution, Future Forecast) Finance DESIRED RESULTS ($ Scorekeeper, Forward Looking Positive P&L Outcomes Economic Advisor) Positive Working Capital Outcomes Customer Service Levels Productivity Improvements Leadership Decision Making Improvements (S&OP Process Owner) Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 24. 24 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 Tool to support Meetings and interactions > Numbers > Metrics Reporting > Assumptions Make your analysts “analysts” – not data and report generators Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 25. S&OP 25 (The Recipe / A Holistic View) Process, People, Performance, Platform • DP Starts the Process (Demand-Supply-Finance) Process / • Business Intelligence / Collaboration Essential People • Defines Units, Revenue, Margin $ Can Be Derived • Ownership of Forecast: Demand Owner • Unconstrained Demand / Constrained Demand • One Forecast (Demand/Supply/Finance/GM Consensus) Performance • Metric Driven: Forecast Accuracy (Level/Time Fence) • Metric Driven: Supply Fulfillment • Tool / System – Foundation For Demand Forecast Platform / Process • Tool/ System – Rough Cut Capacity • Tool/ System – Detailed Supply Planning • How (Demand Management): Tools, Collaboration, and Summary Assumptions Managed By Demand With a Defined Accuracy Metric (Start With Baseline) • Debate the Assumptions Not the Number Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 26. 26 Implementation Steps • Ownership / Sponsor / Key Stakeholder • Education (at least 2 levels) • Metrics • Assessment / Discovery • Project Planning (Includes Change Management) • Process Design • Roles / Responsibilities • Data Management • Tools / IT Solutions • Execution / Implementation • Process Improvement • Business Performance Improvement Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)
- 27. 27 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 Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (June 15, 2012)