S&OP Workshop
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The document outlines a framework for effective Sales and Operations Planning (S&OP) which includes processes such as product, demand, supply, and financial reviews. It emphasizes the importance of focus, collaboration, and commitment in driving successful S&OP outcomes through structured discussions and actionable plans based on demand segmentation. Effective alignment and communication among teams are crucial for enhancing cross-functional collaboration and achieving organizational goals.
S&OP Workshop
- 1. S&OP: Getting The Most From Your Planning Business Forecasting and Analytics Forum Boston, June 6, 2017 Anthony Reese
- 2. Typical S&OP Process 6/6/2017 2 Product Review Demand Review Supply Review Financial Review Business Review Executive S&OP Meeting
- 3. S&OP Critical Areas of Success 6/6/2017 3 Focus • Bring the right discussions to the forefront Collaboration • Bring the right people and process together Commitment • Establish the right pace and cadence
- 5. Create Focus Systematically 6/6/2017 5 •Reduce the conversations that need to happen down to the critical items. •Manage the conversations with a structured system of discussion and action. •Develop separate processes for the critical items (and non-critical items)
- 6. Demand Segmentation is an Analytical Tool to Build Focus Low High High Demand Variability Q3 – A Items (High Variability / High Gross Sales) “Collaborate!” Q1 – A Items (Low Variability / High Gross Sales) “Good for Statistical Tools!” Q2 – B & C Items (Low Variability / Low Gross Sales) “Good for Statistical Tools!” Q4 – B & C Items (High Variability / Low Gross Sales) “New Strategies!” Business Importance 6/6/2017 6
- 7. Demand Segmentation Approach • Review all active finished good items for: • Historical monthly demand for the last three years • Gross sales by month for the same period • Establish Business Importance – ABC Classification based on gross sales over last 12 months • Top 80% = “A item” • Next 15% = “B” item • Bottom 5% = “C” itemLow High HighDemand Variability Q3 – A Items (High Variability / High Gross Sales) “Collaborate!” Q1 – A Items (Low Variability / High Gross Sales) “Good for Statistical Tools!” Q2 – B & C Items (Low Variability / Low Gross Sales) “Good for Statistical Tools!” Q4 – B & C Items (High Variability / Low Gross Sales) “New Strategies!” Business Importance Assign each item to a quadrant based on business importance and demand variability 6/6/2017 7
- 8. Develop Quadrant Specific Action Plans Example Low High High Demand Variability Q3 – Market Intelligence (High Variability / High Gross Sales) 1. Validate if any Q3 can move to Q1 or Q4 • E.g., seasonal items that sell year round with consistent demand pattern may produce reasonable statistical models • E.g., Items that should be MTO Q1 – Statistical Forecasting (Low Variability / High Gross Sales) 1. Validate forecastability against new statistical model parameters 2. Determine if any Q1 should move to Q3. • E.g., new demand patterns, seasonality or trends Q2 – Statistical Forecasting (Low Variability / Low Gross Sales) 1. Validate forecastability against new statistical model parameters 2. Determine if any Q2 should move to Q4. • E.g., SMU, OEM Q4 – Alternative Strategies (High Variability / Low Gross Sales) 1. Validate item type (e.g. SMU, OEM, seasonal) 2. Determine whether statistical forecasts or market intelligence will be value added per item 3. Partner with Supply Chain on Supply Strategy to recommend for organization (e.g. MTO, ROP) Business Importance 6/6/2017 8
- 10. A Working Definition 6/6/2017 10 Two or more functions (stakeholders) working together and leveraging their critical expertise to find the best solution to a shared goal. Attributes of Collaboration: • Clear Goals • Close Cooperation • A Structured System
- 11. Alignment Is Required Across The Top of the Organization 6/6/2017 11 AlignmentSales Operations
- 12. Collaboration Happens Deeper in the Organization… 6/6/2017 12 Alignment Collaboration Sales Operations
- 13. …and depends on having the right people engaged 6/6/2017 13 Alignment Collaboration Sales Operations
- 14. Is Collaboration What you Need? 6/6/2017 14 • Collaboration is hard work • If not done right can damage cross functional relationships • Collaboration needs to be supported by alignment and happen deep in the organization
- 15. 6/6/2017 15
- 16. How Important is it For Teams to be Aligned within Your Company? 6/6/2017 16
- 17. How Important is it For Teams to be Aligned within Your Company? 6/6/2017 17 • Teams identified as important to be aligned, are often not aligned. • The real or perceived gaps can be significant. • Building cross functional alignment is an improvement area for many organizations.
- 18. Poor Collaboration Reduces the Effectiveness of Strategy 6/6/2017 18 56% External partners 59% Colleagues in other departments Share who say they can rely all or most of the time on: Cross Functional Collaboration 84% Their boss 84% Their direct reports Share of managers who say they can rely all or most of the time on: Functional Collaboration
- 20. To Make Collaboration Work 6/6/2017 20 • Clear shared goals (Alignment) • Close cooperation of the right people at lower levels of the organization • A structured system of discussion, agreement and actions to achieve results. • Established ways to resolve conflict and achieve results.
- 21. To Make Collaboration Work 6/6/2017 21 • Clear shared goals (Alignment) • Close cooperation of the right people at lower levels of the organization • A structured system of discussion, agreement and actions to achieve results. • Established ways to resolve conflict and achieve results.
- 22. There are Various Approaches to Collaborating on a Forecast 6/6/2017 22 A forecast is produced with no feedbackWithout Feedback Systematic collection of feedback is incorporated into a forecastWith Feedback Several functions independently create forecasts and compare them together and agree on the final forecastComparison A forecast is created and passed to other stakeholders that adjust the forecast and the final stakeholder produces the final forecastHand Off A forecast is produced as a base and stakeholders add or subtract to/from the baseWaterfall The forecast is assembled through a combination of the above approachesHybrid It is agreed that no forecast is neededDon’t Forecast
- 24. Three Key Areas to Understand 6/6/2017 24 Business Flow Calendar Context
- 25. Understand the Business Flow 6/6/2017 25
- 26. Develop a Calendar Example 6/6/2017 26 January April July October S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 5 6 7 1 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 2 3 4 5 6 7 8 2 3 4 5 6 7 8 8 9 10 11 12 13 14 15 16 17 18 19 20 21 9 10 11 12 13 14 15 9 10 11 12 13 14 15 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 17 18 19 20 21 22 16 17 18 19 20 21 22 22 23 24 25 26 27 28 29 30 31 23 24 25 26 27 28 29 23 24 25 26 27 28 29 29 30 31 30 30 31 February May August November S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 1 2 3 4 5 6 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10 11 7 8 9 10 11 12 13 6 7 8 9 10 11 12 5 6 7 8 9 10 11 12 13 14 15 16 17 18 14 15 16 17 18 19 20 13 14 15 16 17 18 19 12 13 14 15 16 17 18 19 20 21 22 23 24 25 21 22 23 24 25 26 27 20 21 22 23 24 25 26 19 20 21 22 23 24 25 26 27 28 28 29 30 31 27 28 29 30 31 26 27 28 29 30 March June September December S M T W T F S S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 1 2 3 1 2 1 2 5 6 7 8 9 10 11 4 5 6 7 8 9 10 3 4 5 6 7 8 9 3 4 5 6 7 8 9 12 13 14 15 16 17 18 11 12 13 14 15 16 17 10 11 12 13 14 15 16 10 11 12 13 14 15 16 19 20 21 22 23 24 25 18 19 20 21 22 23 24 17 18 19 20 21 22 23 17 18 19 20 21 22 23 26 27 28 29 30 31 25 26 27 28 29 30 24 25 26 27 28 29 30 24 25 26 27 28 29 30 31
- 28. Establish the Context 6/6/2017 28 • Live or Email • In Person or Remote • One to One or Large Group • Regularly or As needed
- 31. No Value to Plan, Develop Alternative Strategies Planned Using Stat Forecast Planned Using Stat Forecast + Collaboration 1(A, B) 1(C) 1(D) 2(A,B) 2(C) 2(D) 3(A,B) 3(C) 3(D) Planning Season #1 Planning Season #2 Planning Season #3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Example Seasonal Planning Map 6/6/2017 31
- 32. What Questions Do You Have? 6/6/2017 32