Sop Overview Intro Implementation Approach

1
Sales & Operations Planning (S&OP)

Introduction & Overview of the Process /
My Implementation Approach
Wednesday, January 18, 2012
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
Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (January 18, 2012)
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)
3
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
• A Blend of Concept & Tactics
• The Recipe: Process, People, Performance (Metrics), Platform (Systems)
4
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
Note: S&OP may also be known as IBF (Integrated Business Forecasting),

SIOP (Sales, Inventory, & Operations Planning), and other names.
5
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)
6
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
7
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.
8
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
Supply Outputs as Basis
+ Assumptions
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
9
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 Æ Supply)
• Integrate All Available Data (Internal &
External) - Collaboration
• One Forecast (Used by All Functions * )
* With Some Caveats
10
S&OP
• Process Alignment / Integration
– (Demand-Supply-Finance-GM)
• “Connect the Knobs” for Leadership
GM Owner
Dem Pl
Finance Supp Pl
11
“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
12
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)
13
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
14
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
15
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
16
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
17
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
18
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
S&OP 19
(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
Platform /
• Tool / System – Foundation For Demand Forecast
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
20
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

21
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
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
23
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
24
Implementation Steps
• Education
• Assessment / Discovery
• Project Planning
• Process Design
• Roles / Responsibilities
• Metrics
• Tools / IT Solutions
• Execution / Implementation
• Process Improvement
• Business Performance Improvement
25
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

Sop Overview Intro Implementation Approach

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sop Overview Intro Implementation Approach

Uploaded by

Copyright:

Available Formats

1

Sales & Operations Planning (S&OP)

Wednesday, January 18, 2012

LinkedIn Profile: http://www.linkedin.com/in/jimbiel

• Multi-Functional Experience, Concentrated in Consumer Product Goods (CPG) Industry

• Independent Management Consulting for large and small entities

Business Drivers / Pain Points

• My Preferred Business Model To:

Note: S&OP may also be known as IBF (Integrated Business Forecasting),

Top Business Benefits of Best-in-Class S&OP

Key Learnings / Observations

The S&OP Flow

+ Create Business Rules (Between Demand/Supply)

* With Some Caveats

“Connecting the Knobs”

• “Before we had Executive S&OP in the

Process, Metrics, Results

PROCESS PERFORMANCE METRICS

Finance DESIRED RESULTS

Accountability Systems For Internal Stakeholders

• Active Involvement By All Functions –

• Transparency Through Dynamic

Cross Functional Alignment

Supply Fulfillment of Owns the Fulfillment of Daily, Weekly

Cross Functional Alignment / Effective

Role Daily Weekly Monthly

Demand Active w/ Supply Active w/ Supply Owns Demand

Frequency Activity Typical Finance GM

+ Supply Pre- Back to Opps; Risks Best Frcst

(The Recipe / A Holistic View)

Future Future Execution

S&OP Outputs Validate, Support Other Planning Processes

Alignment Between Corporate Strategy and

Revenue Targets Revenue Targets Revenue Targets

Strategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review

Amount of Detail (Increases through various processes)

Short-Term Mid-Term Long-Term

(1-3 Months) (4-12 Months) (13-36 Months)

Demand Demand Demand - Strategy

Supply Supply Supply - Strategy

Tool Box Needed to Execute

Systems of Record & Collaboration Tools

Need a well thought-out and efficient S&OP Reporting Tool

Make your analysts “analysts” – not data and report generators

• Expanded Library of Resources

You might also like