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Copyright © 2011 Kinaxis Inc. All Rights Reserved. 2 Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Bill DuBois business consulting bdubois@kinaxis.com
Integrated Business Planning: Fact or Fiction?
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 4
Agenda
• Market drivers • IBP = Mature S&OP? • People, Process, Technology • Continuous and Collaborative S&OP
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 5 Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Market Drivers
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Today’s multi-tier global supply chain
Pervasive, global outsourcing Product portfolio proliferation Shrinking product lifecycles Increasing demand volatility
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A volatile economy makes traditional budgets obsolete before they’re even completed.
Source: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009
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Using inventory to buffer volatility
Venu Nagali , Procurement Risk Management (PRM) at Hewlett-Packard Company, Stanford Risk Management Roundtable, November 13, 2006 http://www.gsb.stanford.edu/scforum/login/pdfs/HP%20%20PRM%20Nov%2006%20Venu%20Nagali.ppt
Flexible quantity contract
Demand forecast (units)
Time
Fixed quantity contract
0
100
200
300
400 Uncommitted
Hi scenario
Base scenario
Lo Scenario
• These are primarily financial decisions
• They have impact on – Investment – Revenue – Margin – Market share – …
• Yet they are expressed in Units
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 9
How the CEO/CFO sees the business
How to Master Analyzing the Income Statement, Old School Values blog, January 20th, 2009
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How the CEO/CFO sees the business
How to Master Analyzing the Income Statement, Old School Values blog, January 20th, 2009
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S&OP – Bridging the gap between functions
11
Goal: Make the financial budget. Top-down focus.
Wants: Control and predictability of operations Forecast: The budget/annual operating plan
Finance Su
pply
C
hain
Operations Sales and Marketing
Goal: A feasible plan. Bottom-up focus
Wants: Minimize risk and disruption Forecast: The demand plan
Goal: Maximize revenue and market share
Wants: Guaranteed product availability
Forecast: Sales plan
Goal: Minimize supply chain costs, often inventory
Wants: Minimum demand uncertainty
Forecast: Supply plan
Demand Side
Supply Side
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 12
S&OP – Bridging the gap between functions
12
Goal: Make the financial budget. Top-down focus.
Wants: Control and predictability of operations Forecast: The budget/annual operating plan
Finance Su
pply
C
hain
Operations Sales and Marketing
Goal: A feasible plan. Bottom-up focus
Wants: Minimize risk and disruption Forecast: The demand plan
Goal: Maximize revenue and market share
Wants: Guaranteed product availability
Forecast: Sales plan
Goal: Minimize supply chain costs, often inventory
Wants: Minimum demand uncertainty
Forecast: Supply plan
Demand Side
Supply Side
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 13 Copyright © 2011 Kinaxis Inc. All Rights Reserved.
IBP = Mature S&OP?
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 20 Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Process, People, Technology
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Larry Lapide – Demand Management Solutions Group – 2008 Gartner: Most companies stuck at stage 1 or 2
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Larry Lapide – Demand Management Solutions Group – 2008
Relative importance of technology
Gartner: Most companies stuck at stage 1 or 2
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Continuous and Collaborative S&OP
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“If I had asked people what they wanted, they would have said faster horses.” ���- Henry Ford
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Continuous and Collaborative S&OP
AND, not OR
Collaborative, not linear
Event-driven, not calendar-driven
What If Anytime
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 26 Copyright © 2011 Kinaxis Inc. All Rights Reserved.
Thank you! Questions? Trevor Miles | e: tmiles@kinaxis.com | m: +1.647.248.6269 | t: @milesahead
Copyright © 2011 Kinaxis Inc. All Rights Reserved. 27
TOP 5… Top 5 signs your S&OP process is in trouble…
1. You hold a “tribal council” to vote off the customers who won’t be getting their orders. 2. You’ve just hired a new S&OP consultant: Zelda the online psychic. 3. Your CEO pronounces it “Sales and Oooops?!” 4. Your IT Director is extremely excited about the new S&OP tool he just purchased. It’s called Excel. 5. Your VP of Manufacturing calls it “Sales OR Operations Planning.”
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