Integrated Demand Planning (S&OP) - Biel - 09-19-11

Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (September 19, 2011)

Integrated Demand Planning

Business ForecastingPredictive Intelligence Summit 2011

Monday, September 19, 2011The Westin San Francisco Airport Hotel

Millbrae, CA

(Summit Sponsor: The Altamont Group)

Jim BielManagement Consultant

E-Mail: [email protected]: 847.687.5379

http://www.linkedin.com/in/jimbielhttp://www.slideshare.net/jimbiel

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Link to Conference Info: http://lnkd.in/s35bTS


Professional Biography – Jim BielPhone: 847.687.5379, Chicago, ILE-Mail: [email protected]

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

• 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

• Independent Management Consulting for large and small entities

• 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)

• 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

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Discussion TopicIntegrated Demand Planning

• Leverage Demand Planning To:

–Improve Demand Forecasting Accuracy

–Drive Decision Making

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• A Blend of Concept & Tactics

• The Recipe: Process, People, Performance (Metrics), Platform (Systems)


Presentation Flow• Presentation of Concepts• Interactive As We Go – Brief Discussion / QA – Concept

by Concept – Share What We All Know (Learn From Each Other)

• Fuller QA at End• Welcome / Encourage Contact After Presentation – E-

Mail, Phone, LinkedIn (Take a Business Card)• Will Be Available After to Talk 1-on-1• Lunch / Networking Reception, etc.• Presentation Available – E-Mail Me; Posted to My

LinkedIn Profile ( LI Link: http://www.linkedin.com/in/jimbiel ); Posted to My SlideShare Site ( ShPt Link: http://www.slideshare.net/jimbiel )

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Polling the Room

• Function• Position / Title• Industry• Interest• Your Burning Question About

Integrated Demand Planning

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Integrated Demand Planning• Leverage Demand Planning To:

– Improve Demand Forecasting Accuracy• Process, Structure, & Ownership• Tools, Metrics

– Drive Decision Making• Process Alignment / Integration

– (Demand-Supply-Finance-GM)• “Connect the Knobs” for Leadership

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Demand Planning (The Recipe / A Holistic View)

Process, People, Performance, Platform

• Leverage Demand Planning To:– Improve Demand Forecasting Accuracy

• DP Starts the Process (Demand-Supply-Finance)• Defines Units, Revenue, Margin $ Can Be Derived• Ownership of Forecast: Demand Owner• Unconstrained Demand / Constrained Demand• One Forecast (Demand/Supply/Finance/GM Consensus)• Metric Driven: Forecast Accuracy (Level/Time Fence)• Tool / System – Foundation For Forecast• Business Intelligence / Collaboration Essential• Debate the Assumptions Not the Number• How: Tools, Collaboration, and Assumptions Managed By

Demand With a Defined Accuracy Metric (Start With Baseline)

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Process / People

Performance

Platform / Process

Process

Summary


Demand Planning • Leverage Demand Planning To:

– Drive Decision Making• Process Alignment / Integration

– (Demand-Supply-Finance-GM)• “Connect the Knobs” for Leadership

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Dem Pl

Supp PlFinance

GM Owner


My Bias – S&OP(Sales & Operations Planning)

• My Preferred Business Model To:– Improve Forecast Accuracy– Drive Decision Making

The Concept is Easy, Execution Can Be Challenging

S&OP may be known as IBF (Integrated Business Forecasting), and possibly by other names

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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.

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The S&OP FlowDemand

SupplyDaily

WeeklyMonthly

Balancing

FinanceGenerates Proformas,Cost, Risk /

Ops Monthly;As Needed In

Interim

Utilize DemandOutputs as BasisFor Forecasts,Annual Plans,

Strategic Plans, Add Risks / Opps /

Other Lifts / Discount Factors

As Needed

GMControls Monthly

S&OP

+ Results+ Metrics Review+ Var to Bus Pl+ Future Frcst+ Assumptions

+ Bulk of Meeting:Gaps, Opps in

Future Frcst

+ Create Business Rules (Between Demand/Supply)+ Forecast Time Fence: Rolling 12-24-36 Months+ Functional Leads & Leader Participate in Monthly S&OP Review

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“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 GuidePage 24

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Best Practices• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics

(Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)• Integrate All Available Data (Internal &

External) - Collaboration• One Forecast (Used by All Functions * )

* With Some Caveats

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Process, Metrics, Results

PROCESS

Leadership(Strategic Direction)

Demand FeedsSupply; Balancing /

Capacitization / Shipment(Ops Execution, Future Forecast)

Finance($ Scorekeeper, Forward Looking

Economic Advisor)

Leadership(S&OP Process Owner)

DESIRED RESULTSPositive P&L Outcomes

Positive Working Capital OutcomesCustomer Service Levels

Productivity ImprovementsDecision Making Improvements

PERFORMANCE METRICSRevenue, Cost Targets

Forecast Accuracy,Working Capital Targets,

Inventory TargetsNew Product Launch Success

Service Level TargetsCycle Time / Quality - Processes

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Cross Functional Alignment

Provides P&L Proformas & Risk / Opportunity Assessment

Counsel, Input, Risk Assessment, Pro-Formas of Future Forecasts

Economic Oversight / Counsel

Finance

Daily, Weekly Interaction with Demand & Finance; Owns Monthly Supply Component of S&OP

Owns the Fulfillment of the” Constrained”Demand Forecast at Least Cost (Balancing with Demand Planning)

Fulfillment of “Constrained Demand”, Least Cost

Supply > Finished> Raw

Daily, Weekly Interaction with Supply & Finance; Owns Monthly Demand Component of S&OP

Owns the Demand Forecast; Accountable for Excess Inventory Generated by a Forecast Miss

Translates Strategy intoDemand Generation; Dem Planning Reports to a Demand Leader;Unconstrained Demand

Demand > Sales> Marketing

Owns Monthly S&OP Meeting; Consulted Daily/Weekly as Needed (Exception)

Owns the Overall Process – The Process Owner

Strategic DirectionGeneral ManagerCommunicationS&OP RoleBusiness RoleFunctional Role

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One Forecast(Linkage – S&OP to Other Plans)

Latest Est / Frcst

S&OP

Business Plan

Demand Plan

SupplyPlan Financial

StrategicTarget /

Intent

StrategicPlan

Demand Plan

SupplyPlan FinancialAnnual

Plan

Demand Plan

SupplyPlan FinancialInterim

Forecasts

Future Execution/ Forecast

FinancialSupplyPlan

Demand Plan

Use S&OPAs a GutCheck

Use S&OPAs Key

Input / Core, Plus Risks/Ops

Use S&OPAs Key

Input / Core, Plus Risks/Ops

Future ExecutionForecast / Details, Active Risk / Ops

Discussion

S&OP Outputs Validate, Support Other Planning Processes

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Tool Box Needed to Execute

Systems of Record & Collaboration Tools- ERP System- Spreadsheets- 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 Toolto support Meetings and interactions

> Numbers> Metrics Reporting> Assumptions

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

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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

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Implementation Steps• Education• Assessment• Process Design• Roles / Responsibilities• Metrics• Tools / IT Solutions• Execution / Implementation• Process Improvement• Business Performance Improvement

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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

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