The Power of Advanced Planning Tools EyeOn – FMCG Inspiration Session

Amsterdam – September 13, 2018

Event Summary

Welcome !

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Result of questionnaire recognized by the audience

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“The percentage of companies using basic Excel in addition to ERP is more than 50%”

“Most companies do not exploit the full functionality offered by their advanced planning tool”

“Working with APS is an ongoing journey to improve in functionalities and knowledge”

“Advanced planning tools are not only about planning itself but also should provide you insights”

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To stay on course several elements need to be in-place: including right tools

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People &

behavior

Tools

Data

Processes

Fit-for-purpose planning tool approach

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51 42

Objectives& scope

Analysis DesignImplement & Benefit

3

Tool Selection

At each stage stay on course

Tools

Stadtler as tool to define scope

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Integration between the different planning layers / processes

Clear distinction of decisions per planning layer

Long term

Mid term

Short term

Rough Cut Capacity

Planning (RCCP)Material

Requirements

Planning (MRP) ATP & Demand

fulfillment

Demand PlanningDistribution Resource

Planning (DRP)

Sales & Operations Planning (S&OP)

Scheduling Transport planning

Strategic Network Design

Supply Network Planning

Purchasing Production Distribution Sales

Bucket Detail Frequency

+ + +

Managing the Change: Target Operating Model

• Translate ideas into an Target Operating Model (Future State of Business / To Be Model)• To deploy vision into high-level planning principles, processes, accountability and clear deliverables• Use to drive the change throughout the journey: why are we doing this?

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Example:• We will manage the

E2E value chain• …

What should a planning tool bring your company to be successful?Your thoughts…

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Key (gap) analysis questions

– On which aspects of the Target Operating Model (future state of business) does your current tooling landscape fall short?

– Which part of this is caused by not utilizing the current tooling landscape to its potential?

– For which key aspect would you need better tooling support?

Which landscape options are possible to achieve the key functionalities?• Right functionality and correct hand-overs are more important than having 1 vendor/ 1 overall

tool• Which functionality is ‘dominant’?

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Best-of-breed vs All-in-one: considerations

1. Implementation speed

2. Leveraging specialized expertise

3. Flexibility

4. Risk

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Tool Selection – Abundance of Choice - SC Magazine IT Subway

13 http://itsubwaymap.com/

Shortlisting ‘best-practice’?

– Some overlooked shortlisting reasons

• Integration technology

• Apples and oranges…

• Technical and functional breadth of solution

– Some overemphasized reasons

• “One vendor” ERP/APS mantra

• Gartner

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Source: Gartner Magic Quadrant Aug 2018

10 step selection process for planning tools

1. Check (high level) process design &

requirements

2. Define functional requirements

3. Create short list/ Send out Request for

Information (RfI)

4. Send out Request for Proposal (RfP)

5. RfP discussion meeting 6. Review suppliers

7. Prepare scripts for demo sessions

8. Demo sessions with suppliers

9. Final selection 10. Negotiation

Milestone: main activities of to-be process

Milestone: required functionality must have and nice to have

Milestone: send out RfP Milestone: get to know supplier and review critical requirements

Milestone: short list of potential suppliers

Milestone: decide on suppliers to consider in next phase

Milestone: determine differentiators in req. between suppliers

Milestone: 1st preferred supplier2nd best supplier

Milestone: define demo script to make final selection

Milestone: agree on contract with supplier

Create business case (costs)

Create business case (benefits)

Thoughts on tool selection

– Short list based on existing tool knowledge, not only analyst lists

– Requirement based, organize second line of review

– Dig deeper on delivery technology (cloud, on premises, SaaS, …..)

– Make different people focus on different aspects, e.g. usability, sales consultant knowledgeability, integration, support…

– Don’t rely on promises and standard demos, get proof on your specific use-cases

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Managing design tracks: start with core planning principles

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Overall Design

Core PlanningPrinciples

Functional Design

Integration Design

Master Data Design

Guideline

‘global key design principles that characterize our business’

Prevent ‘not-invented-here’ syndrom

– Determining core planning principles: involve stakeholders from all regions, all BU’s from the start

–Make sure you reach consensus in iterative workshop sessions on the ‘hot potatoes’

– Local specifics in later stage will be unavoidable, but only within overall planning concept

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Recipes for best-in-class planning design

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Understand your supply chain

Clear Hand-over processes

Plan for maximum flexibility

Integrate and don’t overcomplicate

Managevolatility

Enable right behavour

Optimal teamFeasible Planning

Approach

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Mapping Supply Chain Define horizons

• Based on decisions per horizon, define horizon per planning layer

• Determine aggregation level to take decisions.

Map magnitude of divergence:

Map decisions

• Review decisions to be taken within planning

• Determine planning layer per decision

• Agree resources to plan in DP, S&OP, MPS and scheduling

The concept of user stories can support well to fetch al decisions and make the design practical for a user

Describe processes

• Define high-level E2E planning processes

• Focus on hand-over rules (timing, responsibilities)

• Define constraints (e.g. combined pipelines)

• Determine bottlenecks in the supply chain process:✓ Utilization rates ✓ Days of storage

Critically review all bottlenecks. Prevent planning all bottlenecks, find alternatives.

Clear Hand-over processes

SKUBase RM

Think cycles and set clear responsibilities

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Close open orders

Interface stock/ sales

orders

Run MRP

Evaluate schedule

6:00

8:00

Receive S&OP plan

Create MPS

Determine capacity

constraints

Day 15

Day 17Receive forecast update

Evaluate stock

position

Determine

new MPS plan

Monday

Tuesday

Daily

Weekly

Monthly

MPS Process

S&

OP

Pla

nn

er

MP

S P

lan

ne

rS

ale

sP

rod

ucti

on

Sch

ed

ule

rC

SR

Ra

w M

ate

ria

l p

lan

ne

r

DailyMonthly5th Weekly

Planned anticipation

stock

Production Calendar

Stock Targets

Outcome S&OP

Process

Current Stock Level

Constraint Demand

Plan

Netting of

Demand based

on new

forecast

Determine

Requirement

s MA

Review

Alerts

Solve alert

by adjusting

GMN

planning

Weekly

Production

Meeting

Process

outcome of

meeting

Review

Alerts

Plan supply

MA

Current Stock Level

Netting of

Demand based

on new

forecast

Sales Order Book

Demand

Control

Process

Current Stock Level

Sales Order Book

ATP Process Back Orders

Review

Alerts

Check

starting

stock

position

Possible to

solve w/o

interfering

fixed

horizon?

Run alerts

based on

orders (no

forecast)

Alert

solved?

Confirm new

schedule

Consult

product mng

for

prioritization

No

Yes

Yes

No

Updated process orders

Updated process orders

Confirmed

Schedule

Production

performance

day-1

Updated planned orders

Updated planned orders

Planning rules

Planning rules &

component availability

Planning rules &

component availability

Planning rules: min, target stock level, max stock level (storage capacity), sequencing rules

Component availability: availability of raw materials and packaging material

Run MRP

Order long

lead-time

components

Discuss with MPS

planner to align

planning in case

insufficient supply

Run MRP

Order raw

materials/

packaging

Discuss with

scheduler to align

planning in case

insufficient supply

Projected Stock level

RM/

Packaging

ordered

RM/Packaging

ordered

2

2

Current Stock Level

Current Stock Level

PO

PO

Agreed

Schedule

Determine Req

bottleneck

production

lines

Plan supply

at bottleneck

resources

Push supply to

low utilized

production

lines

Evaluate

impact on

bulk raw

materials

Evaluate

impact on

bulk raw

materials

Order bulk

raw

materialsing

Discuss with

scheduler to align

planning in case

insufficient supply

Projected Stock level

Storage Capacity

tanks

Bulk RM ordered

1

Current Stock Level

PO

1

1

Handover

Schedule

D+1

Process

orders (REL)

Planned

Production

Required # of

people

...

Harmonized snap shot

6:22

SAP

SAP

Month

Week

Day

Define swim lane

Optimization? If Excel is the starting point….

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Network Requirements File Allocation File

First and second stage plan NPI Planning

DSP Daily Schedule DSP Batch Schedule by Hour

Packing ScheduleUSP Daily Schedule

Scheduling Level of Detail Master Planning Level of Detail

No

t Co

nn

ecte

d

Closing the loop for advanced planning systems

Define top parameters

• Using simulation determine to which parameters the outcome is most sensitive

Integrate in APS

• Integrate real-time to APS and transactional systems as parameters

• Use variance as input to safety stock and scenario calculations

Define true parameter value

APS’s have grown to support real-time, data driven insights. However: the data loop is not closed

• Determine the true parameter valuebottom up, using e.g. movement data

“Exactly Wrong”

Advanced Planning

Estimated Data

Change behavior

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Process KPIs Purpose

PI Un-resolved alerts in RCCP horizon

Monitor whether the RCCP plan is kept up-to-date and making sure focus is not deviating too much to short term firefighting

PI Conversion rate of Firmed Planned Orders

Monitor whether the RCCP plan is well handed over to scheduling

✓ Day / Week / Month in the life of a planner✓ Responsibilities of people.✓ Escalation rules✓ Planning rules:

▪ Minimum production sizes▪ Maximum amount of change-over per week▪ ...

Process Control KPIs

PlayBook

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Organizational setup for demand planning & supply planning fit-for-purpose

SUPPLY PLANNING DEMAND PLANNING

Detailing requirements: keep control on the bigger picture

– People often have expertise only on limited scope

• Cherish persons with an integral business process view

• Prepare integral process designs

– People, opinions can change AND solution can perform differently than expected/promised

• Requirements Traceability Matrix (RTM), based on key planning principles, as project conscience

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Interfaces ReportsStakeholder Groups impacted

by ChangePrimary Change Dimension Impact description (Qualify the impact)

If Volume Change:

Quantify change

Size of

change

(subjective)

Reaction to

change

(subjective)

Actions to take resulting

from changeAction Owner

Req nr. Process Business Requirement

description

Input data Output data Process attributes Priority Owner Business scenario/

Use Case

Other

objects/

deliverable

s

FI CO SD PP MM QM PLM IBP Design

Reference

De

sig

n

Obj

D

eli

ve

ry

Code Module Reference D

e

l

i

Test Script

Reference

Test Condition Reference Delivery

datee.g. 3 FTE - Procurement - NL People / Process / Tech. / Bus. / Vol. People Process Tech Bus. Driven Volumes

H, M, L P, O, N

Demand

1/30/43.2/4

3.3

NPI planning New products (NPI’s) part of the total demand plan:

maintained, distinguished, processed to supply planning

Also new customers for which to plan in the future

Product lifecycle status Demand plan for NPI's

maintained, distinguished,

processed to supply

planning

1. Very

critical

Kees < S-gate (not yet specified, but on roadmap):

then being able to easily plan

revenue/financial value (place holder/ dummy

if type number not yet specified)

> S-gate (type number specified, capacity

groups / critical materials could be connected)

x SOH 3.3.15 1.3 UT_IBP_004

Demand 2 Demand

Planning

MBB

Processing EDI customer forecast (or other electronic

message, e.g. web portal), and flagging exceptions

(compared to order book, previous forecast,..)

EDI customer Forecast Customer forecast in system

Alerts

Customer FC performance

Alert boundaries 2. Must

have

Kees Processing EDI (or other electronic message,

e.g. web portal) customer forecast, and

flagging exceptions;

- How the customer forecast is processed?

- How exceptions are shown (e.g. compared to

orderbook, previous forecast,..) and can be

handled?

- How customer forecast performance/accuracy

is shown?

Backward (actual vs. forecasted)

Forward looking (orderbook “fill-rate”)

x Customer B2B YES 3.3.14 2.3

Demand 3 Demand

Planning

Able to ‘tag’ opportunities (projects) and risks (losing

projects) with name, different levels of certainty (for risks

and opportunities); also for group of items that belong to

same project

Opportunities

Risks

Forecast related to specific

opportunities / risks

2. Must

have

Kees ‘Tag’ opportunities (new projects) and risks

(losing projects) with name, different levels of

certainty

- How opportunities (design-win projects) and

risks can be put in as a separate forecast line,

also by easy account managers entry?

- How these opportunities and risks can be

‘tagged’ with the corresponding project

information (cust X, project Y, %)? Also for

group of products together?

- How this information can be retrieved via

reporting?

YES 3.3.18 2.3 UT_IBP_006

Demand 4 Demand

Planning

Be able to easily create ‘umbrella item’ which corresponds

to a kit of end-products, and to forecast on ‘umbrella item’

level

3. Nice to

have

Kees Forecast on 'kit-level':

How products can be modeled in demand

planning as being related to each other (for a

certain customer)?

How this can be forecasted on an ‘umbrella

level’ and automatically translated to forecast

per end-product?

x SOH 5.3.2.d,

3.3.13

1.1,3.4 UT_IBP_002

Demand 5 Demand

Planning

MMS

Be able to use (simple) statistical forecast either as

reference or as leading for specific set of products

Historical sales data Stat forecast line Stat models 2. Must

have

Kees - How statistical forecast can be used in the

system?

- How items can be excluded from stat fc and

how for part of the items statistical FC can be

set to be leading while for other part only as

reference?

x x SOH 3.3.13 2.3,3.4 UT_IBP_002

Demand 5.1 Demand

Planning

MMS

statistical forecast can be done on various aggregation

levels (product-level, product-CACC level,..)

& Hierarchical levels

(product/customer)

Stat forecast Stat models 2. Must

have

Kees How statistical forecast can be done on various

aggregation levels (product-level, product-

CACC level,..)?

x SOH 3.3.13 2.3,3.4 UT_IBP_002

Demand 5.2 Demand

Planning

MMS

items can be excluded from stat fc and for part of the

items statistical FC can be set to be leading while for other

part only as reference

Stat4cast

parameter per

item?

2. Must

have

Kees x SOH 3.3.13,

3.3.18.a

2.3,3.4 UT_IBP_001,

UT_IBP_002

Demand 6 Demand

Planning

MMS

Be able to easily view and analyze PoS data of the

customer (disti) as reference for the demand planners to

determine their forecast towards distributors (the Sell-in

forecast from Ampleon to distributors)

Next tier POS (Disti) Easy view on POS

development in Demand

Planner view

2. Must

have

Kees Easily view and analyze PoS / Inventory data of

the customer (Disti)

- How next tier PoS (and inventory) data can

be processed and analyzed in the tool?

x Model N 2.2.4 2.3,3.4 UT_IBP_012

Demand planner MM

marktet Process 1 1

More insight in PoS and Stock of Disti, for better

forecasting to disti L P Training Rajesh/Edward

Demand 7 Demand

Planning

MMS

Be able to easily view and analyze disti inventory as

reference for the demand planners to determine their

forecast towards distributors (the Sell-in forecast from

Ampleon to distributors)

Next tier Inventory (Disti) Easy view on Inventory

development in Demand

Planner view

2. Must

have

Kees see Demand 6 x Model N 2.2.4 2.3,3.4 UT_IBP_012

Demand planner MM

marktet Process 1 1

More insight in PoS and Stock of Disti, for better

forecasting to disti L P Training Rajesh/Edward

Demand 7.1 Demand

Planning

MMS

signals can be generated to use in forecasting the PoA

forecast, e.g. upwards/downwards trend

Alerts signaling trends Alert parameters 3. Nice to

have

Kees How signals are generated to use in forecasting

the PoA forecast? E.g. upwards/downwards

trend

2.2.4 UT_IBP_012

Demand

8/42/43

Demand

Planning

Being able to set different exception

rules/thresholds/alerts, on different aggregation levels

(e.g. total product or per CACC), e.g. based on:

- EDI customer forecast > 10% of current forecast

- Total order book coming 2 months > 80% of forecast

- The weight of the deviation (f/e by CACC) compared to

the total volume (per product, package, capacity?

Forecast & Actuals data Alerts Alert boundaries 2. Must

have

Kees Set and use different exception

rules/thresholds, on different aggregation

levels

x Customer B2B 5.3.4 4.4 UT_IBP_016..T

o be finalized

with Business

Demand 9 Demand

Planning

Easy overview of multiple demand signals in one screen 2. Must

have

Kees To come to a good demand plan various

demand signals are taken into account, e.g.

marketing topdown (product level) forecast,

accountmanager bottomup forecast per CACC,

Stat4Cast

3.3.1.9 3.4 UT_IBP_003,

UT_IBP_006

Impacted Change DimensionsAnalysis phase Integration Design Phase Build/ Configure Phase Test/ Train Phase

Never underestimate masterdata: from > 3 (polluted) masterdata sources to 1…

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I2 Masterdata

Master Data Management

system SAP

ECC

SAPSOH

SAPIBP

Before Go Live: make sure all hand-overs are tested thoroughly

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Two types of behaviour

Resistance to change Commitment

≠

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Present a clear what-is-in-it-for-you message

Examples:

✓ Swifter decision making

✓ Increased transparency

(one set of numbers)

✓ Involving all stake holders

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Don’t neglect…manage expectations

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Business success with planning tools: it’s a journey

Roadmap of Heineken by Johan Smits

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“IBP is the drumbeat of our business”

Impression of the day

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