Collaborative Demand Planning: A Requirement for Successful Integrated Business Planning (IBP)

1 © 2014 Steelwedge Software, Inc. Confidential.

Single Line of Sight: Plan, Perform, Profit

Agility Webinar Series

Collaborative Demand Planning:

A Requirement for Successful

Integrated Business Planning (IBP)


Agenda

• KPMG

• Introductions

• Integrated Business Planning—KPMG PoV

• Critical Collaborative Demand Planning Elements for Successful IBP

• Steelwedge

• Platform Overview

• 4 Keys to IBP Success

• Collaborative Planning Workflows, Analysis and Reporting


KPMG / Steelwedge

Webinar

Integrated Business Planning

December, 2014

kpmg.com


2© 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Agenda

THANK YOUCritical Collaborative Demand Planning Elements for Successful IBP

Introductions1

Integrated Business Planning – KPMG PoV2

3



KPMG Presenters: Mark Levy and Peter Yu

Background

Mark is a Managing Director in KPMG’s Advisory Services practice where he is the leader for

the Integrated Business Planning (IBP) service offering

He has 25 years of experience in strategy and operations serving companies with complex

product portfolios and extended supply chains. Mark has spent the bulk of his career improving

processes and systems across multiple tiers of the value chain with a focus on cross-functional

and cross-enterprise solutions.

Before resuming his consulting career, he was VP Products at RiverOne responsible for

defining and building a multi-tier collaborative SaaS solution that was acquired by i2

Technologies in 2006.

Mark holds degrees from Stanford, Wharton, and Penn Engineering.

Mark T. LevyManaging Director, Customer and

Operations Advisory Services

KPMG LLP

Irvine, CA

Tel 949-885-5870

[email protected]

Peter J. YuDirector, Customer and Operations

Advisory Services

KPMG LLP

Chicago, IL

Tel 312-665-1397

[email protected]

Background

Peter, a director in KPMG Advisory Services, has 16 years experience in supply chain

transformation consulting experience in the Hi-Tech, Consumer Packaged Goods, Retail,

Industrial Products, and Automotive Industries. He has expertise in Integrated Business

Planning (IBP/S&OP) process improvements, and is one of the leading members of IBP/S&OP

offering team at KPMG.

Peter also has a strong background in global supply chain processes and systems

management with a focus on advanced supply chain planning (Global Demand, Supply,

Inventory, Capacity Planning) across a number of industries.

Peter holds graduate and undergraduate degrees in Industrial & Operations Engineering and

Computer Science from the University of Michigan, Ann Arbor.



Experience based client confidence

Driving value across the extended

enterprise supply chain

KPMG culture

of accuracy

KPMG tradition

of delivering

measurable results

Customer & Operations has a global network of over 3,000 partners &

practitioners working across supply chain and operations, customer analytics, business integration and innovation.

AMERICAS

> 850 Professionals &

Partners

across Strategy &

Operations

EMEA

> 1400 Professionals &

Partners

across Strategy & Operations

Our Differentiators

Focus on total value delivered:

Comprehensive view to maximize value from

customers’ customers to suppliers’ suppliers

Sustainability of benefits: Overriding focus

on structural improvements and knowledge

transfer to deliver sustainable benefits

Genuine insight: Experienced practitioners

with methods, domain knowledge, industry

insights and cross-functional capabilities to

tackle complex challenges

Strategic solution provider relationships: Allows us to provide clients with differentiated,

market-leading solutions

Trusted advisor: Objectivity in

recommendations and solution design

Global reach: Network of professionals in all

major sectors and countries to address global

client needs – with global centers of excellence

850+ supply chain professionals globally

(250 in America, 500 in EMEA and 100 in ASPAC)

KPMG’s Customer & Operations Advisory Overview

ASPAC

> 850 Professionals & Partners

across Strategy & Operations



KPMG’s Operations Practice:

Balancing Multiple Objectives – Revenue, Assets, Cost, and Risk

Deliver value from product

and service innovation

Optimize asset portfolio

Profitably enter new markets or channels

Profitably deliver the

customer experience

Build scalable supply chains

Effectively collaborate with customers and channel

partners

Configure supply chains to

achieve low cost

Engineer planning and

execution to optimize

performance

Implement continuous and step-

change improvement programs

Deliver compliance

requirements and manage

enterprise / operational risk

profile

Build flexible and resilient

supply chains

Measure, monitor and govern

Executive

Agenda



5 Pillars of Supply Chain Excellence:

Principles to Design and Operate Customer Centric Supply Chains

We work with our clients to drive value across the extended supply chain

Manage

innovation and

design supply

chains that

support, enhance

and enrich the

customer

experience

Design, configure

and integrate

operations

networks and

supply chains

across the

extended

enterprise supply

chain

Transform the

traditional supply

chain into a

demand driven

multitier network—

eliminating

information latency

and improving end-

to-end visibility

Design and

implement lean

and flexible

operations and

supply chain

processes across

the extended

enterprise supply

chain

Identify sources of

operational risk

and help them use

flexibility,

extended

enterprise

visibility and

analytics to be

more resilient

Purpose Built Globally Integrated Demand Driven Lean & Agile Resilient

• Supply Chain Risk

Assessment

• Supply Chain

Resiliency Strategy

& Implementation

• Lean Six Sigma

• Product Lifecycle

Management

• Working Capital/

Cost Optimization

• IT Enabled Process

Transformation

• Supply Chain

Collaboration

• Demand Driven

Operations

• Operations

Strategy

• IntegratedBusiness Planning

• Value Chain

Management

• Supply Chain

Segmentation

• Supply Chain

Scalability

• Cost to Serve



Our Point of View

Integrated Business Planning (IBP) Definition and Objectives

Integrated Business Planning (IBP) brings strategic planning, finance, supply chain, sales, marketing and product

development into a unified planning operating model to drive transformational performance improvement

decisions

…enables an organization to optimally collaborate and address

critical, cross-functional business decisions across the product

lifecycles…

…and delivers cross-enterprise alignment of planning and execution

processes to improve predictability and financial performance while

managing risk

Integrated Business Planning (IBP) harmonizes financial

and operational processes with customer demand…



Our Point of View

IBP Process Model Synchronized with E2E Supply Chain Planning

IBP is enabled by multiple planning processes

Supply Planning

Product & Portfolio Strategy

Product Roadmap (NPI/EOL)

Strategic

Planning

Strategic

Plan

Forecasting

Sales

Forecast

Budget/

AOP

AOP/

Budget/

Marketing

Forecast

Customer Collaboration Vendor / TPM Collaboration

Vendor

CommitsInventory

Constrained

Demand-Supply

Plan

Operations

Scenarios

Demand

Planning

Unconstrained

Demand Plan

Financial

Analysis

(Pre-IBP)

Demand-

Supply

Scenarios

Pro forma

Financials

Refined

Ship Plan

1

2 3 4

5

6

Executive

IBP

7

Statistical Forecast

SC

Strategy

Inventory Plan

Assumptions Package

Capital

PlanningPlan of

Record

BOMFcst/Orders Inventory Promos

KEY:IBP Owned

e2e SC Planning

Proposed

Ship Plan

Webinar Focus



Our Point of View

IBP Leading Practice Process Flow

IBP

COE

Owned

Pa

rtn

ers

Fin

an

ce

SC

M / O

ps

Ma

rke

tin

gS

ale

sP

rod

uc

t

Financial Analysis

(Pre-IBP)

Forecasting

Bottoms Up

Sales Forecast

Vendor / TPM Collaboration

Product & Portfolio Strategy

Product Roadmap

Account Pipeline

Tops Down

Market Forecast

Market Forecast

Baseline Statistical

Statistical

Forecast

Consensus

Process

Demand

Planning

Unconstrained

Demand PlanSupply Planning

Ops Scenarios

Constrained

D / S Plan

Customer Collaboration

Consensus

Unconstrained Demand Plan Pro forma Financials

Constrained

Demand-Supply Plan

Refined Ship Plan

Financial

Scenarios

E

x

e

c

u

t

i

v

e

I

B

P

Cycle Prep

Assumptions

Package

Inventory Plan

AOP/

Budget/

Capital

Vendor

CommitsInventory BOMFcst/Orders Inventory Promos

Webinar

Focus



Our Point of View

KPMG IBP Process Framework

■ Forecasting: Delivers unconstrained forecasts to Demand Planning from Sales, Marketing, Product Management, et al using

a variety of techniques (pipeline management, promotional forecasting, and co-planning/CPFR)

■ Demand Planning: Uses multiple forecast inputs to create a demand plan aligned with financial goals. Demand Planning

refines the plan through a rapid meeting cadence and feeds the approved consensus demand plan to Supply Planning

1.0

Collaborate with

Customer

2.0

Generate Forecast

3.0

Manage Demand

1.1

Capture customer

key data (i.e. POS,

forecast, inventory,

etc.)

1.2

Conduct analysis to

Identify issues,

disconnects, promo

impacts, and

measure performance

1.3

Refine customer

forecasts based on

analysis and key

events

1.4

Collaborate with

customer to align

forecast, promo,

transitions plans, and

resolve issues

1.5

Make commitments

to customer

1.6

Track KPIs and

highlight on-going

issues and root-

causes

2.1

Review Assumptions

Package

2.2

Create statistical

baseline forecast

(sell-thru preferred)

2.3

Capture sales

pipeline, and create

forecast, including

event / promotional

lifts

2.4

Understand TAM and

market trends to

create top down

Marketing forecast

input

2.5

Publish

unconstrained

forecast(s) to

Demand Planning

3.1

Publish Assumption

Package

3.2

Identify major

changes from

previous cycle, and

convert sell-thru to

sell-in

3.3

Investigate

inconsistencies

between assumptions

and forecasts (i.e.

Promos, NPI/EOL)

3.4

Compare and identify

major gaps between

operational plan vs.

financial targets

3.5

Create proposals to

close gap with

financial plan, if

feasible

(i.e. promos, price)

3.6

Drive consensus

demand planning

process

3.7

Track KPIs including

plan accuracy and

highlight ongoing

issues and root

causes

Forecasting vs. Demand Planning Definitions



Our Point of View

Successful IBP requires consensus demand planning with published

assumptions package and defined consensus business rules

Lift

Library

Product

Lifecycle

(NPI/EOL)

Clear DP

vs.

Forecast

RACI

Governance &

ComplianceMaster Data Management

Published

Assumption

Package

Consensus

Business

Rules

Rapid Demand

Consensus

Process

COE

Aligned

Incentives

Executive Decisions Must Be

Cross-functional to Be Compelling

Supply

Planning and

Co-Planning

E2E Single

Version of

the Truth

Scenario

AnalysisKPIs

A

B C

Change

Management

Taxonomies,

Analytics,

Reporting

Parallel

Financial

Analysis

Executive Decisions

Must Be ‘Teed Up’ Clearly

Executive IBP Requires Executives



Selected, critical collaborative demand planning elements for successful IBP

Critical Demand Planning Oversights Leading Practices

Consensus demand plan not final before IBP

meetings leads to limited focus on decision making

and waning executive participation

Get demand consensus ahead of IBP meeting

• Go through the process – Do not skip steps

• Ensure critical inputs and data are validated

• Assumptions Package and Consensus Rules

A

Lack of assumptions package impedes fact-based

discussion and encourages arguing about the

“numbers”

Forecast based on published assumptions

• Make documented assumptions explicit and

available to all early in the IBP process

B

Lack of consensus demand planning business

rules to apply against multiple demand inputs bogs

down process

Define consensus demand planning business rules

• Include exception based ‘guardrails’

• Refine based on continual planning performance

analysis

C



Consensus Demand PlanA

■ Get demand consensus ahead of IBP meeting – Do not skip process steps

■ Ensure all critical inputs and data are validated

Client E2E IBP Time Spent on Debating Demand Executive IBP Time Spent on Debating Demand

Client X 25% 10%

Client Y 60% 40%

Client Z 70% 50%

0% 10% 20% 30% 40% 50% 60% 70% 80%

E2E IBP Time Spent on Debating Demand

Executive IBP Time Spent on Debating Demand

Time Spent Debating Demand during IBP

Client Z Client Y Client X



Consensus Demand PlanA

How much time is spent during the Executive IBP meeting debating demand?

a) 0% - 20% b) 20% - 40% c) 40% - 60% d) over 60% e) Don’t know / NA



Assumptions PackageB

■ Generate Assumptions Package and make it available to all early in the process

■ Forecast based on fact-based assumptions

Assumption Element

Promotion calendar with lift and/or Big Deal pipeline

Description

26 week view of planned promotions with estimated lift

and/or Big Deals with expected unit forecast

Typical Owner

Marketing / Sales

Assumption Element

NPI launch assumptions

Description

Assumptions for products with no history;

launch date by channel

Typical Owner

Product Management

# Key Elements

1 Product roadmap with target ASPs

2 Promotion calendar with estimated lift / Big Deal pipeline

3 NPI launch assumptions

4 Product substitution assumptions

5 Key customer summary

6 Market growth rate / TAM

7 Market share actuals and targets

8 Revenue / Inventory bets

9 Assortment plan

10 Base seasonality



Assumptions PackageB

How accessible are current key assumptions to process participants?

a) Essentially, not accessible

b) 1-2 elements are available to those in the ‘know’ (e.g., product roadmap on a server)

c) 25 - 50% of key elements are fresh and accessible to participants

d) 50% - 75% of key elements are fresh and accessible in a synchronized manner

e) Over 75% of key elements are fresh and accessible in a synchronized manner



Selected consensus demand planning business rule optionsC

Define business rules to accelerate consensus planning – and refine based on performance

■ Option 1: Time-Horizon

Select different forecast across time horizon based on forecast performance

e.g., when mismatch is < X%, select Sales forecast for 1 - 6 months, there after Marketing/Brand forecast

For Product X Period 1 Period 2 Period 3 Period 4

Statistical 85 86 88 89

Marketing 62 68 70 72

Sales 55 56 56 57

Consensus 62 65 66 67

50%

35%

15%

■ Option 2: Weighted Average

Develop weights for each forecast stream based on forecast performance

E.g. 50% weight to sales, 35% weight to marketing, 15% weight to statistical

■ Option 3: Combine techniques

For Product X Period 1 Period 2 Period 3 Period 4

Statistical 85 86 88 89

Marketing 62 68 70 72

Sales 55 56 56 57

Consensus 55 56 70 72



Consensus demand planning business rulesC

Do you apply demand planning consensus business rules today?

a) Yes, integrate per Option 1 (Time-Horizon)

b) Yes, integrate per Option 2 (Weighted-average)

c) Yes, integrate with a combination of options and/or other business rules

d) No, integrate without business rules

e) No, no multiple forecast streams for business rule use



Our Point of View

Successful IBP requires consensus demand planning with published

assumptions package and defined consensus business rules

Focus on assumptions

Get demand consensus ahead of IBP

Accelerate gap closure with rules


THANK YOU

© 2014 KPMG LLP, a Delaware limited liability partnership and

the U.S. member firm of the KPMG network of independent

member firms affiliated with KPMG International Cooperative

(“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name, logo and “cutting through complexity” are

registered trademarks or trademarks of KPMG International.


“ Steelwedge has grown into

the market's leading S&OP

solution in the cloud. ”

Rating: Strong Positive

Global market share leader

Offices: USA, Europe, Japan & India

Founded in 2002, 50%+ year over year growth

Global organization focused on global delivery (~500 employees)

Cloud-based Integrated Business Planning platform

100% cloud-based for rapid deployment & value realization

Leader in Global Cloud-Based S&OP

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=6Yyw-CHzHSBkpM&tbnid=midefT58ZHafUM:&ved=0CAUQjRw&url=http://www.kk-asc.com/Network/network_j1.html&ei=KEFZU-fFOMSQyAT0-4KoCA&bvm=bv.65397613,d.aWw&psig=AFQjCNG8zp2-QMTAEb7krPkYbWi_Y8o8ng&ust=1398444700807508


S&OP Platform



Key 1: Create a scalable & agile process

Third Party

Systems – SAP, Oracle etc

Budget

Mkt Trend NPI File

Pricing Model Compare Rev/Unit to DPM

S&OP

RCCP

Rev Fcst

DPM

Access

Family Roll-Up

Manual

Complex

Security Risk

Error Prone

Agile Decision Making??

Manual SFS


Drive Agility, Speed and Accuracy with Steelwedge

Third Party

Systems – SAP, Oracle etc

DPM

Access

Manual SFS

Make sure technology

ACCELERATES the process &

supports adoption

28 © 2014 Steelwedge Software, Inc. Confidential. 28

Key 2: Its about how you get to one number…

Statistical

Forecast

Demand Forecasting Requirements

1. Maintain a 3 year detailed forecast at the

customer/product level

2. Allow field sellers and product reps to make updates

to the forecast

Marketing

Consolidated

Plan

Sales

Statistical forecast can be leveraged as baseline to

sales forecast

Jan-11 Feb-11 Mar-11

Stat Forecast 100 120 112

Regional 100 118 114

Product Rep 200 120 115

Consensus 150 120 115

Sales forecast can be

defaulted to statistical

forecast (if desired )

Can be run at higher/global level

and integrate product pricing and

NPI/EOL assumptions

Business rule can drive

defaults as well as find

exceptions to review

Illustrative Demand Plan

Demand templates and process can be configured to meet

specific requirements. Illustration below depicts demand input

captured at the customer/product level. Decisions on inclusion of stat

forecast and work flow would be determined by the business during

the design phase.

Reason & Notes

are captured with

all changes

Business Rules

Simplify

Process

System Drives

Gaps/Exceptions

Review


Key 3: Drive process through exceptions!

Plan monitoring drives “real time” S&OP

3. Drive forecast accountability at the field seller level

4. Focus on value add & consistent performance metrics

Performance metrics are available to review demand plan

performance for specific roles and at planning levels defined by

the business.

Demand plan performance could be reviewed at the value center,

region, market, field seller, customer level, etc.

Plan Monitoring for

out of cycle

exceptions &

performance focus


Volume

(Lbs)

ASP $/Lb Revenue

PROD 1/Cust 1 10 $2 $20

PROD 1/Cust 2 20 $3 $60

PROD 1/Cust 3 30 $2 $60

PROD 1/ Cust 4 40 $2 $80

PROD/Customer

Customer

Market Family

PROD/Customer

PROD

Trade Product

Market Family

Key 4: Integrate financials “throughout” the process…

Financial Integration

5. Integrate volume plans with financial forecast

6. Enter financial inputs at different levels (ASP, standard

cost, unit freight cost)

Volume plans can be translated into financial plans by using

ASP, Standard Cost and Freight unit cost inputs. This data can

be entered at different levels.

Finance

RCM

Finance

Supply Chain

Finance

Logistics

ASP

Freight

Unit Cost

PROD

Trade Product

Supply Family

Data Owner TBD by

Standard Cost

PROD 1/Cust 1 10 $2 $20

PROD 1/Cust 2 20 $2 $40

PROD 1/Cust 3 30 $2 $60

PROD 1/ Cust 4 40 $2 $80

1

2

3

PROD 1/Cust 1 10 $2.2 $22

PROD 1/Cust 2 20 $3.3 $66

PROD 1/Cust 3 30 $2.2 $66

PROD 1/ Cust 4 40 $2.2 $88

If ASP is entered at the

product level, ASP is

pushed Customer to each

customer buying that

PROD

If changes are made at

the PROD level after

customer specific

updates are made, these

changes overwrite the

PROD/Customer updates

Updates made at the

PROD/Customer level

are pushed back up and

ASP is recalculated for

the PROD

Volume

(Lbs)

ASP $/Lb Revenue

PROD 1 100 $2 $200

PROD 1 100 $2.2 $220

Volume

(Lbs)

ASP $/Lb Revenue

PROD 1 100 $2.44 $244

Integrate financials

throughout the

process vs just at

the end!


31

Collaborative Planning Workflow (Example)

Field Seller receives

email notification to

update forecast

Team Performance

updates forecast

volume and value

Product Rep receives

email that field seller

forecast has been

updated

Product Rep updates

forecast

Volume and value

Plan of record created

in Steelwedge

Performance report

sent to Field Seller

and Product Manager

Field Seller reviews

demand performance

against rev targets

Product Rep reviews

demand performance

report

Account

Managers

Sales

Mgmt/

Forecast

Team

A workflow can be configured to facilitate the collection of demand data and push out updates to the demand plan. Email

notifications can be set to send performance reports to demand plan owners and stakeholders.


32

Drive use of non

supply chain users

by push

notifications


New Opportunities

and Run-Rate

New Opportunities

and Run-Rate

Give Sales Management Complete View for Vetting Process

Drill to Details

Quantitative and

Qualitative Information

34 © 2014 Steelwedge Software, Inc. Confidential. 34 Customer RESTRICTED -

For internal use only

Don’t guess where the

changes are coming from &

who’s participating


Consensus Vs. Finance

GAP in EMEA

Leverage Analysis, Workflow & Reporting: Work Finds You

Exception

Details w/ drill

down to notes &

reason codes

Exception

Details w/ drill

down to notes &

reason codes


Q&A

Technology

Collaborative Demand Planning: A Requirement for Successful Integrated Business Planning (IBP)