S&OP Best Practices Aligns People, Process, and Technology

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Information about S&OP Best Practices Aligns People, Process, and Technology
Business & Mgmt

Published on February 26, 2014

Author: steelwedgesoftware

Source: slideshare.net

Description

Aligning your business planning involves a focus on people, process, and technology for proper forecasting and planning.

Single Line of Sight: Plan, Perform, Profit S&OP: A Better Way to Run Your Business Best Practice S&OP Aligns People, Process and Technology © 2014 Steelwedge Software, Inc. Confidential. 1

Speakers Danny Smith, VP Industries Jan Veerman, Managing Partner Steelwedge Software EyeOn Solutions © 2014 Steelwedge Software, Inc. Confidential. 2

Agenda •  S&OP: Current State and Challenges •  Realizing the Business Value from S&OP •  A Call to Action © 2014 Steelwedge Software, Inc. Confidential. 3

A Brief History & Review of S&OP •  S&OP: “a better way to run your business” •  Evolved out of early work in Material and Production Planning in the 1970s (by thoughts leaders like Oliver Wight, TF Wallace, others) •  Expanded to include Sales, other groups in 1980s •  Continually evolving - latest version rebranded as “Integrated Business Planning” (IBP) in 2000s •  Integrates Finance, R&D •  Executive value (i.e. risk mitigation; “what if” simulations) •  Extended to external processes © 2014 Steelwedge Software, Inc. Confidential. 4

Great Results when Executives are Fully Engaged “How involved is your executive team?” Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 5

S&OP Accelerates Performance “What kind of benefits is S&OP delivering?” 0% 10% 20% 30% 40% 50% Forecast Accuracy Customer Satisfaction Asset Utilization Inventory Value Order Fill Rate Revenue Working Capital Most are NOT getting good results – why? Perfect Order Return on Assets Gross Margin Inventory Turns Substantial Overwelming Sales and Operations Planning Research Study 2006: Ventana Research © 2014 Steelwedge Software, Inc. Confidential. 6

Reality: Most Execs Not Fully Engaged in S&OP Process “Does your executive team own the S&OP process?” Why aren’t executives owning the S&OP process? Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 7

Most Efforts Not Supporting Executive Needs “Rate your S&OP capabilities” Integrated Supply/Demand 16.7% Integrated Financial Plans 25.4% Strategy Deployment 29.4% Strategic Initiatives 35.1% Scenario Planning 57.4% 25.9% 45.0% 55.7% 18.9% 57.3% 13.4% 54.2% 10.7% 46.1% Low Medium High Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 8.9% Still operations focused vs. an enabler for executive decision making 8

Missing Big Opportunities “Rate your S&OP approach” Focus 12.5% 70.8% 16.7% Backward Results In-Between Forward Planning Strategic Perspective 29.5% 65.2% 5.3% Short Term Problem Solving In-Between Exploiting Opportunities Approach to Results 18.9% 67.8% 13.3% Passive In-Between Actionable Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. Not delivering on true potential 9

Executives Want More “Rate your current vs. desired capabilities” 50.2% 46.7% 44.4% 34.2% 28.4% 25.7% Reality still a long way from the potential Hit Financial Targets Synch Operating Strategies Current Benefits Ensure Execution of Strategies Future Desired Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 10

Gap between Best Practices & Current Situation “Rate your S&OP process” (maturity) 32.2% Below Average 14.7% Only Adequate 8.4% Excellent After 30+ years of S&OP only 10% rate themselves as Excellent or World-Class World Class 1.7% Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 11

Agenda •  S&OP: Current State and Challenges •  Realizing the Business Value from S&OP •  A Call to Action © 2014 Steelwedge Software, Inc. Confidential. 12

Key for Delivering Results: Addressing All S&OP Critical Success Factors People Process (Collaborate) (Automate/Monitor) Technology/Data (Manage) © 2014 Steelwedge Software, Inc. Confidential. 13

Blocking S&OP Results: Gaps with Existing Systems “How satisfied are you with your current systems capabilities?” 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Demand Supply Matching What if Analysis S&OP Plan Quality & Metrics Role Based Alerts & Exceptions Fully Meets Needs Doesn't Fully Meet Needs Source: Executive Sales & Operations Planning: Process & Technology Strategies. Survey of 380 companies. Aberdeen Group 2007+ © 2014 Steelwedge Software, Inc. Confidential. 14

Best Practice S&OP Aligns People, Process & Systems “We continue to look at S&OP as an aspect of business that needs terrific improvement…It’s hard to argue that this shouldn’t be a central piece of management software” –Rob Kugel, Ventana Research © 2014 Steelwedge Software, Inc. Confidential. 15

Gap between Best Practices & Current Situation “What tools do you use for S&OP?” 83% still using spreadsheets or limited functionalsilo tools Closing the Gaps in S&OP Study 2013: CSCO Insights © 2014 Steelwedge Software, Inc. Confidential. 16

Ground Reality: the Difficulties of Supporting the Process Sales Consolidation Review, Overrides Consensus Process Manual Pre-ES&OP Marketing Industry Data S&OP Complex Not Scalable Operations Security Risk Finance Does this Give Executives an Agile Decision Making Process? © 2014 Steelwedge Software, Inc. Confidential. 17

Value People, Process & Systems Together Enable and Sustain S&OP Adoption & Values SW Powered S&OP L4 L3 Step Change Maturity & Performance Accelerated Time to Value L2 L1 Avoid Process Failure Q1 Q2 Q3 Time Q4 “Companies can have a hard time getting past basic levels of S&OP without technologies like Steelwedge to support the process” - Tim Payne, Gartner VP of Supply Chain Analysis © 2014 Steelwedge Software, Inc. Confidential. 18

Agenda •  S&OP: Current State and Challenges •  Realizing the Business Value from S&OP •  A Call to Action © 2014 Steelwedge Software, Inc. Confidential. 19

Next Steps •  Understand your goals for S&OP •  Translation mechanism between strategic objectives and operations •  Enforcement mechanism to deliver results •  Unifying mechanism to have all functions “march in the same direction” •  Assess your maturity •  People •  Process •  Assess your technology support •  Cross functional platform for collaboration •  Inclusiveness: easy adoption © 2014 Steelwedge Software, Inc. Confidential. 20

Crawl – Walk – Run Approach •  Identify gaps in people, process and systems •  Develop plans to close them •  Key to success is incremental value •  Start with quick win as phase 1 & foundation •  Expand the roll-out adding value as you go © 2014 Steelwedge Software, Inc. Confidential. 21

Who are we? 40 Specialists in realizing forecasting and planning improvements •  Focus on design and implementation •  System independent •  Line management experience and university educated •  Cross functional & hands-on mentality •  Proven track records in interim management •  Industry focus; industrial companies, its suppliers and customers •  Network facilitator •  Deliver concrete projects with a short throughput time (max. 100 days) and clear deliverables. © 2014 Steelwedge Software, Inc. Confidential. 22

EyeOn offering … Consulting Research & Publications Interim Teaching Outsourcing Benchmarks Expert Sessions / Idea Labs Industry Networks © 2014 Steelwedge Software, Inc. Confidential. 23

Selection of customers High Tech Food / FMCG Process Life Science Zorg Other © 2014 Steelwedge Software, Inc. Confidential. 24

Mythe: It is not about predicting the future.. •  “I think there is a world-market for about five computers” (Thomas J. Watson (IBM Chairman), 1943) •  “The worldwide demand for automotives will not surpass 1 million, due to the lack of qualified chauffeurs” (Gottlieb Daimler, 1901) •  “If I had asked people what they have wanted, they would have said faster horses” (Henri Ford, 1913) •  There are two sort of forecasts: Lucky or Wrong (Freek Aertsen, 1995) © 2014 Steelwedge Software, Inc. Confidential. 25

The objective is to enable high quality decision making!!! © 2014 Steelwedge Software, Inc. Confidential. 26

S&OP the cure for all diseases? GDP$growth$ S&OP$publica5ons$ © 2014 Steelwedge Software, Inc. Confidential. 27

Most Companies Not Doing “Best Practices” S&OP Percent of respondents running S&OP process Percent of respondents conducting periodic without input from the following departments S&OP process without the following steps Manufacturing 48% 66% Performance Review 66% Supply / Demand Match Finance 47% 47% Supply Planning Inventory Planning Sales 45% 36% Demand Planning 44% Source: “Recession Survival Kit; cross-industry survey conducted for Supply Chain Management Review, on behalf of Oracle and IBM, by Reed Business Information; February, 2009. Response to question: “Which factors will enable your organization to achieve your primary business goal?” n = 537 responses. © 2014 Steelwedge Software, Inc. Confidential. 28

Benefits to be expected from S&OP Increasing  revenue   59%   Improving  forecast  accuracy   57%   Reduc=on  of  inventory   50%   Improving  asset  u=liza=on   42%   Determining  outsourced  manufacturing   38%   Determining  procurement  requirements   Improving  new  product  launch   36%   34%   Capital  planning  and  asset  management   32%   Transporta=on  and  warehouse  management   32%   Improvements  in  the  perfect  order   30%   Source: Supply Chain Insights © 2014 Steelwedge Software, Inc. Confidential. 29

4 most important performance indicators S&OP process DEMAND Service Level (On Time In Full) 1 SUPPLY Forecast Accuracy 2 Factory Performance (CLIP / RLIP / LAP) Stock 4 Stock Levels 3 © 2014 Steelwedge Software, Inc. Confidential. 30

Trends and movements in planning: Technology driven © 2014 Steelwedge Software, Inc. Confidential. 31

Large variety in Planning tools •  Traditional ERP vendors •  Operational focus •  Rigid •  Software as a Service (Saas) solutions •  Specific solutions •  Agile •  S&OP solutions © 2014 Steelwedge Software, Inc. Confidential. 32

Key Learnings S&OP Implementations •  Old school ERP implementations do not fit business requirements •  Environment is changing fast à S&OP process + platform need to be agile •  Think big, act small •  Short implementation cycles (25 – 50 days) •  SaaS Planning tools able to support S&OP process •  Master data management / data quality •  Involve business as soon as possible •  Maintenance of tool by business, not IT © 2014 Steelwedge Software, Inc. Confidential. 33

Ready to Keep Learning? Watch the Video Connect Your Sales Pipeline to Your Demand Plan © 2014 Steelwedge Software, Inc. Confidential. 34

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