Executive Sales and Operations Planning: Process and Technology Strategies

Transcription

1 2 Hapnina 2 Hapnina St. St. Raanana Raanana, 43215, Israel. Israel. Tel: Tel: Fax: Fax: Executive Sales and Operations Planning: Process and Technology Strategies Based on Aberdeen Group benchmark Copyright 2010 by programa. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the permission of Programa. Presented by: Mr. Ronen Abramovich Partner Programa

2 Executive S&OP: Focus of the Current Study 2 Hapnina St. Raanana 43215, Israel Tel :

3 Survey participants Over 380 companies participated 21% 15% 22% 42% Discrete (Automotive, Aerospace, and Defense, Industrial Manufacturing) Process (Chemicals, Metals and metal products, mining/oil/gas, paper/lumber/timber, pharmaceutical manufacturing) Consumer Industries (Apparel, consumer durable goods, consumer electronics, consumer packaged goods, distribution, food/beverage, health and beauty aides, retail, wholesale) High-tech sector (telecommunication equipment, computer equipment and peripherals, hightech,medical devices) 2 Hapnina St. Raanana 43215, Israel Tel :

4 The benchmark questions 1. What are the financial and operational benefits companies gained from their S& OP process? 2. What are the differentiating characteristics of the Best In Class companies? 2 Hapnina St. Raanana 43215, Israel Tel :

5 What is Best in Class Performance? The benchmark questions Aberdeen used four key performance criteria to distinguish Best in Class companies from Industry Average and Laggard organizations. Improved gross margin in the last 3 years Reduced logistics cost/sales in the last 3 years Improved complete order fill rate in the last 3 years Improved average forecast accuracy at a product family 2 Hapnina St. Raanana 43215, Israel Tel :

6 The benchmark questions 1. What are the financial and operational benefits companies gained from their S& OP process? 2. What are the differentiating characteristics of the Best In Class companies? 5 major categories: Process (the level of maturity gained by the company with respect to their business processes) Organization (corporate focus and collaboration among stakeholders) Knowledge (ability to channel disparate sources of data into meaningful information as well as retain that information for future use) Performance management (ability of the organization to measure the benefits and to improve key processes further) Technology (tools and intelligent deployment of those tools) 2 Hapnina St. Raanana 43215, Israel Tel :

7 Competitive Assessment - Process Planning Process Capabilities Frequency and for Executive Closed Loop S&OP Planning Best 72% in of Class Best companies in Class companies are: have a formal monthly S&OP process as compared to 54% 1.4X of more Average likely to companies be able to and consider 27% of major Laggard constraints companies. 1.7X Best more in class likely companies to be able have to consider better processes phase in/phase and technology out of products infrastructure in place to orchestrate 2X more likely and to conduct be able the to create operational multiple (pre-s&op scenarios meetings) to analyze and strategic (executive S&OP meetings) procedures on a regular monthly frequency. Laggards are more likely to struggle with carrying out a regular S&OP process. 2 Hapnina St. Raanana 43215, Israel Tel :

8 Competitive Assessment - Process Planning Frequency and Closed Loop Planning 72% of Best in Class companies have a formal monthly S&OP process as compared to 54% of Average companies and 27% of Laggard companies. Best in class companies have better processes and technology infrastructure in place to orchestrate and conduct the operational (pre-s&op meetings) and strategic (executive S&OP meetings) procedures on a regular monthly frequency. Laggards are more likely to struggle with carrying out a regular S&OP process. 2 Hapnina St. Raanana 43215, Israel Tel :

9 Competitive Assessment - Process Reporting Capabilities for Executive S&OP Best in Class companies are: 1.7X more likely than All Others to have high-level reporting designed for executive management 1.6X more likely than All Others to be able to express the S&OP plan in terms of revenue and margins 1.8X more likely than All Others to be able to consider the KPIs from the previous periods with regards to capacity, forecast accuracy and inventory 2 Hapnina St. Raanana 43215, Israel Tel :

10 Competitive Assessment - Organization Organization Characteristics for Executive S&OP Best in Class are: 1.8X more likely than All Others to have a full-time S&OP coordinator managing the S&OP process. 1.4X more likely than All Others to have a formal S&OP meeting timing and schedule One should note that having a cross-functional team is not a differentiator for Best in Class companies. 2 Hapnina St. Raanana 43215, Israel Tel :

11 Competitive Assessment - Knowledge Data and Integration Architecture Best in Class are: 1.4X more likely than All Others to have a centralized data repository for S&OP 3X more likely than All Others to have well-integrated S&OP modules. However, only 39% of Best in Class companies indicated they have well-integrated S&OP modules. 2 Hapnina St. Raanana 43215, Israel Tel :

12 Competitive Assessment - Technology Technology Architecture Some key takeaways from the research findings regarding the technology architecture of the participating companies are: 73% of all companies indicated that fragmented excel spreadsheets are used to support the S&OP process (65% of Best in Class companies!) Average and Best in Class companies are 30-40% more likely to have an integrated ERP module be part of the S&OP process than laggards. Best in Class companies are 2.6X more likely than All Others to have a best of breed demand forecasting system. Best in Class companies are 2.5X more likely than All Others to have a best of breed supply planning system. Nevertheless, only 20% of Best in Class companies actually have. Best in Class companies are 1.4X more likely than All Others to have a business intelligence tool support their S&OP process. 2 Hapnina St. Raanana 43215, Israel Tel :

13 Required Actions - Laggard Laggard Steps to Success Step 1: The ability to measure and monitor the performance of their S&OP plans is a clear differentiator for Best in Class companies. Step 2: Laggard companies must move towards a monthly frequency S&OP planning process. Step 3: Laggard companies need to make sure they have a formal S&OP meeting schedule in place so as to ensure the different stakeholders like procurement, finance, manufacturing, engineering etc are collaborating with each other. 2 Hapnina St. Raanana 43215, Israel Tel :

14 Required Actions - Norm Industry Norm Steps to Success Step 1: In an environment where product life-cycles are rapidly shrinking, the ability to consider phase in/phase out of products during the S&OP process is a key requirement for Average companies to focus on. Step 2: Invest in tools that can facilitate high-level reporting for the executive management as well as closed loop tie-in to the operational S&OP process. Step 3: Ensure that your S&OP architecture is well integrated. In addition to the ability to monitor the S&OP output, focus on the ability to react quickly during the monthly planning cycle; for instance, communication between the operational S&OP meeting and the executive S&OP meeting. 2 Hapnina St. Raanana 43215, Israel Tel :

15 Required Actions - BIC Best in Class Steps to Success Step 1: 62% of Best in Class companies do not have the ability to create multiple scenarios to analyze the S&OP plan. These companies need to focus on obtaining this capability; especially the ability to perform profit optimization. Step 2: 59% of Best in Class companies do not have event management and alerting capabilities to perform more frequent and responsive S&OP processes. There is ample opportunity for Best in Class companies to be able to leverage event management and alerting capabilities as well as to respond to market conditions faster. Make sure the S&OP goals are taken into consideration when performing inventory management or demand management projects. Step 3: Only 30% of Best in Class companies are able to perform their S&OP process at either the enterprise or value chain level (including trading partners and customers). This capability is critical to ensuring the S&OP plan is as collaborative and accurate as possible. 2 Hapnina St. Raanana 43215, Israel Tel :

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