Continuous S&OP Breaking the Mold. Trevor Miles e: m:

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2 Continuous S&OP Breaking the Mold Trevor Miles e: m:

3 Where did this all start? Sep,

4 What have we been working toward? The 5 step ES&OP Process - Tom Wallace, Executive S&OP: The Executive's Guide Issues - Sequential - One Directional - High Level - Manual - Slow - Unit based - Ignores margin 4

5 A lot has changed in 25 years Unprecedented time of global expansion 5

6 A lot has changed in 25 years PC, ERP, APS, internet, SAP DOS VisiCalc Windows 95 SAP APO Google GSM Mobile ipad Oliver Wight: Transitioning from S&OP to IBP Excel dotcom 6

7 A lot has changed in a little over 10 years Cloud, Social, Mobile, Internet-of-Things, May 2003 Feb 2004 Mar 2006 Jun 2007 Sep 2010 Aug 2006 Mar 2011 Oct

8 A lot has changed in 5 years Internet-of-Things, 3D Printing, 8

9 Disruptive Technologies for Supply Chain SCM World, The Chief Supply Chain Officer Report 2014, September

10 But our mental model is stuck in 1990s ideas The traditional plan then execute model is the product both of historical thinking about supply chain processes and the state of available supporting technology. Next Generation Supply Chain Management - The Integration of Planning and Execution, CSCO Insights Thought Leadership Series, Supply Chain Digest,

11 Traditional S&OP Description Step 5 Exec-S&OP Meeting Decisions & Updated Game Plan Step 1 Data Gathering Step 2 Demand Planning Step 3 Supply Planning Actuals Demand, Supply, Inventory, & Backlog + Statistical Forecasts and Worksheets Step 4 Pre-S&OP Meeting Management Forecast 1 st -pass spreadsheets Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting Resource Requirements Plan Capacity Constraints 2 nd -pass spreadsheets 11

12 Traditional S&OP Description Exec: I want to increase demand In Asia by 5% to compensate for revenue drop in Europe Step 5 Exec-S&OP Meeting Decisions & Updated Game Plan Step 1 Data Gathering Step 2 Demand Planning Step 3 Supply Planning Step 4 Pre-S&OP Meeting Management Forecast 1 st -pass spreadsheets Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting Resource Requirements Plan Capacity Constraints 2 nd -pass spreadsheets Actuals Demand, Supply, Inventory, & Backlog + Statistical Inventory Forecasts Manager/Planner: S&OP Team: Executive S&OP Team: and How Worksheets much Do RM, we WIP, have and the FG Can right do we demand/supply we live need with to the carry? projected balance? revenue shortfall? Where are Will we going this meet to place the Have new it? all revenue the risks targets? been considered? Do we have Do the we warehouse need additional capacity? Marketing campaigns? What does What-if this mean the in NPI terms What-if does of not min we take order accelerate off qtys? as we R&D assume? by 6 months? How close does FG need to be to customers? No wonder companies still think in terms of months and quarters Demand Manager/Planner: Supply Manager/Planner: Given the last 12 months Does the history usual factory have capacity? and our existing Marketing If not, where plans else can we get supply? which countries make What most will be sense? the additional mfg & delivery cost? Will Europe drop even more if we shift Marketing emphasis to Asia? Is this spread across Which all product materials families? do we need to increase? What about NPI? Can the suppliers meet our new demand? If not, do we have alternative suppliers? 12

13 Traditional S&OP Description Step 5 Exec-S&OP Meeting Decisions & Updated Game Plan Step 1 Data Gathering Step 2 Demand Planning Step 3 Supply Planning Actuals Demand, Supply, Inventory, & Backlog + Statistical Forecasts and Worksheets Step 4 Pre-S&OP Meeting Management Forecast 1 st -pass spreadsheets Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting Resource Requirements Plan Capacity Constraints 2 nd -pass spreadsheets 13

14 Traditional S&OP Description Step 5 Exec-S&OP Meeting Decisions & Updated Game Plan Step 1 Data Gathering Step 2 Demand Planning Step 3 Supply Planning Actuals Demand, Supply, Inventory, & Backlog + Statistical Forecasts and Worksheets Step 4 Pre-S&OP Meeting Management Forecast 1 st -pass spreadsheets Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting Resource Requirements Plan Capacity Constraints 2 nd -pass spreadsheets 14

15 Continuous & Collaborative S&OP Step 5 Exec-S&OP Meeting Step 2 Demand Planning Step 3 Supply Planning Step 4 Pre-S&OP Meeting Management Forecast 1 st -pass spreadsheets Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting Resource Requirements Plan Capacity Constraints 2 nd -pass spreadsheets Actuals Demand, Supply, Inventory, & Backlog + Statistical Forecasts and Worksheets Huge improvements in - Visibility to issues - Resolution time - Alignment across functions 15

16 What does good look like? 16

17 Risk Adjusted Long Term Plan One number plan wrong approach StrataBridge, Evolution of Sales & Operations Planning, Andy Coldrick, Dick Ling & Chris Turner 17

18 Outside-In approach critical Source: Gartner, Elevate Your S&OP Process From Traditional to Demand-Driven, Todd Applebaum and Jan Kohler, Jul 2,

19 Outside-In approach critical Distribution Network Finance Supply Network Innovation Network Source: Gartner, Elevate Your S&OP Process From Traditional to Demand-Driven, Todd Applebaum and Jan Kohler, Jul 2,

20 Continuous S&OP Breaking the mold AND, not OR Concurrent, not just sequential Event-driven, not just calendar-driven Effective, and efficient 20

21 Sales & Marketing Operations Engineering/R&D Finance Executive S&OP Meeting Operational Planning & Execution Monitor Performance Continuously Continuous S&OP Breaking the Mold Finance Consensus Finance Scenarios Financial Performance Continuous S&OP Generate plan Sense when plan will not be met Identify future risk New Product Consensus New Product Scenarios Mid-cycle adjustments Know sooner, act faster New Product Gates Supply Consensus Key Capabilities Range planning Supply Scenarios Decision orchestration Supply Performance Business trade-off analysis Demand Consensus Demand Scenarios Statistical Forecast Future Risk Scenario planning Assumption capture Concurrent planning Time Function Continuous demand, supply, and market input Hierarchy 21

22 What does good look like? Qualitative Improvements 22

23 What does good look like? Quantitative Improvements 23

24 Continuous S&OP Breaking the Mold Trevor Miles e: m: