Getting S&OP to work. EyeOn PID building blocks for process design and implementation. Rotterdam, 5 October 2017

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2 Getting S&OP to work 12 building blocks for process design and implementation EyeOn PID 2017 Rotterdam, 5 October 2017

3 S&OP and IBM as decision making processes S&OP is a set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning, and to link high level strategic plans with day-to-day operations. Process designed around decisions Integrated planning: -strategy, tactical, execution -financial & volume Driven by business leaders 3 Demand/Supply balancing at the basis

4 S&OP Maturity stages Increasing horizontal and vertical integration S&OP Chaotic S&OP Supply Chain S&OP Financial S&OP Integrated Business Management Unstructured Scattered ICT landscape No or scattered metrics No collaboration Balancing Supply / Demand Supply Chain driven Volumes Local processes Ownership in Supply Chain or Operations Formalized S&OP process Sequential Optimizing financials as well as volumes Operational planning input for q*p / LE / Rolling forecast Aligned demand supply plan, proactive, profit optimization Suitable frequency of decision making Integral profitability Customers and suppliers integrated in process Concurrent rather than sequential

5 A framework to configure your process Process designed around decisions Balance demand & supply Integrated planning Organizational readiness DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 5

6 S&OP is a process where we make decisions DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 6

7 S&OP is about balancing demand & supply DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 7

8 S&OP is about integrated planning horizontally and vertically DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 8

9 S&OP Organizational aspects DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 9

10 How to use Building Blocks for a successful S&OP (re)design Internal Environment Configuration S&OP Design -Objectives -Process -Tool support - S&OP execution -Analysis -Behavior -Decisions - PERFORMANCE Implementation Gap External Environment 10

11 Mentimeter question 1 How would you rate your S&OP maturity? S&OP Chaotic S&OP Supply Chain S&OP Financial S&OP Integrated Business Management Unstructured Scattered ICT landscape No or scattered metrics No collaboration Balancing Supply / Demand Supply Chain driven Volumes Local processes Ownership in Supply Chain or Operations Formalized S&OP process Sequential Optimizing financials as well as volumes Operational planning input for q*p / LE / Rolling forecast Aligned demand supply plan, proactive, profit optimization Suitable frequency of decision making Integral profitability Customers and suppliers integrated in process Concurrent rather than sequential 11

12 Mentimeter question 2 Indicate 1-3 building blocks that are major contributors to the success of S&OP in your organization 12

13 Mentimeter question 3 Indicate 3 building blocks that you think should to be improved in the S&OP process in your organization 13

14 Configure your process: season to taste! DECISION-DRIVEN ENRICHMENT ONE PLAN COLLABORATIVE BEHAVIOR SUPPORTIVE DATA & TOOLS EVENT PLANNING STRATEGY EXECUTION PLANNING COMPETENCE ANALYTICS AGILE SUPPLY BUSINESS-LEADER DRIVEN CONTINUOUS IMPROVEMENT 14

15 Supportive data & tools Problem symptoms? Discussions about the data? Back-and-forth between meetings? Extreme effort to prepare for a cycle? Lack of trust in the quality of decisions? Disconnected view? Excel hell: Lack of suitable support from the system? Errors in the underlying data? Difficult to build scenarios and simulate How to tackle Prepare information according to decision items on the agenda Differentiated level of aggregation (per horizon) Work on master data where possible, arrange for data cleaning where necessary Automated or optimized data collection processes Improve E2E visibility within the company (in case of complex structures) Improve E2E visibility across the chain (in case of high interdependency) Use tools that enable fit-for-purpose information processing, simulation and scenario building 15

16 One plan Problem symptoms? No alignment between plans (silo s)? Unclear financial outlooks? Inability to monetize tactical plans? Decision tracks on S&OP topics outside the S&OP process? Lack of outlook on proper horizon? Running out of budget near end of year How to tackle Integrate planning processes across disciplines (horizontal alignment with shared underlying assumptions) Integrate the input and output of these planning processes; enable to move between aggregation levels where needed Financial forecast is updated and discussed as part of S&OP Financial plan = financial forecast + risks and opps Remove focus from calendar year only (rolling forecast) 16

17 Strategy execution Problem symptoms? Strategical level and tactical level are disconnected? Out-of-control top management? Gaming? Keep focusing on details? Keep focusing on short term? Keep focusing on operational or supply chain decisions instead of business decisions? Blindness outside preferred scenario, no fallback options or plan? Target-seeking forecast How to tackle Separate target setting and action setting: remove budgeting from the forecasting process Aim for gap-closing actions that act upon the difference between budget / target and actuals / forecast Scenario-based evaluations against strategic outcomes Put controls on the focus of the process: evaluate time spent on business vs. supply chain decisions, and short-term vs mid/long term Structured handover of responsibilities between teams on different horizons, incl. joint operationalization of strategy to the tactical level (business plans, sourcing, expansion markets etc.) including timing 17

18 Collaborative behavior Problem symptoms? Reluctance to collaborate? Blaming culture? Not-my-problem? No responsibility? Individual agenda s? Incoherence in used formats and interpretation of numbers, KPIs, etc.? Disconnected overall objectives? We didn t know that 18 How to tackle Cross-functional approach: take people with a collaborative mindset that supports decision making and organize them in teams with decision making authority Behavioral management: clear guidelines and priorities on content and process; coaching (especially leadership level), controls on appropriate behavior (for example escalation acceptance only with a plan attached) Communication plan & execution: continuous effort that promotes 2-way communication instead of implementing from the top or the sideline Balanced relative-to-market incentives in line with holistic objectives (business and behavioral) to prevent gaming Promote information transparency and information sharing

19 Enjoy your gift Take the box to your office 2. Separate the blocks you want to work on first 3. Use them daily as your favourite coasters 4. Forecast the tear and wear of your coasters and align your planning accordingly 5. Celebrate success and proceed with the next selection 6. Repeat until business is happy And do get in touch when you want a sparring partner! The Netherlands : Marco van Alfen marco.vanalfen@eyeon.nl +31 (0) Belgium : Luc Van Wouwe luc.vanwouwe@eyeon.eu +32 (0) UK and Ireland : Sabu Sheikh sabu.sheikh@eyeon.eu Switzerland : Jean-David Risson jean-david.risson@eyeon.eu Other countries: Menno Bruggeling menno.bruggeling@eyeon.nl +31 (0)

20 Ready to take your next steps? Want to read more? Visit us at EyeOn reports Planning excellence Accelerated improvement Forecasting Benchmark S&OP benchmark Fast Forecast scan Inventory Management scan 20

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