Planning Capacity and Responding to Change

Transcription

1 Planning Capacity and Responding to Change Barry Elliott Oliver Wight

2 Agenda Background The Journey to Business Excellence Integrated Business Management How to Deliver and Sustain Outstanding Business Performance Oliver Wight 2

3 The approach is different The focus is on integration The approach is to: firstly, educate people and develop internal expertise secondly, develop appropriate processes and behaviours The results are great sustainable benefits in any industry Oliver Wight 3

4 Background Oliver Wight

5 Defining what we mean by Excellence We wrote the book, figuratively and literally An excellent reference for how best to design and implement Integrated Business Management Library of hundreds of processes Nine Chapters, which we will discuss Oliver Wight

6 In more detail... The nine chapters of the Checklist are the following: 1. Strategic Planning 2. Managing and Leading People 3. Continuous Improvement 4. Integrated Business Management 5. Product Management 6. Demand Management 7. Supply Chain Management 8. Internal Supply Management 9. External Supply Management Oliver Wight

7 Focusing on where will be most beneficial Tackling the entire Checklist at once is not practical for any organisation Therefore, we have defined several Milestones to structure the appropriate approaches, depending on where focus should lie at various stages of development Class A Checklist Sixth Edition Capable Planning & Control Milestone STRATEGIC PLANNING PROCESS (3) 1.3 Mission & Vision (a) 1.5 Strategic Planning (b,c) 1.11 Business Planning (a,b,d) PEOPLE (4) 2.13 Leadership for change (a) 2.1 Trust (e) 2.7 People Dev+ Edn. & Training Supplement 2.9 Communication (a,b,e) DRIVING BUS IMPROVEMENT (6) 3.5 Ownership & Accountability 3.6 Ownership & Improvement 3.7 Continuous Improvement 3.8 Framework for sustained improvement 3.21 Coy Perf Measures balanced & integrated 3.22 Velocity (a) INTEGRATED BUSINESS MANAGEMENT (5) 4.1 Process designed (a,b,d) 4.2 Integration 4.3 Characteristics 4.9 Financial projections 4.16 Financial integration (definition + a,b,d) MANAGING PRODUCTS & SERVICES (4) 5.3 Integration 5.4 Day to day process integration 5.9 New Product Master Plan 5.10 Project Planning (a,b) MANAGING DEMAND (9) 6.10 Unconstrained demand planning 6.11 Process for multiple views 6.13 Demand Manager 6.14 Sales plans 6.16 Demand constraining 6.17Customer promising/satisfaction 6.18 Demand management 6.19 Demand Controller 6-BPM1 Aggregate Demand Plan (Sales Plan Performance) SUPPLY CHAIN MANAGEMENT (2) 7.13 Data Mgmt [definition + a,b,c,d at 95%] 7.10 Distribution & Logistics Planning INTERNAL SUPPLY (20) 8.3 Integration: Integrated Business Management 8.5 Master Supply Planning Process + Master Scheduling Supplement 8.6 Capable People 8.7 Material Requirements Planning (a,b,c,d) + Material Planning & Control Supplement 8.7e/8.9d Supplier Planning & Control + Supplier Planning & Control Supplement 8.8 Capability Planning & Scheduling + Capacity Planning & Control Supplement 8.14 Housekeeping & Organisation (d) 8-BPM1 Customer Service OTIF to Promise 8-BPM2 Aggregate Supply Plan (Production Plan Performance) 7.7e. Master Schedule Performance - applied to Supply Point (95%) 8.9 (a) Manufacturing Schedule Performance (95%) 8.9 (d) Supplier Delivery Performance (95%) 8.11(a) Item Master & Supporting Data Accuracy (95%) d 8.11(b) Bill of Material Structure & Accuracy (98%) d 8.11(c) Routing Structure & Accuracy ( 95%) d 8.11 (e) Work Location Record Accuracy (95%)+ 7.13d 8.11 (f) Inventory Record Accuracy (95%) (b,c) 8.17 Behaviours demonstrate excellence characteristics 8.18 Behaviours demonstrate excellence characteristics MANAGING EXTERNAL SOURCING (2) 9.4 Supplier capability (a,c) 9.13 Supplier Relationships (a,c,d) 8.9 Executing the schedule (b,c,) + Production Planning & Control Supplement 55 elements to score Require avg 3.5 /5 Oliver Wight Oliver Wight

8 Class A Checklist Sixth Edition Revision 6 Capable Planning & Control Milestone STRATEGIC PLANNING PROCESS (3) 1.3 Mission & Vision (a) [3.0] 1.5 Strategic Planning (bc) [3.0] 1.11 Business Planning (abd) [3.5] PEOPLE (4) 2.1 Trust (e) [3.0] 2.7 People Development (+ topic f *) [3.5] 2.9 Communication [3.0] 2.13 Leadership for change (a) [3.5] DRIVING BUS IMPROVEMENT (6) 3.5 Ownership & Accountability [3.0] 3.6 Ownership & Improvement [3.0] 3.7 Continuous Improvement [3.0] 3.8 Framework for sustained improvement [3.0] 3.21 Performance Measures balanced & integrated [3.0] 3.22 Velocity (a) [3.0] INTEGRATED BUSINESS MANAGEMENT (5) 4.1 Process designed [3.5] 4.2 Integration [3.5] 4.3 Characteristics [3.5] 4.9 Financial projections [3.0] 4.16 Financial integration (abd) [3.0] MANAGING PRODUUCTS & SERVICES (4) 5.3 Integration [3.5] 5.4 Day to day process integration [3.0] 5.9 New Product Master Plan [3.0] 5.10 Project Planning (ab) [3.0] Oliver Wight D-W-L Notes 8 MANAGING DEMAND (9) 6.10 Unconstrained demand planning [3.5] 6.11 Process for multiple views [3.5] 6.13 Demand Manager [3.5] 6.14 Sales plans [3.0] 6.16 Demand constraining [3.5] 6.17 Customer promising/satisfaction [3.5] 6.18 Demand management [3.5] 6.19 Demand Controller [3.5] 6.23 Aggregate Demand Plan Performance [3.5] SUPPLY CHAIN MANAGEMENT (2) 7.10 Distribution & Logistics Planning [3.0] 7.13 Data Mgmt (95%) [3.5] INTERNAL SUPPLY (20) 8.3 Integration: Integrated Business Management [3.5] 8.5 Master Supply Planning Process (+ h*) [3.5] 8.6 Capable People [3.5] 8.7 Material Requirements Planning (abcd + f *) [3.5] 8.8 Capability Planning & Scheduling (+ f *) [3.5] 8.9 Executing the schedule (bc + e*) [3.5] 8.14 Housekeeping & Organisation (d) [3.0] 8.17 Behavioural characteristics [3.0] 8.18 Planning behaviour characteristics [3.5] 8.19 Supplier Planning & Control (+ c*) [3.5] * Signifies a supplementary topic 8-20 Customer Service OTIF to Promise (95%) [3.5] 8-21 Aggregate Supply Plan Performance [3.5] 8.22 Master Schedule Performance (95%) [3.5] 8.23 Manufacturing Schedule Performance (95%) [3.5] 8.24 Supplier Delivery Performance (95%) [3.5] 8.25 Item Master & Supporting Data Accuracy (95%) [3.5] 8.26 Bill of Material Structure & Accuracy (98%) [3.5] 8.27 Routing Structure & Accuracy( 95%) [3.5] 8.28 Work Location Record Accuracy (95%) [3.5] 8.29 Inventory Record Accuracy (95%) [3.5] MANAGING EXTERNAL SOURCING (2) 9.4 Supplier capability (ac) [3.5] 9.13 Supplier Relationships (acd) [3.0] 55 definitions to score 35 minimum score minimum score 3.0 NB: Original is a controlled Slide

9 Class A Checklist Sixth Edition Revision 1 Capable Planning & Control Milestone for Distribution & Logistics STRATEGIC PLANNING PROCESS (3) 1.3 Mission & Vision (a) [3.0] 1.5 Strategic Planning (bc) [3.0] 1.11 Business Planning (abd) [3.5] PEOPLE (4) 2.1 Trust (e) [3.0] 2.7 People Development (+ topic f *) [3.5] 2.9 Communication [3.0] 2.13 Leadership for change (a) [3.5] DRIVING BUS IMPROVEMENT (6) 3.5 Ownership & Accountability [3.0] 3.6 Ownership & Improvement [3.0] 3.7 Continuous Improvement [3.0] 3.8 Framework for sustained improvement [3.0] 3.21 Performance Measures balanced & integrated [3.0] 3.22 Velocity (a) [3.0] INTEGRATED BUSINESS MANAGEMENT (5) 4.1 Process designed [3.5] 4.2 Integration [3.5] 4.3 Characteristics [3.5] 4.9 Financial projections [3.0] 4.16 Financial integration (abd) [3.0] MANAGING DEMAND (8) 6.9 Collaboration with customers (ade) [3.5] 6.10 Unconstrained demand planning [3.5] 6.13 Demand Manager [3.5] 6.14 Sales plans [3.0] 6.16 Demand constraining [3.5] 6.17 Customer promising/satisfaction [3.5] 6.18 Demand management [3.5] 6.19 Demand Controller [3.5] SUPPLY CHAIN MANAGEMENT (14) 7.3 Integration through Integrated Business Management [3.5] 7.9 Inventory Accuracy Control (+d,e*) [4.0] 7.10 Distribution & Logistics Planning (+f*) [3.5] 7.13 Data Mgmt (95%) [3.5] 7.20 Inventory management process [3.5] 7.21 Inbound process control [3.5] 7.22 Outbound process control [3.5] 7.23 Returns process control [3.5] 7.24 Stock definition record accuracy [4.0] 7.25 Shipping Schedule Performance [3.5] 7.26 Aggregate Distribution Plan Performance [3.5] 7-27 Customer Service OTIF to Promise 95% [3.5] 7-28 Inventory Levels (turns) [3.5] 7.29 Total Delivered Cost [3.5] INTERNAL SUPPLY (11) 8.5 Master Supply Planning Process [3.5] 8.6 Capable People [3.5] 8.7 Material Requirements Planning (abcd) [3.5] 8.8 Capability Planning & Scheduling (abde) [3.5] 8.9 Executing the schedule (bc) [3.5] 8.14 Housekeeping & Organisation (d) [3.0] 8.17 Behavioural characteristics [3.0] 8.18 Planning behaviour characteristics [3.5] 8.19 Supplier Planning & Control [3.5] 8.24 Supplier Delivery Performance (95%) [3.5] 8.25 Item Master & Supporting Data Accuracy (95%) [3.5] MANAGING EXTERNAL SOURCING (2) 9.4 Supplier capability (ac) [3.5] 9.13 Supplier Relationships (acdf) [3.0] 55 definitions to score 2 minimum score minimum score minimum score 3.0 MANAGING PRODUUCTS & SERVICES (2) 5.4 Day to day process integration (bd) [3.0] 5.10 Project Planning (ab) [3.0] Oliver Wight D-W-L Notes 9 * Signifies a supplementary topic NB: Original is a controlled Slide

10 The Philosophy People are the key to success Education drives behavioural change Create internal experts Develop multi-disciplined teams Improve business to World-Class / Best Practice levels Formal environment Consistent processes, clear responsibilities and accountabilities Continuously improve Deliver sustainable results through integration Oliver Wight 10

11 The Journey to Business Excellence Oliver Oliver Wight Wight 11

12 Integrating the Business - Maturity Oliver Wight

13 Integrating the Business - Prioritising One agenda and set of numbers Working together to solve problems Consistent working Designing for our processes Automation and business integration Driving out defects in all processes Keeping to plan across the Business True cost of work Ownership and improvement With Education and Training at Every Step Oliver Wight 13 OWI

14 Integrating the Business - Prioritising Sales and Operations Planning Team working ISO 9000 ISO14000 DFM/DFC Automation and business integration Closed loop control of all processes Supply/Demand/ Project Management Activity costing 5S/TPM With Education and Training at Every Step Oliver Wight

15 The Journey to Business Excellence All companies are on a journey to Performance Improvement but many do not recognise the journey or where they are on that journey or what to do next. One needs to understand the journey, how the techniques fit, when they should / shouldn t be deployed, and work through the multiple transitions showing how a business focus enables Performance Improvement. Enables upper quartile performance in any industry sector and hence become an industry leader. It also maps the way to becoming an upper decile business. Oliver Wight 15

16 Integrating the Business - Maturity Oliver Wight The Maturity Journey Transitions on The Journey through Phases 1 & 2 Phase I Phase II Disconnected Management Processes Informality and fire-fighting Plagued by unplanned events Process Excellence Joined up processes, reliable, knowledge captured and failure free Self managed teams Responsive optimisation of the business in pursuit of business strategy Upper decile performance Process Competence Integrated Business Management drives rolling management, strategy deployment and directed business improvement. Upper quartile performance End-to-end process excellence process thinking, streamlining and capability, process organisation, process measures - velocity, responsiveness, variability Managing the extended supply chain. Capable Planning & Control Capable Planning & Control practices and standards attained across all processes Co-ordination across the business and one set of numbers secure through S&OP process Educated workforce driving honesty and openness, ownership and accountability, realistic plans, data integrity, democracy in planning: autocracy in execution Business performance is 95% capable Foundations of Planning & Control Data management Understanding Practices and Processes for Planning & Control in design and / or implementation for Supply, Demand, Product Management, S&OP and Financial Integration Oliver Wight 16 Oliver Wight T OVE 11

17 The Oliver Wight Journey to Class A Oliver Wight 17

18 Principle Objective of Integration Oliver Wight

19 Integrated Business Model MANAGEMENT BUSINESS REVIEW STRATEGY BUSINESS PLAN PERFORMANCE SUPPLY REVIEW PRODUCT MANAGEMENT REVIEW DEMAND REVIEW SUPPLY CHAIN MANAGEMENT SUPPLY POINT MANAGEMENT SUPPLIER MANAGEMENT MARKET MANAGEMENT DEMAND MANAGEMENT SALES MANAGEMENT PORTFOLIO MANAGEMENT PROJECT MANAGEMENT RESOURCE MANAGEMENT PROCUREMENT MANAGEMENT PROCUREMENT MANAGEMENT Oliver Wight

20 How Do We Respond to Change? FUNCTIONAL PERSPECTIVE I second guess that plans may or may not happen I assess the impact this will have I compensate for change based on what effect it will have on my function and it s measures I take defensive action to protect my function Everyone has a view, takes different actions, no coordination Oliver Wight IBMP1-20 EAME

21 How Do We Respond to Change? BUSINESS PERSPECTIVE We have a process to identify change occurring in the business We ensure that we understand the change and its full business wide implications We enable cross-functional discussions and alternate planning We identify choices and recommendations to optimise the business Oliver Wight IBMP1-21 EAME

22 Integrated Business Management Oliver Oliver Wight Wight 22

23 First Priority A Company Must Bring demand and supply in balance Understand impact of new products on demand and supply If you don t do these things first, your time will be consumed dealing with the consequences of demand and supply being out of balance. There will be little time and energy to grow the business Oliver Wight

24 Multiple Sets / Single / Integrated Set of Numbers MULTIPLE SETS SINGLE INTEGRATED SET UPSIDE GAP DOWNSIDE Oliver Wight 24

25 Integration STRATEGY / TACTICS / OPERATIONS STRATEGIC PLANNING BUS. PLAN S&OP TACTICAL PLANNING OPERATIONAL PLANNING Source: Coldrick, Ling Oliver Wight 25

26 Integrated Business Management (Sales and Operations Planning) Brings together all the plans for the business (customers, sales, marketing, development, manufacturing, servicing & financial) into... integrated set of plans Monthly process Reviewed by management at an aggregate (product family) level Reconciles supply, demand and new product plans at both detail and aggregate level and tied to the business plan Definitive statement of what the company plans to do for the near / intermediate term covering a horizon sufficient to: Plan cross-functional resources Support business planning Oliver Wight 26

27 Integrated Business Management (Sales and Operations Planning) MANAGEMENT BUSINESS REVIEW STRATEGY BUSINESS PLAN PERFORMANCE SUPPLY REVIEW PRODUCT MANAGEMENT REVIEW DEMAND REVIEW Oliver Wight 27

28 What if Business Scenario Planning Management needs to have the ability to evaluate the impact of changes to the plan Oliver Wight

29 No. of Late Deliveries Weeks #No. of On-Time Deliveries STD HRS OR UNITS RESOURCE A REQUIRED CAPACITY WEEKS PLANNED CAPACITY (DEMONSTRATED OUTPUT) Management Business Review KPI Dashboard Summary by Family Business Trends Demand, Supply & NPI Change Key Assumptions Vulnerabilities / Opportunities Financial Impact Recommendation Total Number of Changes Current Last Project Engineering Current Last Project Other Current Last Project Business Review O/T Delivery Performance # Customer's Rating A B C Months DEMAND SUPPLY PLAN BUDGET ACTUAL ACTUAL SUMMARY BY FAMILY SUMMARY BY FAMILY SUMMARY BY FAMILY 1st Pass Test Percent Current Goal Margins Revenue Current Plan FY9x Project Cost to Date Plan Actual Demand Supply Inventory Budget Current Plan Previous Plan Prior Year Demand Supply Inventory MAJOR Budget CHANGES Current Plan Previous Plan Prior Year MAJOR ASSUMPTIONS Demand Supply Inventory MAJOR Budget CHANGES Current Plan Previous Plan Prior Year MAJOR ASSUMPTIONS MAJOR CHANGES MAJOR ASSUMPTIONS DECISIONS MADE DECISIONS OUTSTANDING DECISIONS MADE DECISIONS OUTSTANDING DECISIONS MADE DECISIONS OUTSTANDING VULNERABILITIES RECOMMENDATIONS AND COSTS VULNERABILITIES RECOMMENDATIONS AND COSTS VULNERABILITIES RECOMMENDATIONS AND COSTS Alignment to Business Plans Alignment to Strategy Strategic Programme 1 Strategic Programme 2 Strategic Programme 3 Strategic Programme 4 Strategic Programme 5 Strategic Programme 6 Strategic Programme 7 Strategic Programme 8 Strategic Programme 9 Strategic Programme 10 Strategic Programme 11 Strategic Programme 12 Strategic Programme 13 Strategic Programme 14 Oliver Wight 29

30 The Maturity Journey - Example: Integrated Business Management Mature Integrated Business Management Drives responsive optimisation of the business in pursuit of business strategy Continuous Reconciliation, managing gaps and alternative scenario planning Integrated Business Management Rolling business management process including gap analysis versus strategy and focus on competitive priorities Integrated Reconciliation is the driver: business analysis provides underlying understanding, drives improvement priorities and gap closing actions Process frequently reshapes to meet changing organisational structure Used to deploy and drive the value proposition Capable S&OP Process is established driving integrated operational and financial planning Full suite of KPI s to drive operational effectiveness, achieving 95%+ capability Issues are identified and this is the decision making process Annual budgeting process removed S&OP numbers drive forward plans Team working behaviours are demonstrated throughout the process Foundation S&OP All elements defined with correct accountability, KPI s and structure Focus is demand /supply tactical balancing Initiate integrated supply chain KPI s Challenging behaviours but not yet team working Disconnected Management Processes Traditional management meeting focused on the past Annual budgeting process with poor basis for forward projections Functional/silo management few/unaligned objectives & measures Defensive functional behaviours Oliver Wight IBMEP8-30 EAME

31 Implementation Oliver Oliver Wight Wight 31

32 The Oliver Wight Proven Path Oliver Wight

33 Oliver Wight Class A All business processes integrated Integrated set of numbers Routine things happening routinely Planning ahead, preventing rather than correcting Easier to deal with crisis when you are in control The whole is greater than the sum of the parts Oliver Wight 33

34 Focus of Attention Managing Director Strategic Plan Business Plan S&OP Horizon Time Fence Topic 1 5 Years 3-4 Months Strategy Senior Management S&OP & SCM 1-5 Months 1 Month Tactics Middle Management Demand & Supply Mgmt 1-5 Weeks 1 Week Operational Planning Team Leaders Execution 1-5 Days - Scheduling Oliver Wight 34

35 Business Performance Improvements 80% 70% 60% 50% 40% 30% 20% 10% 0% 17% 9% Class A Companies 68% 29% 24% Oliver Wight 35 Class A Companies Customer Service Costs Inventory Performance Supplier Delivery Performance Continuous Improvement Activity Source: Benchmark Research Limited. Nov 1997

36 Oliver Wight 36