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S&OP Implementation Roadmap

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Implement S&OP, as a critical business process, championed by a cross-functional team of senior executives

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S&OP Implementation Roadmap

  1. 1. S&OP Implementation Roadmap Implement S&OP, as a critical business process, championed by a cross-functional team of senior executives Anand Subramaniam
  2. 2. <ul><li>“ Don’t be fooled by the calendar. There are only as many days in the year as you make use of. One man gets only a week’s value out of a year while another man gets a full year’s value out of a week .” </li></ul><ul><ul><li>- Charles Richards </li></ul></ul>
  3. 3. Highlights <ul><li>Executive S&OP – Close Loop </li></ul><ul><li>S&OP – Life Cycle </li></ul><ul><li>S&OP – Implementation Road Map </li></ul><ul><li>S&OP - Education / Training </li></ul><ul><li>S&OP – Forecasting / Demand Management </li></ul><ul><li>S&OP - Governance & Risk </li></ul><ul><li>S&OP – Measures & Metrics </li></ul><ul><li>S&OP – Checklists </li></ul><ul><li>S&OP – Process Mapping </li></ul><ul><li>S&OP - Project / Change Management </li></ul><ul><li>S&OP – Stakeholder Management </li></ul><ul><li>S&OP – Knowledge Management </li></ul><ul><li>Conclusion </li></ul>
  4. 4. Executive S&OP – Close Loop
  5. 5. Executive S&OP - Close Loop Execute Demand Planning Supply Planning S&OP Meeting Market Demand Forecasting New Product Forecasting Promotion Planning Consensus Forecast Safety Stock Demand Inventory Optimisation Constraint-Based Production Scheduling Evaluate Supply Constraints Measure Financial and Customer Service Level Results S&OP Outputs: Service levels Profitability Inventory Levels Promotions DRP / MPS S&OP Review Demand Data
  6. 6. S&OP - Demand Planning Data Gathering & Setup (Analysis, Exception Reporting, Statistical Models, Data Aggregation) Routine Forecasting Cycle (Demand Change Reviews, Sales History and Future Forecast Adjustments, Unconstrained Forecast) Monitor & Improve Forecast Accuracy (Forecast Accuracy KPI, Forecast Value Added from Business Intelligence) Sales & Operations Planning Process Inventory Plan, Supply Plan MPS, Raw Material Plan Distribution Plan Financial Forecast Process Network Optimisation Safety Stocks Capacity Planning Input from Marketing, Sales, Customers & R&D
  7. 7. S&OP - Supply Planning Data Gathering & Setup (Source, Make, Deliver, Product, & Capacity Plans) Define Supply Capability (Available Inventory, Sources of Supply, Summarise Supply Changes, Adjust Constraints, Initiate Master Data Changes) Develop Supply Plan Proposals (Assess Impact & Develop Options, Submit Supply Plan Options) Stakeholder Meeting MPS, Raw Material Plan Distribution Plan Approve Supply Plan Input from Plants, Asset Management Network Optimisation Changes Unconstrained Demand Plan
  8. 8. S&OP - Senior Executive Meeting Review Demand Plan (Review Product Families, Demand Assumptions) Review Supply Plan (Inventory Plan, Cost Projections, Supply Assumptions, Issue Resolution) Agree to Supply Plan (Develop Supply Chain Plans, Source, Make, Deliver) Develop Revenue Projections (Identify Gaps) 18 Month Projections Communicate Approved Plans (Source, Make, Deliver) Communicate Plan Implications (Financial, Sales)
  9. 9. S&OP – Life Cycle
  10. 10. Importance of Alignment Doing The Right Things Doing Things Right Exploit What We Did Align Measure Execute Holistic Approach to manage S&OP Initiatives
  11. 11. S&OP Lifecycle – Critical Success Factors Benefit Assurance Stakeholder Management Sponsorship S&OP Best Practices Organisation Alignment Measurement Capability Development Project Management Risk, Quality, Scope, Cost, Quality, Resources, Time etc Process, Tools, checklist Risk, DOS, ROI, QA Project Select. Prioritise Leadership, Commitment Communication, Integration Coach / Mentor Knowledge Mngt Prof Development PIR, Lesson Learnt Capture Communicate Collaborate Continuously Improve Critical Success Factors
  12. 12. S&OP – Planning Process <ul><li>Identify future potential influences on Demand or Supply </li></ul><ul><ul><li>Changes in customers ordering patterns (+ or -) </li></ul></ul><ul><ul><li>Funding (+ or -) </li></ul></ul><ul><ul><li>Workload capacity (+ or -) </li></ul></ul><ul><li>Evaluate the potential cross-chain impact of those influences </li></ul><ul><li>Recommend potential approaches for ensuring Demand Plans and Supply Constraints are balanced </li></ul><ul><ul><li>S&OP ‘modeling’ capability to help inform decisions </li></ul></ul><ul><ul><li>Gauge the anticipated impact of actions on workload and $$ </li></ul></ul><ul><li>Reach consensus (cross-chain if applicable) on actions to pursue </li></ul><ul><li>Continuously improve and capture lessons </li></ul>
  13. 13. S&OP – Output Planning Unit of output Productive days in planning horizon Excess demand Inventory Accumulation Cumulative Demand Cumulative output
  14. 14. S&OP – Implementation Road Map
  15. 15. <ul><li>“ If there is a way to do it better . . . find it .” </li></ul><ul><ul><li>- Thomas Edison </li></ul></ul>
  16. 16. S&OP – Implementation CSF <ul><li>Prioritisation of Business Initiatives </li></ul><ul><li>Disciplined, consistent process in place </li></ul><ul><li>Ability to reliably execute on supply commitments </li></ul><ul><li>Trade-offs articulated and commercially evaluated </li></ul><ul><li>High levels of customer service, satisfaction and retention </li></ul><ul><li>Clear demand planning accountability and unbiased forecasts </li></ul><ul><li>Senior management - leads and is actively involved in the process </li></ul><ul><li>Short, medium & long-term demand / supply / financial risks & plans are managed, re-evaluated and integrated continuously across a rolling horizon </li></ul>
  17. 17. Implementation Approach Includes.. <ul><li>Phased approach by defining high level S&OP process </li></ul><ul><li>Determination of the data collection process, timing and responsibilities </li></ul><ul><li>Prototype of key concepts for each process and review with design team </li></ul><ul><li>Identification of detailed processes for demand, supply and consensus building </li></ul><ul><li>Definition of the data requirements for population of the S&OP tool and reports </li></ul><ul><li>Development of the S&OP tool, report formats, key measures and meeting packages </li></ul><ul><li>Identification of key meeting participants and communicate level of commitment / participation needed for each process </li></ul><ul><li>Establishment & publication of all meetings (Demand, Supply and Consensus) for the remainder of the year </li></ul>
  18. 18. Why Phased Approach? Why? Minimise risks & maximise opportunities Leverage and extend existing investments (by deciding what you should add or replace) To deliver S&OP implementation at a defined cost in the shortest time possible Improve ROI in all aspects of implementation with proven tools and methods Limit business disruption through well defined scope based on industry best practices Address key business and processes issues Improve knowledge via training & support future growth Improve stakeholder buy in via change / relationship build Implement the functionality required and defer other investments until required
  19. 19. S&OP Implementation Plan Months Business Improvement 1 2 3 4 5 6 7 Phase I Preparation Phase II Expansion Phase III Financial Integration
  20. 20. S&OP – Phased Implementation Phase 1 Phase 2 Phase 3 Initiation / High Level Planning As ~ Is Assessment To ~ Be Assessment Knowledge Portal Method / Tool Development Manage Stakeholder Expectations S&OP Pilot - Implementation Continuous Improvement Skill / Capability Development Multi-Product Family Rollout Business Improvement Financial Expansion 1 2 3 4 5 6 7 Months Project / Change Management
  21. 21. S&OP – Project Schedule
  22. 22. S&OP – Pre-Implementation <ul><li>Executive leadership and participation is key </li></ul><ul><li>S&OP document is a single sheet for each family </li></ul><ul><li>S&OP process is measured and goals are in place </li></ul><ul><li>S&OP process occurs on a regularly scheduled basis </li></ul><ul><li>S&OP process and policies are defined and documented </li></ul><ul><li>S&OP is done at the family level (with some sub family analysis) </li></ul><ul><li>The process is institutionalised (a integral part of doing business) </li></ul><ul><li>S&OP process owners & cross functional team is formally chartered </li></ul><ul><li>Executives from sales, marketing, operations and finance participate </li></ul>
  23. 23. Phase 1 - Preparation for Pilot <ul><li>Confirm responsibilities & team memberships </li></ul><ul><li>Identify product families & sub-families </li></ul><ul><li>Determine product family units of measure (UOM) </li></ul><ul><li>Identify supply resources to be tracked </li></ul><ul><li>Determine capacity UOM </li></ul><ul><li>Determine planning horizon </li></ul><ul><li>Select pilot family </li></ul><ul><li>Set demand / supply strategies for pilot family group </li></ul><ul><li>Determine sources and automate </li></ul><ul><li>Develop Formats for spreadsheets, graphical displays & capacity displays </li></ul><ul><li>Design how the S&OP process will be used </li></ul><ul><li>Develop Executive S&OP process steps and first-draft S&OP Policy </li></ul><ul><li>Determine </li></ul><ul><ul><li>sources & automate feeds for actual </li></ul></ul><ul><ul><li>planned production : actual sales </li></ul></ul><ul><ul><li>forecasts : actual finished inventories and backlogs </li></ul></ul>
  24. 24. Phase 1 - Conducting Pilot <ul><li>Conduct pre-meeting for pilot family group </li></ul><ul><li>Conduct the data fathering step for the pilot family group </li></ul><ul><li>Conduct the demand planning step for the pilot family group </li></ul><ul><li>Conduct supply planning Step for the pilot family group </li></ul><ul><li>Conduct executive meeting for pilot family group including </li></ul><ul><ul><li>a) full explanation of processes </li></ul></ul><ul><ul><li>b) review of draft of executive S&OP policy </li></ul></ul><ul><ul><li>c) decision-making </li></ul></ul><ul><li>Make Go/No-Go Decision </li></ul>
  25. 25. Phase 2 - Expansion <ul><li>Determine pilot family group to be added in next cycle </li></ul><ul><li>Set demand / supply strategies for next group of families </li></ul><ul><li>Begin resource requirements planning, if not already done in Pilot </li></ul><ul><li>Begin addressing new products, if not already done in Pilot </li></ul><ul><li>Begin comparison of operations plan to master schedule </li></ul><ul><li>Approve executive S&OP policy </li></ul><ul><li>Test the executive S&OP process against the executive S&OP checklist </li></ul>
  26. 26. Phase 3 – Full Implementation <ul><li>Ensure that all product families and resources are covered within executive S&OP, either individually or in groupings </li></ul><ul><li>Add full financial </li></ul><ul><li>Formalise business plan review within executive meeting </li></ul><ul><li>Add full resource requirements planning </li></ul><ul><li>Add full simulation </li></ul><ul><li>Evaluate other routinely held meetings for discontinuance or integration into executive S&OP sessions </li></ul><ul><li>Imbed the executive S&OP process into the business </li></ul><ul><li>Slice financial plan by market segment </li></ul><ul><li>Align financial plan segments with marketing manager objectives </li></ul><ul><li>Close demand gap more actionable </li></ul><ul><li>Break down demand plan by individual salesperson </li></ul><ul><li>Use perfect order fulfillment metric to drive increased customer satisfaction </li></ul><ul><li>Test the executive S&OP process against the executive S&OP checklist </li></ul>
  27. 27. S&OP - Continuous Improvement <ul><li>Structured meeting agendas </li></ul><ul><li>Ongoing, routine S&OP meetings </li></ul><ul><li>Pre-work to support meeting inputs </li></ul><ul><li>An unbiased baseline forecast to start the process </li></ul><ul><li>Joint supply and demand planning to ensure balance </li></ul><ul><li>Internal collaborative process leading to consensus and accountability </li></ul><ul><li>Cross-functional participation & participants empowered to make decisions </li></ul><ul><li>Measurement of the process, supported by integrated supply-demand planning technology </li></ul>
  28. 28. S&OP – Implementation Benefits Benefits Increased teamwork & shared risk management among internal functions Improved material / product fulfillment - reduced expediting $ Increased confidence in planning systems Improved Supply, leading - to on-time delivery, improved profits and customer satisfaction Effective bottleneck and constraints management on the supply side Acceptable lead times Reduced inventories obsolescence Improved collaboration among stakeholders - internal or external (no more finger-pointing) Effective utilisation of resources
  29. 29. S&OP Health Check <ul><li>Does your S&OP actively involve senior leadership? </li></ul><ul><li>Are proactive decisions made? </li></ul><ul><li>Does it cover all major areas of business looking out 18 months or more? </li></ul><ul><li>Is financial difference between S&OP plan and financial plan evaluated monthly? </li></ul><ul><li>Does it occur on a monthly cycle? </li></ul><ul><li>Does it include a capacity review? </li></ul><ul><li>Does it include actual vs. forecasted sales? </li></ul><ul><li>Are accountabilities clearly defined? </li></ul><ul><li>Is there a financial view as well as units? </li></ul>
  30. 30. S&OP - Education / Training
  31. 31. S&OP - Education As above, but in more procedural detail for S&OP, Master Scheduling and all other functions of MRP II. Middle Management 2-Hour In-House Educational Sessions Determine how the concepts will be applied, set operating policies, assign implementation responsibilities Top Management 2-Hour In-House Educational Sessions Understand how to implement and operate the system All S&OP & MPS Same as above, but with more detail Middle Management MRP II ( Detailed Level) Understand MRP II process and the role S&OP plays Top Management MRP II (High Level) Purpose Participants Education
  32. 32. S&OP - Forecasting
  33. 33. <ul><li>“ Facts are stubborn things, but statistics are more pliable.” </li></ul><ul><ul><li>Laurence J. Peter </li></ul></ul>
  34. 34. Forecasting Process Services Sales and Operations Planning Master Scheduling Customer Scheduling Materials Planning Workforce Scheduling Order Scheduling Manufacturing Collect Data Select Model Plot Data Develop Forecast Check Accuracy Forecast Adjust Forecast Monitor Forecast Forecasting
  35. 35. Integrate - Sales Forecast & Production
  36. 36. S&OP - Demand Management
  37. 37. Demand Management Process
  38. 38. S&OP - Governance & Risks
  39. 39. <ul><li>“ When investors buy stocks, surgeons perform operations, engineers design bridges, entrepreneurs launch new businesses, astronauts explore the heavens, and politicians run for office, risk is their inescapable partner. Yet their actions reveal that risk . . . need not be feared: managing risk has become synonymous with challenge and opportunity .” </li></ul><ul><ul><li>Peter L.Bernstein, </li></ul></ul><ul><ul><li>(Against the Gods: The Remarkable Story of Risk1) </li></ul></ul>
  40. 40. S&OP – Governance Process Audit Committee Stewardship Committee Enterprise Business Process Owners Audit Readiness Working Group People, Process, Systems, Activities Business Teams Remove Barriers Issues / Status Validate & Control Establish Objectives Implement Correct
  41. 41. Risks & Opportunities Operational Risk Compliance Risk Financial Risk Strategic Risk Business Continuity Plan <ul><li>Legislative changes (health & safety, employment, taxation) </li></ul><ul><li>Regulatory changes </li></ul><ul><li>Impact of corporate social responsibility (e.g. better food labelling to prevent obesity, “healthy” disposal of waste) </li></ul><ul><ul><li>Daily transactions </li></ul></ul><ul><ul><li>Cash-flow implications </li></ul></ul><ul><ul><li>Customer/supplier credit facilities </li></ul></ul><ul><ul><li>Impact of interest / foreign exchange </li></ul></ul><ul><ul><li>Debt repayment rates </li></ul></ul><ul><ul><li>General competitiveness </li></ul></ul><ul><ul><li>Effects of Mergers and Acquisitions activities </li></ul></ul><ul><ul><li>Changes in market conditions (emerging technologies, demand vs. supply) </li></ul></ul><ul><ul><li>Research and development </li></ul></ul><ul><ul><li>Industry changes </li></ul></ul><ul><ul><li>Competitive shifts </li></ul></ul><ul><ul><li>New entrants </li></ul></ul><ul><ul><li>IT systems and data protection </li></ul></ul><ul><ul><li>Supply chain </li></ul></ul><ul><ul><li>Accounting controls </li></ul></ul><ul><ul><li>Recruitment and retention </li></ul></ul><ul><ul><li>Regulatory compliance </li></ul></ul><ul><ul><li>Forecast Errors </li></ul></ul><ul><ul><li>Supplier compliance </li></ul></ul>
  42. 42. Risk - Enterprise Wide Policies and standards in place and are strong, effective, and are followed completely Policies and standards in place but weak or not followed completely No policies or standards in place or ill-defined and ineffective Policies and Standards Very experienced with similar projects Moderate experience or experience with different type of projects (ERP, BI) No experience with projects of this type or projects in general Experience with Similar Projects Strongly committed to success of S&OP project Has support for S&OP project but demonstrates lack of commitment Little or no support for S&OP project Commitment to S&OP Project Verifiable scope, requirements, and measures clearly defined Scope defined at a high level and/ or requirements to be defined in detail S&OP Priorities / Scope not established or requirements are ill-defined and not measurable Priorities / Scope / Requirements Agreed to support S&OP project S&OP issues unresolved or in process of being defined or approved No support for S&OP project or major unresolved issues Executive Management Support Has extensive history with successful S&OP projects Has experience with S&OP systems or has had some successful projects Has a poor history or has little experience with S&OP systems Project History/ Experience Project directly supports one or more of the strategies and mission Project indirectly or partially supports strategies & goals S&OP Project does not support any Organisation’s Strategies, Mission & Goals Low Risk Medium Risk High Risk Risk Factor
  43. 43. Risks - Technology & Fit Time lines are not critical Has critical time line, but little to no impact on quality Time line likely to adversely affect quality and completeness Quality Control Uses proven technology that integrates well Limited use of new technologies Introduces new technologies to the environment Fit with Existing Environment Little or no integration or interfaces required Some integration or interfaces required and/or of some importance to project Extensive integration of systems, or exchange of information or interfaces are a major part of project System Integration/ Interfaces Requirements are few and easily defined; few users to provide input Project is fairly complex with some requirements more easily defined; several user groups will be aiding in the design S&OP Project is very complex with multiple requirements from many different users; requirements are complex and hard to define Complexity of Requirements Analysis of alternatives complete, all alternatives and options considered, and assumptions verifiable Analysis of alternatives completed, some assumptions questionable, and alternatives not fully considered Analysis of alternatives not completed, not all alternatives considered, and/or assumptions faulty Analysis of Alternatives Low Risk Medium Risk High Risk Risk Factor
  44. 44. Risks - Approach / Benefits / Change Formal change control process in place, followed, and effective Change control process in place but not being followed completely, or ineffective No change control process being used to manage S&OP (overtime, planning horizon, scope etc) Change Control Management All deliverable requirements defined, reasonable, and measurable Some deliverable requirements remain to be defined or are vague and un-measurable S&OP requirements not defined for deliverables or unreasonable requirements Deliverable Requirements Defined Benefits well-defined, baseline established, measurable, and verifiable Some questions remain about benefits, or baseline changing and measurements doubtful S&OP Benefits not defined, no baseline established, unattainable, or un-measurable Achievable Benefits Project development methodology in place, established, effective, and followed by staff Project development methodology established, but not followed or ineffective No formal project development methodology being used, either commercial or in-house system Development Methodology Project management approach is strong and effective Project management approach is good, but needs development Project management approach is weak or ineffective Management Approach Low Risk Medium Risk High Risk Risk Factor
  45. 45. Risks - Project Management Well-defined, consistent, established, well-distributed, effective Requirements are defined, some inconsistencies remain, and requirements may not have been distributed to all employees None in place, defined, or ineffective Management Requirements Quality assurance system established, well followed, highly effective Procedures established, but not well-followed or effective No quality assurance process or procedures established Quality Assurance Requirements well-established, baseline defined, user acceptance high, and few or no changes Requirements defined and users signed-off but changes to baseline expected Rapidly changing size or scope, requirements not defined and not signed off by users S&OP Project Size and Scope Process well-established, procedures followed, and highly effective Process established, not well followed, or is ineffective No process established or process is ignored Monitoring Process Comprehensive plan is approved, monitored, updated, and used by all project team Plan is approved, complete, and used by most of project team Project plan is not updated and/or plan is not followed by most of project team Project Plan Low Risk Medium Risk High Risk Risk Factor
  46. 46. Risks - Project Team Project staff is all available, in place, experienced, and stable Project staff is available, but not all in place, training plan established Project staff has high turnover rate, little or no experience, or is not available for project Available Personnel Resources A balanced mix of client and vendor staff with client personnel capable of taking over new system A small percentage of client staff personnel being trained on new systems Complete reliance on contractor or vendor staff with no client staff being trained in new system Vendor / Client Mix Project staff is highly committed to success of project Project staff states commitment to project, but indications are that commitment is not genuine Project staff has little or no commitment to the success of this S&OP initiative Commitment of Staff Productivity tools being used and staff are trained in use of tools Productivity tools available but not being used to full potential, or in process of being implemented and training needed Productivity tools not being used or considered Availability of and Experience with Productivity Tools Project staff is highly experienced with projects of this type, and has experience with S&OP software Project staff has some experience with projects of this type, but lacks experience with S&OP software Staff has little or no experience with S&OP projects and lacks experience Experience of Staff Low Risk Medium Risk High Risk Risk Factor
  47. 47. Risks - Budgetary / Cost Justification Complete agreement on incremental payments based on product deliverables Some set of agreed-upon incremental payments based on product deliverables No set, agreed-upon incremental payments based on product deliverables (i.e. per module, per feature, per product) Incremental Payments Based on Deliverables Sufficient funds available to complete project as currently defined Questions remain concerning budget Insufficient budget available to complete S&OP project as defined Budget Size Completely justified and cost-effectiveness proven Justification questionable or cost-effectiveness not completely established Not justified or cost-effective Economic Justification/Cost Effectiveness Cost controls well-established, in place, and effective Cost control system in place but weak in some areas Cost control system lacking or nonexistent Cost Controls Funds allocated without constraints Some questionable allocations or doubts about availability Budget allocation in doubt or subject to change without notice Funding Sources and Constraints Low Risk Medium Risk High Risk Risk Factor
  48. 48. Risks - User Participation Users have accepted all concepts and details of the system and process in place for user approvals Users have accepted most of the concepts and details of the system and process is in place for user approvals Users have not accepted any of the concepts or design details of the system User Acceptance User training needs considered, training or training plan in place and in process User training needs have been considered but training or training plan is in development Requirements have not been defined or have not been addressed User Training Requirements User justification complete, accurate, and sound User justification provided, justification complete with some questions about applicability Users have not provided any or satisfactory justification for system development User Justification Users highly involved with project team, provide significant input and have significant ownership of system Users on project team play minor roles or have only moderate impact on system Minimal or no user involvement on development team or little user input into process Involvement of Users User requirements are well-defined and no changes are anticipated User requirements have been defined but changes are anticipated User requirements have not been defined or are insufficient for a successful project User Requirements Defined Low Risk Medium Risk High Risk Risk Factor
  49. 49. S&OP – Measures & Metrics
  50. 50. Integrating Key Performance Indicators Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Directly Proportional Indirectly Proportional Directly Proportional Indirectly Proportional
  51. 51. S&OP – Checklist
  52. 52. S&OP - Checklist <ul><li>Is the data accurate and timely? </li></ul><ul><li>Are accountabilities clearly defined? </li></ul><ul><li>Does it cover a 18~ 24 month time horizon? </li></ul><ul><li>Is volume expressed in units as well as $$$? </li></ul><ul><li>Does your S&OP actively involve senior members of the leadership team? </li></ul>
  53. 53. S&OP - Checklist (Contd.) <ul><li>Does it include a capacity review? </li></ul><ul><li>Are decisions being made proactively? </li></ul><ul><li>Does it include actual Vs. forecasted sales? </li></ul><ul><li>Does the S&OP meeting occur on a monthly cycle? </li></ul><ul><li>Is the financial difference between S&OP plan and financial plan, evaluated monthly? </li></ul>
  54. 54. S&OP – Process Mapping (As~Is / To~Be)
  55. 55. S&OP - Process Improvement Framework Continuous Improvement Identify Best Practices As~Is Analyse & Evaluate To~Be Implement Business Process Reengineer Business Process Improvement Approaches
  56. 56. S&OP - As~Is Process Design Select a specific Process Scope, Plan & Schedule Resources Select Technique Individual Interviews Focus Group Mapping Document As~Is Process & Improvement Opportunities Analyse, Evaluate & Sign-off
  57. 57. S&OP - To~Be Process Design Implementation and Change Management Improvement Opportunities from As~Is Process Design Visioning Workshops Senior Management Vision Best Practice, Benchmarks, Performance, Goals Visioning Workshops
  58. 58. Information Required for Process Mapping S&OP - Information Required Responsibility Key responsibilities of the process area Output Key deliverables of each activity - products and services Input methods, materials, manpower, information, equipment etc Activities Key Activities of the process area KPIs Volumes Key volumes related to an activity Customers Recipients of each activity output Suppliers Suppliers of each activity input
  59. 59. S&OP - Process Mapping Select the process Get the right people together Establish process boundaries List steps, activities and decisions Map the “as-is” process Simplify the process Collect Data Is the process stable? No Yes Is it capable? No Yes Perform root cause analysis Map and implement the “to-be” process Collect Data Is the process stable? Perform root cause analysis Is it capable? No Yes Yes Yes Benchmark the process Institutionalise the process
  60. 60. S&OP - Project / Change Management
  61. 61. Project & Change Management <ul><li>Project Set-up </li></ul><ul><li>Project Management Process </li></ul><ul><li>Shared Picture of the Future </li></ul><ul><li>Design Criteria </li></ul><ul><li>Future Organisation State </li></ul><ul><li>Transformation Plan and Process </li></ul><ul><li>Communications Plan </li></ul><ul><li>Criteria </li></ul><ul><li>Timeframes </li></ul><ul><li>Process & Feedback </li></ul><ul><li>Stakeholders </li></ul><ul><li>Change Management </li></ul><ul><li>Establish conditions for effective change </li></ul><ul><li>Integration of actions </li></ul><ul><li>Coaching of employees </li></ul><ul><li>Symbols of change </li></ul><ul><li>Process Objectives </li></ul><ul><li>Develop a shared future view </li></ul><ul><li>Agree criteria & objectives </li></ul><ul><li>Define & scope the project </li></ul><ul><li>Manage the change process </li></ul><ul><li>Agree on PI framework </li></ul><ul><li>Deliverables </li></ul><ul><li>Shared view of the future </li></ul><ul><li>Transformation plan </li></ul><ul><li>Improved process </li></ul><ul><li>Coach </li></ul><ul><li>Implement the outcomes </li></ul>
  62. 62. S&OP - Change Process 20061121 Build Commitment Heighten awareness Involve Stakeholders who need to change <ul><li>Do we understand the S&OP issues? </li></ul><ul><li>How do we stimulate the need to change? </li></ul>Examine Options for change Assess what’s in it for key stakeholders Get sanction and joint commitment for the process Stakeholder Approval to proceed with change Set S&OP Vision and direction CHECKPOINT Do we have the desire to continue? Can we provide support, sanction, direction and resources? Develop interim Change targets Establish structure to design and coordinate change Set Rules of the Road Implement Change & Training Make changes Evaluate Continuous improvement Monitor Assess readiness to proceed Communicate Communicate Communicate Detailed Organisational Analysis CHECKPOINT Recognise the need to change Create the Vision for Change Management Commitment Planning Change Delivered Review Business Process Design or Redesign
  63. 63. S&OP – Project Success Factors Project Management Bottom Up Buy-in Sponsor reports to Board Training / Coach Manage Stake-holder Top Down Support Clear Charter
  64. 64. S&OP - Benefit Realisation Key Measurement Criteria Benefit Ownership Benefit Key Success Criteria Communication Plan Business Case for S&OP S&OP Benefits Delivered Progress Monitoring S&OP Benefits Identified Responsibility Matrix Benefit Delivery Execution Governance Risk Management S&OP
  65. 65. Stakeholder Management
  66. 66. S&OP - Stakeholders AUDIENCES <ul><li>Program Leadership </li></ul><ul><li>Team </li></ul><ul><li>Project Teams </li></ul><ul><li>Supporting Teams </li></ul><ul><li>The Board </li></ul><ul><li>Senior Executives </li></ul><ul><li>Executive Sponsor </li></ul><ul><li>Senior Manager </li></ul><ul><li>Senior Management Owners </li></ul><ul><li>Process Owners </li></ul><ul><li>External Customers </li></ul><ul><li>Stockholders </li></ul><ul><li>Government </li></ul><ul><li>Broader Community </li></ul><ul><li>Line Managers </li></ul><ul><li>Resource Providers </li></ul><ul><li>Staff Functions </li></ul><ul><li>Internal Customers </li></ul><ul><li>All areas of the organisation </li></ul><ul><li>that will be affected </li></ul>UPWARD EXTERNAL PROGRAM INWARD
  67. 67. S&OP - Stakeholder Engagement Areas to Focus
  68. 68. Knowledge Management
  69. 69. S&OP - Knowledge Areas Principles, Beliefs, Expectations, Vision, Mission, Goals, Objectives, Action Plans Critical Success Factors, Strategies, Continuous Improvement of Projects, Investments, Incentives, Communication, Policies, Attitudes, Practices S&OP Technology Measurement Methodology Skills Organisation Culture Work Product, Quality, Time, Productivity, Cost, Impact, Defects, ROI, Value, Satisfaction Experience, Method Training, Technical Training, Management Education, On-the-Job Training, Learning Curves Methods, Specifications, Outputs, Procedures, Techniques, Standards, Guidelines, Controls, Tools, Tool Classes, Platforms, Standards, Protocols, Architectures, Physical Environment Roles, Jobs and Responsibilities, Formal and Informal Structures, Resources and Resource Allocations, Support Staff Services, Relationships
  70. 70. S&OP – Knowledge (Capture & Improve) Lessons Learnt Capture Communicate Collaborate Continuously Improve
  71. 71. Conclusion
  72. 72. Remember… <ul><li>S&OP delivers business results </li></ul><ul><li>Implement quickly and improve each month </li></ul><ul><li>S&OP needs to be a cross-functional process </li></ul><ul><li>Decisions should be based on visibility of facts </li></ul><ul><li>Risk Management thinking is at the heart of S&OP </li></ul><ul><li>Finance should be fully integrated into the S&OP process </li></ul><ul><li>Manage by exception – and focus on the key issues </li></ul><ul><ul><li>Gap closure (volume, revenue, and profit expectations) </li></ul></ul><ul><ul><li>Resource issues </li></ul></ul><ul><ul><li>Alignment of demand, supply, and new product plans </li></ul></ul><ul><ul><li>Performance issues </li></ul></ul>
  73. 73. Tomorrow’s Position <ul><li>Improved visibility of demand and supply </li></ul><ul><li>Improved service, On-time delivery at 98% </li></ul><ul><li>Improved financial forecast accuracy </li></ul><ul><li>S&OP meetings are boring… a sign of success </li></ul><ul><li>Aligned communications between business, finance, and supply chain </li></ul><ul><li>Sales and volume forecasting for outlooks/budgets; easier and more accurate; drives supply chain plans </li></ul><ul><li>Demand plan aligned with financial plan </li></ul><ul><li>Business plans validated against supply chain capabilities on a monthly basis </li></ul><ul><li>One volume forecast aligned w/ all business plans </li></ul><ul><ul><li>Financial </li></ul></ul><ul><ul><li>Supply Chain </li></ul></ul><ul><ul><li>Operational </li></ul></ul><ul><ul><li>Commercial </li></ul></ul>
  74. 74. S&OP – Month End Review Pre-S&OP Review (include what If) Review -Alternates / Trade-offs / What If / Constraints Executive Management Plan Review (Communicate) <ul><li>Game Plan - Next Month </li></ul><ul><li>Agreed Revenue / Profit Plan </li></ul><ul><li>Master Build Schedule </li></ul><ul><li>Contingency plans </li></ul><ul><li>Documented agreements and planned outcomes </li></ul>= Cross Functional Team Reviews Actual Demand & Supply Statistical Forecasts Revenue / Sales Forecast Resource / Capacity Constraints Product Portfolio Review All Constraints & Risks Conflicts Resolved Agenda & Recommendation Data / Month End Reports Demand Review (include what If) Product Mngt Review (include what If) Supply Review (include what If)
  75. 75. Some Lessons <ul><li>Use risk analysis as key input to S&OP decision making </li></ul><ul><li>Factor in explicit change management strategies and approaches </li></ul><ul><li>Use simulation and “range based” estimates to establish certainty of outcomes </li></ul><ul><li>Focus on limited key drivers of demand and recognise changes in demand early </li></ul><ul><li>Align granularity of S&OP inputs with constraints, market dynamics & org structure </li></ul><ul><li>Develop actionable level of detail, frequency and granularity for participating functions </li></ul><ul><li>Make improved sales and operations planning a closed loop & a continuous process </li></ul><ul><li>Have established actionable levers to influence demand based on profitability & market changes </li></ul><ul><li>Focus downstream that influences demand (“moments of truth”) & use supply chain timing to plan </li></ul>
  76. 76. <ul><li>“ To listen well is as powerful a means of communication and influence as to talk well.” </li></ul><ul><ul><li>John Marshall </li></ul></ul><ul><ul><li>(Former US Supreme Court Chief Justice) </li></ul></ul>
  77. 77. <ul><li>Good Luck </li></ul><ul><li> </li></ul>