From Surviving to Thriving - Leveraging People, Process and Systems to Achieve S&OP Excellence-...

transcript

Single Line of Sight: Plan, Perform, Profit

SCOPE Spring 2014

From Surviving to Thriving Leveraging People, Process and Systems to Achieve S&OP Excellence

Danny Smith – Vice President Industries, Steelwedge Software

Randy Ramsey – Director of Supply Chain, Contech Engineered Solutions

Agenda

• S&OP: Current State and Challenges

• Realizing the Business Value from S&OP

• Contech Engineered Solutions Case Study

A Brief History & Review of S&OP

• S&OP: “a better way to run your business”

• Evolved out of early work in Material and Production

Planning in the 1970s (by thought leaders like Oliver

Wight, TF Wallace, others)

• Expanded to include Sales, other groups in 1980s

• Continually evolving - latest version rebranded as

“Integrated Business Planning” (IBP) in 2000s

• Integrates Finance, R&D

• Executive value (i.e. risk mitigation; “what-if” simulations)

• Extended to external processes

S&OP: Process Led by and Primarily for Executive Mgt.

S&OP Accelerates Performance “What kind of benefits is S&OP delivering?”

0% 10% 20% 30% 40% 50%

Forecast Accuracy

Customer Satisfaction

Asset Utilization

Inventory Value

Order Fill Rate

Revenue

Working Capital

Perfect Order

Return on Assets

Gross Margin

Inventory Turns

Substantial Overwhelming

Sales and Operations Planning Research Study 2006: Ventana Research

Why Isn’t Everyone Benefiting From S&OP? A different perspective…

0% 20% 40% 60% 80% 100%

Forecast Accuracy

Customer Satisfaction

Asset Utilization

Inventory Value

Order Fill Rate

Revenue

Working Capital

Perfect Order

Return on Assets

Gross Margin

Inventory Turns

Substantial Overwhelming

Sales and Operations Planning Research Study 2006: Ventana Research

Great Results When Executives Are Fully Engaged “How involved is your executive team?”

Closing the Gaps in S&OP Study 2013: CSCO Insights

Reality: Most Execs NOT Engaged in S&OP Process “Does your executive team own the S&OP process?”

Most Efforts NOT Supporting Executive Needs “Rate your S&OP capabilities”

Integrated Supply/Demand

Integrated Financial Plans

Strategy Deployment

Strategic Initiatives

Scenario Planning

Low Medium High

Most Missing BIG Opportunities “Describe your S&OP approach”

12.5% 70.8% 16.7%

Backward Results In-Between Forward Planning

29.5% 65.2% 5.3%

Strategic Perspective

Short-Term Problem Solving In-Between Exploiting Opportunities

18.9% 67.8% 13.3%

Approach to Results

Passive In-Between Actionable

46.7% 44.4%

Hit Financial Targets Synch Operating Strategies Ensure Execution of Strategies

Current Benefits Future Desired

Executives Want More “Rate your current vs. desired capabilities”

Gap Between Best Practices & Current Situation “Rate your S&OP process” (maturity)

Below Average

Only Adequate

Excellent

World Class

Agenda

Best Practice S&OP Aligns People, Process & Systems

“We continue to look at S&OP

as an aspect of business

that needs terrific improvement…

It’s hard to argue that this shouldn’t be a central piece of

management software.”

–Rob Kugel, Ventana Research

Aligning Planning Horizons and Capabilities … (It's Not the Same as Integrating!)

Time Horizon

Execution

Operational Planning

S&OP Stage 4 or 5

Strategic Plan/Goals

4 wks 12 mths 2 yrs 5 yrs >5yrs

Current Op. Model

Future/Alternative Op. Model

Financial Budget/AOP

S&OP Stage 3

Blocking S&OP Results: Gaps With Existing Systems “How satisfied are you with your current systems capabilities?”

Source: Executive Sales & Operations Planning: Process & Technology Strategies. Survey of 380 companies. Aberdeen Group 2007+

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Demand Supply Matching (entry level)

What-if Analysis (exec)

S&OP Plan Quality & Metrics (exec)

Role Based (x-functional collab)

Alerts & Exceptions (make it easy)

Fully Meets Needs Doesn't Fully Meet Needs

Gap Between Best Practices & Current Situation “What tools do you use for S&OP?”

Pre-ESOP

Ground Reality: Trying It With Spreadsheets

Demand Planning, SCM/APS Systems

ERP, Financial, & Transactional Systems SAP, Oracle, etc.

Industry

Consolidation, Review,

Overrides

Data Collection,

Reconciliation

Consensus Process ESOP

Operations

Marketing

Finance

Manual

Complex

Security Risk

Not Scalable

Does this Give Executives

an Agile Decision Making Process?

Systems Landscape

Change Your Reality: Drive & Sustain S&OP Adoption & Values

Q1 Q2 Q3

Step Change

Maturity &

Performance

Avoid Process

Failure

Accelerated

Time to Value

“Companies can have a hard time getting past basic levels of S&OP without

technologies like Steelwedge to support the process.”

-Tim Payne

VP Supply Chain Analysis, Gartner

Return on Investment Is Substantial Typical: $5M to $10M in Committed Savings per $1B in Revenue

Value Levers

50-70% Reduction

15-30% Improvement

20%-25% Reduction

25% Reduction in

Stock-outs

1-2% Lift in Revenue

Typical Results Customer Example

What Your System Needs to Deliver to Support S&OP

• S&OP is about human collaboration

• Handle the translation between functions

• Automate and enforce the process

• S&OP needs engaged participants

• Make it easy for stakeholders to participate

• Give participants access to information they haven’t had before

• S&OP is a tool for leadership to manage the business

• Give executives the information they need: forward-looking KPIs

• Let executives ask “what-if” questions

• Make it actionable

Tom Wallace – Godfather of S&OP

“Sometimes people ask me about the

S&OP module from their ERP provider.

I respond that the next really good S&OP

software package that comes from a main

line ERP vendor … will be the first. We

have yet to see that happen.

You need to look at best-of-breed. And the

best of the best-of-breed is Steelwedge.”

Tom Wallace,

Founder, T. F. Wallace & Co

Watch the video: http://www.youtube.com/watch?v=SVWaNiBC4Jo&index=4&list=PLF5EAC415A68DC43B

Integrated Business Planning for S&OP – Master Class with Tom Wallace: http://www.youtube.com/playlist?list=PLF5EAC415A68DC43B

Agenda

• Leading provider of site solution products & services

• Sell into Agricultural, Military, Airports, Commercial & Residential,

Rail, Government, Wind Farms, Mining, Recreational markets

• Bridges, drainage products, retaining walls, sanitary sewer,

stormwater, erosion control, soil stabilization solutions

• Sales Offices (US, Mexico, Australia, Canada, China, Central

America)

• 40+ mfg facilities

Mexico

Australia

Canada

Who We Are

Structures

Drainage Solutions

Filtration / Separation

Erosion Control

Our Competitive Environment

• Unpredictable demand

Make to Stock

Make to Order – Project Based

Configure to Order

• Competing against smaller competitors

• Global business, global impacts

• Rapidly changing commodity supply situation – varying prices

and government regulated

• Need for “Immediacy” – capability to respond quickly to

opportunities

Our Business Environment

• Expansion through acquisitions and organic growth

• Fragmented systems (5 different ERP systems)

• No centralized supply chain team

• No Formal Sales & Operations Planning Process

• Disjointed Planning process

Multiple Demand Plans

No formal Production Plan

No formal Inventory Strategy

• Find Leadership Champions

• Training, Education, and Gain Buy-in

• Develop Proof of Concept

• Partner search

• Cross-functional involvement

• Solid implementation team

Our Journey for Success

Our Focus

• The Goal – GROWTH & OPTIMIZATION

• Leverage lead time (manufacture to delivery)

• Leverage working capital

• Optimize the supply chain network

• Become more agile as an organization – analyze opportunities quickly

• Gain market share

• MAKE MORE MONEY!!!!!

• More robust, systematic process to planning: S&OP

• Put a centralized team in place

• Hire the right people – change agents

• Get the team collaborating with discipline

• GAIN CONTROL!!!!

• System to empower the team (Steelwedge)

• Holistic view of demand, supply and inventory

• Facilitates collaboration

• Enforcement of the process

• Quick analysis of opportunities for executives

Our Process

People

Systems

Process

Powered by…

Agility & Discipline Provides Results

• 5+ year journey

• 5-10% increase in customer service levels

• 30-40% reduction in working capital needs

• Examine “what-if scenarios” for opportunities and business

planning

• Ability to capitalize on opportunities that we couldn’t respond

quickly enough to before

Our Improvements & Future Vision

• Network Optimization

• A look at a raw material network not seen before

• Analyzing distribution/inventory cost dynamically

• Metrics

• Unique site-level metrics for the entire supply chain picture

• Network optimization metrics, distribution plans tied to lowest total landed

• Agility

• Tying of multiple systems for visual indicators

Network Optimization

• Analyzed the entire North American network from a lowest total landed cost

perspective and built a “reverse” hub and spoke system for our raw material

network

• Built a system tool that auto-populated raw material requirements (kanban & order

driven) for each site that maximized outgoing TL’s on a daily basis

Metrics

• Created a supply chain optimization metric at the site level

known as the Supply Chain Excellence Site Rankings

• Each site’s daily inventory, inbound supplier freight, intra-network freight

(site to site), outbound freight and slow moving inventory was ratio’d to

their COGs

• Metrics are cumulative to account for day-to-day issues such as order

holds, strategic inventory decisions, etc.

• These ratios were compared to best-in-class ratios and weighted in terms

of financial cost to Contech for each category

• Weighted scores were added to come up with an SCE Score and sites

are ranked top to bottom

• Created a “BCS” like atmosphere for Supply Chain and we award a

specific site with a “Supply Chain Plant of the Year Award”

Excellence & Financial Influence

Agility in the Future

• Swings to a Make-To-Order business with short customer lead times are

causing the need for constant network analysis, accounting for mix/volume

changes, new distribution points, and strategic stocking decisions

• Agility in the future is obtained by:

• Centralizing our planning/forecasting systems with our ERP and CRM

systems to give a dynamic view of supply chain that allow us to make

decisions on the fly

• Giving visual metrics and indicators to all areas of supply chain

involvement

• The continued increase in upper management support and one forecast

now, the rest are run-rate projections and scenarios

Danny Smith

VP, Industries

www.steelwedge.com

dsmith@steelwedge.com

Today’s presentation is on SlideShare

http://slidesha.re/OtpcwI

Stay connected on social media!

Twitter ● LinkedIn ● Google+ ● Facebook