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Bob Stahl www.tfwallace.com
Gaylord Texan Resort & Convention CenterDecember 11-12, 2008
Gaylord Texan Resort & Convention CenterDecember 11-12, 2008 Rick Hall
Director of Operations UPG ofThomas & [email protected]
Rick HallDirector of Operations UPG ofThomas & [email protected]
APICS / iBF Best of the Best S&OP Conference
APICS / iBF Best of the Best S&OP Conference
Executive S&OPExecutive S&OP How to Implement SuccessfullyHow to Implement Successfully
Executive S&OPExecutive S&OP How to Implement SuccessfullyHow to Implement Successfully
QuickTime™ and aTIFF (Uncompressed) decompressor
are needed to see this picture.
Bob StahlR.A. Stahl Companywww.tfwallace.com
Bob Stahl www.tfwallace.com
The The Evolution . . . Evolution . . . The The Evolution . . . Evolution . . .
Plant Scheduling/PullPlant Scheduling/Pull
MSMS
S&OP / Rough CutS&OP / Rough Cut
PTF
24MonthsTime
Most Detail Aggregate OnlyExac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space
VolumeMix
Detailed Forecasting &Detailed Forecasting &
Master SchedulingMaster Scheduling• Lost in the woods- Detail• Engage Top Management?• Added Little Value outside
the Planning Time Fence
Super MSSuper MS
Bob Stahl www.tfwallace.com
An An Imperative . . . Imperative . . . An An Imperative . . . Imperative . . .
PTF
Horizon
Detai
lSuicideQuadrant
Aggregate Only
Quadrant
S&OP
Bob Stahl www.tfwallace.com
Four FundamentalsFour FundamentalsFour FundamentalsFour Fundamentals
DemandDemand SupplySupply
MIXMIX
VolumeVolume
Bob Stahl www.tfwallace.com
The Real Issue . . The Real Issue . . . . The Real Issue . . The Real Issue . . . .
Understanding Executive S&OP is simple.The hard part is . . .
Organizational Behavioral ChangeChanging the way everyone does their jobs.
Keys: - Full cross functional buy-in
- Counter-experiential/intuitive
- Comfort vs Change- Path of low risk
Bob Stahl www.tfwallace.com
Successful Successful Implementation . . .Implementation . . . Successful Successful Implementation . . .Implementation . . .
A - PeopleB - Data
C - Software
Bob Stahl www.tfwallace.com
C - Software . . C - Software . . ..C - Software . . C - Software . . ..•Data “warehouse”
– ERP Operating System, Forecasting Software, etc. (transaction level data)
•Data Cubes . . . •Excel (or equivalent)
– Organizer– Presenter (tables & graphs)
•More complex software – later/maybe
Bob Stahl www.tfwallace.com
Rick Hall on Rick Hall on software . . . software . . . Rick Hall on Rick Hall on software . . . software . . .
• Change forecasting from detailed to families
• Extract data from BPCS; organize in Excel • Develop appropriate MIX assumptions • “Control Tools” to build confidence in these assumptions (Excel based)
• Be willing to put “the gator” on the table
• No financial investment for software.
This is not a software implementation; it is a knowledge application implementation!
Bob Stahl www.tfwallace.com
B - Data . . . B - Data . . . B - Data . . . B - Data . . . •Getting out of “Suicide Quadrant”– Forecasting in Families
•Simplifying Data Assumptions– for Rough Cut Resource Planning– for financial conversion (units to $$$)
•Single process -– tied together– one source for data– one agreed upon output
Bob Stahl www.tfwallace.com
Rick Hall on Rick Hall on data . . .data . . .Rick Hall on Rick Hall on data . . .data . . .
Getting MORE with LESS• MORE clear picture of the business condition
LESS crunching of massive amounts of ultimately useless data
• MORE understanding of where we want the business to beLESS confusion about where we are and where we are going
• MORE participation and agreement in how we will get the business thereLESS conflict surrounding business initiatives
• MORE accountability for the resultsLESS waste of human and financial resources
Bob Stahl www.tfwallace.com
Rick Hall -- Rick Hall -- One Key to One Key to success . . .success . . .
Rick Hall -- Rick Hall -- One Key to One Key to success . . .success . . .
SimplifyingAssumptions
Bob Stahl www.tfwallace.com
Validating AssumptionsValidating AssumptionsValidating AssumptionsValidating Assumptions
RRP Run Rate ConversionUnits to Hours Control Chart
0.42
0.44
0.46
0.48
0.5
0.52
0.54
0.56
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
2006 2007 2008
Hours per Unit
UCL LCL Hours per Unit Linear (Hours per Unit)
AssumptionSensitivity
Bob Stahl www.tfwallace.com
Supply Supply Assumptions . . .Assumptions . . .Supply Supply Assumptions . . .Assumptions . . .
% of A that is IC 01
Instructions:1) Enter subgroup (sample) size. 3
2) Enter subgroup observations. 4
3) You may need to adjust the chart size to have the observations align with the data points
Note: If you clear all the cells, you will get an error - you may ignore it. The worksheet will perform properly with data in it.
Note: You may unprotect this worksheet should you wish to modify it: select T ools,
then Protection, then Un p rotect Sheet
3 Constants: A2
D3
D4
AVERAGES X = 32.25 UCL= 43.8 (X + A 2R) LCL= 20.7413 (X - A 2R)
RANGE R = 11.25 UCL = 28.9575 (D 4R) LCL = 0 (D 3R) (0 for Sample < 6)
Period Mar-07 Jun-07 Sep-07 Dec -07Apr-07 Jul-07 Oc t-07 Jan-08May -07 Aug-07 Nov -07 Feb-08
1 31 40 35 23
2 30 20 37 29
3 26 38 43 35
Sum 87.00 98.00 115.00 87.00
X 29.00 32.67 38.33 29.00
R 5.00 20.00 8.00 12.00
Subgroup (sample)
2) Observations
1.023
0
2.574
1) Enter Subgroup Size (1-10)
0.00
10.00
20.00
30.00
40.00
50.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Bob Stahl www.tfwallace.com
Financial Financial Assumptions . . .Assumptions . . .Financial Financial Assumptions . . .Assumptions . . .
+1 -1 +2 -21.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.004447
Average Selling Price Family H
$1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58$1.58$1.58
$0.10
$0.60
$1.10
$1.60
$2.10
$2.60
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12
Period
Observations
Average Selling Price Family H Range Chart
0
0.2
0.4
0.6
0.8
1
1.2
Oct-
06
Nov-
06
Dec-
06
Jan-
07
Feb-
07
Mar-
07
Apr-
07
May-
07
Jun-
07
Jul-07 Aug-
07
Sep-
07
Oct-
07
Nov-
07
Dec-
07
Jan-
08
Feb-
08
Mar-
08
Period
Range
Bob Stahl www.tfwallace.com
Graphical ReportGraphical ReportGraphical ReportGraphical ReportResource Requirements Plan - Dept #8
0
50
100
150
200
250
Oct Nov Dec Jan Feb Mar Apr May Jun JulAug Sep Oct Nov Dec Jan Feb Mar
2007 2008 2009
Hours Per Month
Normal Capacity Normal Capacity +25%Medium Widget Required Capacity Large Widget Required Capacity
Bob Stahl www.tfwallace.com
Simplifying AssumptionsSimplifying Assumptionsallow Homac to . . . allow Homac to . . . Simplifying AssumptionsSimplifying Assumptionsallow Homac to . . . allow Homac to . . .
• Get out of the suicide quadrant• Keep noise level MIX issues from clouding VOLUME space picture
• Maintain confidence in the process because the assumptions are monitored for validity
• Build believable future state projections
Bob Stahl www.tfwallace.com
Done Done Properly . . . Properly . . . Done Done Properly . . . Properly . . .
Simpler(Not Easier)
Better
Bob Stahl www.tfwallace.com
A - A - People . . . People . . . A - A - People . . . People . . .
• Top Management “centric”– The Leader of the business (CEO, President, GM, MD,
etc.) must not only provide• Support• Funding• Commitment• Leadership
– They must also be “hands-on” each and every month(Top Management must not only support it, they must be willing, ready, & able to do it!)
• It’s not doing what you do better, it’s doing something different to be better!
• Counter-experiencial & Counter-intuitive equals Discomfort & Risk
Bob Stahl www.tfwallace.com
Engaging Top ManagementEngaging Top ManagementEngaging Top ManagementEngaging Top Management
•In Change, there is no Comfort(In Comfort, there is no Change)
Those who succeed withExecutive S&OP
are willing the endure the discomfort that is required!Ris
k
Bob Stahl www.tfwallace.com
• Uninformed (before Go/No-go #1)
Boss: “Okay, let’s do an Executive Briefing.”
• Semi-informed (after Briefing: Go/No-go #1)
Boss: “Okay, let’s do a Live Pilot”
• Fully informed (after Pilot: Go/No-go #2)
Boss: “Okay, let’s go to full cutover.”
Low
Risk
Three Levels Three Levels of Commitment . . . of Commitment . . . Three Levels Three Levels of Commitment . . . of Commitment . . .
Bob Stahl www.tfwallace.com
Homac Homac Getting Getting started . . .started . . .
Homac Homac Getting Getting started . . .started . . .• President was convinced this was worth looking at by Demand, Supply, and Finance executives.
• The Executive Briefing supplied all the necessary facts. The fact that it was a people based implementation was a strong selling point. After all, our people are our strength!
• After some Co-Chair possibilities a staff level chair person was chosen (support from the top) for Design Team Leader
Bob Stahl www.tfwallace.com
Homac Homac Design Team Design Team Selections. . .Selections. . .
Homac Homac Design Team Design Team Selections. . .Selections. . .
• Chose the best people disregarding perceived workload constraints
• To a person, the team members were enthusiastic to take on the task of developing and implementing this new tool
• Initial progress was slow but progressed nicely as hurdles were overcome
• Live pilot demo was very convincing with all design team members sharing in the presentation process
• Implementation went forward on time and fully supported
Bob Stahl www.tfwallace.com
Homac’s added plus . . Homac’s added plus . . ..Homac’s added plus . . Homac’s added plus . . ..• ES&OP output provided clear supportable data for marketing our company
• ES&OP process at our company is being modeled for all of the Utility Products Group within Thomas & Betts
• ES&OP process is being used in tough market conditions to drive business performance
• We are looking for new simplifying assumptions to help us broaden the proactive benefits of our ES&OP process (space requirements)
Bob Stahl www.tfwallace.com
Implementation PathImplementation PathImplementation PathImplementation Path
1 2 3 4 5 6 7 8 9
Months
Business
Improvement
Phase IPhase IPreparation
Phase IIPhase IIExpansion
Live PilotDemonstrationGo/No-Go #2
Phase IIIPhase IIIFinancial Integratio
n
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Low RiskLow Cost
High Impact
Low RiskLow Cost
High Impact
Bob Stahl www.tfwallace.com
Implementation AlternativesImplementation Alternatives
“Build it and they will come” Design it first, get the mechanics working, and
then attempt to sell it to top management.=
Low probability for success
“Hold the high ground” Involve top management at the very outset of the
implementation, and throughout.=
High probability for success
Bob Stahl www.tfwallace.com
Success RequiresSuccess RequiresSuccess RequiresSuccess RequiresDesign Team’s Job:
1. Defined set of practices (What, How, & Who)
2. Accurate, timely, & believed data
3. Valid, simplifying assumptions (Demand/Supply/Financial)
(Getting out of ‘Suicide Quadrant’)
Leadership’s Job:
• High discipline clear accountability (process & results)
• Constant improvement
• Changed performance measures
• Culture/Behavior change (Gator on table)
Bob Stahl www.tfwallace.com
Thanks for Thanks for ListeningListeningThanks for Thanks for ListeningListening
www.tfwallace.com