How to Keep S&OP From Getting "Stuck", Oliver Wight, JDA

How to Keep S&OP From Getting

“Stuck”

Coco Crum, Oliver Wight

Danny Halim, JDA

Copyright 2010 JDA Software Group, Inc. - CONFIDENTIAL

Agenda

Why S&OP Processes Get “Stuck”

Common Company Situations

How to Get Un-Stuck

Shelf-Connected S&OP


Agenda



How to Get Un-Stuck



Key observation / perspective that will be shared

S&OP has been evolving on a macro, industry level journey following a typical

innovation adoption model,

but key elements of the process are often missing

in company implementations.

S&OP implementations go through transitional stages

at a micro, individual company level…

Companies that follow-through move to an

Integrated Business Planning (IBP) process.

Supply Chain organizations can use IBP to strengthen their role

in supporting “the Essence of the business.”


S&OP and IBP:

Decades of Evolution – The Macro Evolution

70searly

80smid

80slate

80slate

90searly

2000s2000to present

ProductionPlanning Balancing

Supply & Demand

and Inventory Control

Financial Integration

Product and Portfolio

Management Integration

Supply Chain

Collaboration

Scenario Planning

and Strategic

Deployment

Sales & OperationsPlanning


S&OP Is a Common Sense Process

for Aligning Company Plans Every Month


IBP Is a Monthly Process

for Managing the Business Enterprise


Sales & Operations Planning and

Integrated Business Planning

A process led by senior management that evaluates and revises time-phased

projections for demand, supply, new product development, strategic projects

and the resulting financial plans. This is done on a monthly basis, on a planned

24-month rolling horizon.

It is a decision-making process that realigns the tactical plans for

all business functions in all geographies to support the company’s strategy,

business goals and targets.

A primary objective of S&OP/IBP is to reach consensus on a single operating

plan, to which executives of the management team hold themselves

accountable, and allocates the critical resources of people, equipment,

inventory, materials, time and money to most effectively satisfy customers in a

profitable way.


Most Companies Have Elements of S&OP

in Place, But Are Not Truly Doing S&OP / IBP

(No Management Business Review

and little executive involvement.)

© Oliver Wight International 2009

Why is that?

70-80%of companies surveyed do not

do S&OP at the executive level

Therefore, they are not really

doing S&OP/IBP at all!


S&OP IBP – the Issue Is…

S&OP/IBP is often

treated as:

– Supply Chain only

– Demand – Supply – Inventory Balancing …

near term

IBP should be the

primary management

process to run the

business.

Companies get results … but

they miss out

on the benefits of

truly doing it well.

EAME 1014


What We See: S&OP Goes Through Four

Stages of Maturity…


…But Companies Do Not Fully Mature


Case Example – Supply Chain Initiated

S&OP Implementation

• A leading wine producer and distributor

• Difficult to achieve consensus demand

• S&OP process led and owned by supply chain

• Emphasis on improving forecast accuracies and alignment

to finance/budget

• No management business review

• Will gradually evolve to integrated business planning


Here’s Why Maturity Typically Stops

Middle

Management Only Company Leadership

Stuck

ProductionPlanning

Balancing Supply & Demand

and Inventory Control

Sales & OperationsPlanning


Product and Portfolio

Management Integration

Supply Chain

Collaboration

Scenario Planning

and Strategic

Deployment


Here’s What Companies Miss When S&OP Is

Not Fully Mature!

4 Stages


Food for Thought …

Are supply chain organizations truly connected

with the essence of the business?

Operational Excellence or

Operational Competence?

Operational

Excellence

Product

Leadership

Customer

Intimacy

What is your

business focus?


S&OP & IBP – What is the Difference?

More Robust Financial Integration

Inclusion of Strategic Plans, Initiatives, and Activities

More Robust Product & Portfolio Review

Improved Simulation, Modeling, and Scenarios

Improved Operational Risk Visibility and Management

Gap Identification, Improved Decision-Making

Easy, Effective Translation – Aggregate and Detail

Improved Trust Across the Entire Management Team


Oliver Wight and JDA Partnership

• Recognized Innovator and thought leader

• Recognized standard for S&OP/IBP education and implementation

• Class A Certification

• World class S&OP/IBP requires process and behavior changes and executive leadership

• Recognized Market Leader for SCM & Collaboration

• Broadest integrated functional coverage for S&OP and CPFR

• World Class business processes efficiently deployed with technology


JDA’s S&OP / IBP Solution Approach

Demand Planning

• Demand

• Enterprise Planning

• Promotions

• Demand

Classification

• Collaborate

Supply Planning

• Fulfillment

• Sequencing

• Supply

• Master Planning

• Strategy/IPO

• Collaborate

Trans Planning

• Logistics Sourcing

• Transportation

Planning

• Inbound freight mgmt

• Collaborate

ProfitabilitySimulation

AnalyticDashboard

Executive MgmtGraphical Review

Demand/Promotion

Review

Supply

Review

Financial

Appraisal

Management

Business Review

Process Workflow & Task Management

Integrated Reconciliation

Product

Review

Document Assumptions, Risks, Opportunities

Scalable Hierarchy

Meeting Management & Task Assignment

“What-If” Scenario Modeling

Publish Plan Process – Archive Inputs to Plan


Agenda



How to Get “Un-Stuck”



Case Example

• Healthcare Industry

• Spinoff

• Supply Chain Orientation

• Initially Struggled to Get Executive Involvement

• Now Executive-led S&OP

• Executives View

– Process Didn’t Address Their Business Issues

– Information Presented Was Not in the Way They Viewed the

Business


Determine Value

Leader Education

DeterminePlan

AppointTeams

Leadership Phase

DiagnosticDesign Team Education

Management Business Review

Strategic Review

Product & Portfolio Review

Demand Review

Supply Review

Financial Appraisal

Integration Reconciliation

Pro

cess D

esig

n a

nd E

ducatio

n

Development Phase

Quick Start Solution Setup

Cycle 0

TacticalStrategicDecisionMaking

Implement the Process

Performance Measures

Assess Progress

Assess Progress

DocumentResults

.....

Aggregate to Detail Planning

ProblemPrevention

ProblemSolving

ImproveCommunications

Ownership Phase

Aggregate to Detail SynchronizationDesign

Cycle 1-3 Cycle 4-6 Cycle 7-8 Cycle 9

Executive Briefing

Technolo

gy/In

form

ato

n S

coptin

g

Dia

gnostic

Assessm

en

t

Business Data Mapping Elements

Install Software and Train

OliverWight

JDA

Joint

Client

Proven Path Fast Track Program

Approach

Executive Led and “Owned” Process…

In 3 Months and Continuing to Improve

Business Focus


Product Innovation Inclusion


Agenda



Oliver Wight/JDA Fast Track



Case Example

Business Challenges

• How do we best support each customer at every purchase?

• How do we optimize shelf space in a highly cost-competitive

economy?

• Can we improve satisfaction, reduce stock-outs and increase

revenue simultaneously?

• Are our customers fully engaged in "the Sony experience"?


Sony incorporated a focus from

Sell-In to Sell Out

• Localized assortments

• Optimized shelf spaces and in-

store displays

• Promotion/bundling

• Capture store-level KPIs and

exceptions

• Store/merchandising actions

• Leveraging POS for forecasting is not good enough

• Executing collaboration that includes store-clustering based on preferences and

demographics and predicting out-of-stocks to trigger store-level actions

Sell-outSell-in


Shelf-Connected S&OPStrategically align to the business plan

Supplier Factory Manufacturer DC Retail DC

Manufacturing

Supply Chain

Retail

Supply Chain

Store

S&OP

Production

Planning &

Scheduling

Raw

Material

Planning

Demand

Planning

Fulfillment

PlanningCategory

Management

Store & DC

Replenishment

Store

ForecastingPromotional

Planning

Shelf

Analytics

Network, Sourcing and Inventory Optimization

Order Promising, Inventory Deployment & Logistics

ShipmentsProduction Orders

ProcurementOrders

Assortments POS Sales

DC Withdrawals

CustomerOrders

Collaborative

Planning


“Americas’ favorite CE Brand” with industry leading positions in

audio, video, information and communications equipment, semiconductors,

components and other products

Proven Results From Shelf

Connected Journey

Breakthrough results

In-stocks at store level +18%

Lowered weeks of supply by 27%

Improved forecast accuracy by 40%

Named Walmart Supplier of the Year*

* Source: Gartner Case Study: Sony Electronics' Customer Focus and Channel

Collaboration Result in Wal-Mart Supplier of the Year Award, November 2010

• “We felt our end users weren't fully engaged

in the Sony experience, and that if we could

better understand their needs, we could

better support them.

• We also knew we had to improve our already

good relationships with retailers. I wanted to

be able to tell them that if you carry X

inventory and take Y actions, we can have a Z

desired level of profitability.”*• - C.J. Wehlage, vice president of supply chain solutions

How to Keep S&OP From Getting

“Stuck”

Date post:	02-Dec-2014
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