IBP
© 2017 Westernacher Consulting AG
IBP Case Study – Weir MineralsJan 6th 2017
Lars Sondergaard – Managing PartnerHead of Global Business Unit Planning at Westernacher
Jan 2017
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
1 © 2017 Westernacher Consulting AGAll rights reserved
The Weir Group overview § Leading global provider of engineering solutions to mining and minerals, oil and
gas, power and industrial markets§ Established in 1871 with a footprint in over 70 countries employing more than
14,000 people across three divisions§ FTSE 100 company§ Minerals - End-to-end solutions provider with original equipment and aftermarket
products, including high quality pumps, valves, wear resistant linings, cyclones, crushing & screening equipment, dewatering systems, hose and controls
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Weir Minerals - company structure§ 20 production sites§ 55 service centers§ Sales & Distribution Centers worldwide
(not pictured)§ Over 6,300 employees§ Numerous sales offices
Major customers
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Weir Minerals Manufactured Products
Cone CrushersSlurry Pumps
Hydrocyclones
Positive DisplacementPumps
Screens
Rubber Hoses
Rubber sheet and linings
Valves
Verticalturbine pumps
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Minerals needs to improve its S&OP response to customer and market changes to optimize profitable outcomes, in close to real-time:
Why does Weir need a S&OP process?
§ S&OP approach was fragmented and not harmonized
§ S&OP process was a slow, elaborate and manual process
§ Little consistency in how demand is consolidated an translated into supply requirement and there is little system visibility of Regional or Global demand and capacity situation
§ Long lead times even though capacity would be available elsewhere in the network
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Objective – The journey to ‘S&OP Excellence’– Gartner S&OP Maturity Model
Weir objective is to move from ~1 to >3 within 6 months of go-live date, with all entities at 3 by 2017, and improving up to and beyond 4
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
ReactingRCCPAsset UtilnInventory Levels
AnticipatingPlan manuf capacitiesForecast errorInventory turnsFunctional costs
CollaboratingNPIProfitabilityMarketing plansService LevelsWorking capital
OrchestratingDemand sensingDemand tradeoffsService strategiesProfitMarket share
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Sales & Operations Planning – S&OP§ Sales & Operations Planning (S&OP) is a set of decision-making processes,
to balance demand and supply, to integrate financial planning and operational planning, to deploy strategy.
§ In narrow terms : S&OP is about CHANGE.
It provides a “window into the future”, so that companies can1) see potential problems ahead of time 2) take corrective action and 3) prevent potential problems from becoming a real ones.
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Expected benefits
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Benefits
Customer Service Improvement • Through planning and leveling of constrained
resources the avg. Sales order cycle time is reduced
• Uncover capacity restrictions within the network and shift production accordingly to solve bottlenecks before they occur; improve the “First Time Fill” & deliver on confirmed delivery date
• Higher forecast accuracy due to better demand visibility supported by sophisticated prognosis models facilitates network wide reduction of inventories and safety stocks.
• Balance inventory throughout network –shift over-inventories to short-handed locations
Inventory Reduction
• Prevent obsolete material by monitoring the “days of supply” across the entire network, alerting the planners early to potential issues using threshold values
• Recognize surplus material and balance it throughout the network
Surplus & Obsolescence Reduction
• By using an integrated planning solution with scenario capabilities, balancing of ordering, inventory, transportation and production costs can be achieved across the entire enterprise
Supply Chain Cost Reduction
Soft Benefits such as: • Enhanced Teamwork• Better Communications (in- and external)• Better Decisions in shorter time frames• Strategy Linkage• Improved Accountability & Control• Improved Foresight / Window to future
• Reducing risk of new product launches by balancing capacity between the existing and new product(lines).
• Creating visibility to all parties involved.
New Product Launch Risk Reduction
• Cross-plant recognition of over- and under-utilization giving options of optimization across the network or potential for contract manufacturing
• Intra-plant recognition of over-and under-utilization enabling plant utilization optimization measures (e.g. labor planning)
• Early recognition of production bottlenecks, allows for resolution measures to be taken well in advance
Plant Productivity Improvement
Working Capital improvement: • Quote to cash time is shortened due to
better planning capabilities.
Based of our past experience, the following benefits can be realized.
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Expected benefitsWhat problems will S&OP solve and HOW will it help solve them?
§ The primary objectives of S&OP are: § Improved Customer Service (On Time Delivery, Lead Time, Service Levels)§ Improved Operational Efficiency (cost management, asset utilization,
inventory, plant & equipment deployment)
§ S&OP can help improve performance through:§ Better forecast accuracy and dialogue§ Faster planning and execution response times§ Better visibility of demand and supply mismatches
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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§ Service level: 5-10%
§ SKU Rationalization: 10-15 %
§ Order Fulfillment Lead Time: 10%
§ Inventory Cost Reduction: 5%
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Expected benefits in numbers
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• Input from Sales, Marketing, Finance and Operations, including quantity, price, revenue, and margin
• Consensus Demand Planning and New Products
• Based on updated demand plan, understand capacity and material impacts, including contract manufacturing
• Understand long-term gaps in supply and demand
• Review and resolve outstanding supply issues• Compare constrained plan with finance plan • Define and compare scenarios
• Escalate resolution plans with scenarios, if applicable• Review key changes since last meeting
Demand
Supply
Balance
Executive Review
Sales & Operational Planning
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Years
Months
Weeks
Days
Sales & Operations Planning
Product Design &Development
Budget & Finance Planning
Demand Planning
Master Planning
Customer Demand Management
Replenishment Planning and
Execution
Production Planning
Production Planning
Strategic Business Planning
Differentiating Planning Processes by timescales
Procurement Planning
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Sales and Operations Planning
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Tasks
Outputs
• Collect unconstrained demand, from multiple sources:- Firm, anticipated
orders- Product families- Assumptions
• Align to revenue and margin targets
• Approved Consensus Demand plan (Forecast Demand)
• Propagated to Demand/ Supply Alignment
• Collect supply data, from multiple sources- Inventory balance,
targets- Production plan- Procurement plan- Production costs- Lead times- Shift levels- Materials review
• Approved Consensus Supply plan (Available Capacity)
• Propagated to Demand/ Supply Alignment
• Bring together Consensus Demand and Supply plans
• Review with stakeholders to identify gaps
• Develop alternative scenarios to address gaps
• Identify scenario that best meets customer, operational and financial goals
• Unresolved gaps escalated to Executive Review
• Review proposed sales and operations plan
• Review unresolved gaps• Agree final plan that
meets KPIs
• Approved upside scenarios
• Published final plan for all stakeholders
• Balanced plan for execution
• Input to financial forecasts
DemandReview Balancing Executive
ReviewSupplyReview
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ECC IBP - S&OP C4C
Finance PlanCO/PA Finance Plan
Statistical Forecast
Sales OrdersSales Orders
Consensus Demand
Constrained Demand
Supply Plan
Inventory TargetInventory
Opportunities
Sales Forecast
Sales Forecast
Inventory
Constrained Demand
Supply Proposal
S&OP Document flow
Opportunities
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Dem
and
Supp
ly
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Working with Dashboards and Planning Views
T1_OE_Overview
T1_OE_Detail
T1_Spares_Overview
T1_Spares_Details
T2_OE_Detail
T2_Spares_Overview
T2_Spares_Details
DP_Input_Opps Consensus Demand
Forecast vs. Financial Budget
Forecast vs. Demand History
Changes in the Forecast since previous month
Deviations between current
and future Forecast
Planning Views
Reports
Supply Plan Overview
Capacity Overview
Capacity Details
Supply Plan Details
Inventory Performance
UncoveredRevenue +
Margin
Constrained vs.
Finance Plan
Forecast AccuracyBill of Material
Where Used List
Dashboards
Demand Planning
Local Demand/ Supply Balancing
Regional Demand / Supply
Balancing
Executive Review
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Working with scenarios
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
BaselineScenario
ConstrainedScenario 1
ConstrainedScenario 2
UnconstrainedScenario with Alerts
been triggered
ConstrainedScenarios dealing
with the Alerts
What If
XY
Z
What If
AB
C
NewBaselineScenario
Copy Compare & Decide Copy
Baseline Scenario without
unaddressed Alerts
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Working with meetings
Forecasting & Demand history analysis
Load conversion and analysis
Demand meeting
Supply meeting
Balancing Meeting
Executive Meeting
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Demand exceeds capacityIncrease Capacity Decrease DemandWork overtime Challenge demand (reductions possible?)Increase shifts Postpone orders
Build stock ahead Reduce promotionRe-allocate production to other plants Order freeze
Outsource Cut back inventoryCAPEX, Tooling, Business Acquisition
Capacity exceeds DemandDecrease Capacity Increase DemandReduce shifts Expedite orders
Schedule absence Schedule promotions
Reschedule maintenance Introduce new products
Insource
Resolving imbalances:
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Data model§ IBP is not a reporting tool – it has a complete data model to depicture:
§ Master Data *§ Transactional Data§ Planning Functionality§ Simulations
CURRENCYCURRID
CURRENCYTOCURRTOID
CUSTOMERCUSTID
CUSTOMERPRODUCTCUSTID; PRDID
EVENTEVENTID
EXCHANGERATECURRID, CURRTOID
LOCATIONLOCID
LOCATIONFRLOCFR
LOCATIONPRODUCTLOCID; PRDID
PRODUCTPRDID
PRODUCTIONRESOURCERESID; SOURCEID
PRODUCTIONSOURCEITMPRDID; SOURCEID
RESOURCERESID
RESOURCELOCATIONLOCID; RESID
RESOURCELOCATIONPRODUCT
LOCID; PRDID; RESID
SOURCECUSTOMERCUSTID; LOCID; PRDID
SOURCELOCATIONLOCFR; LOCID; PRDID
SOURCEPRODUCTIONLOCID; PRDID; SOURCEID
SPRODUCTSPRDID
UOMCONVERSIONPRDID; UOMTOID
UOMTOUOMTOID
COMPONENTPRDFR
Currency
Pricing Customer
Material MasterVendor
Info Record BOM Workcenter
Routing
*picture not complete
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Dashboards and Charts
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Dashboards and Charts
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Planning Views
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Collaboration using SAP JAM
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Challenges so far…Do not underestimate the following factors:
§ New Software> IBP S&OP is completely flexible> Software and Implementation knowledge is key
§ Integration of system through HANA Cloud Integration
§ Process and Data> Product hierarchy development> Connection to C4C
§ Organizational Change Management - Harmonization Effort> Across Regions and Companies> Across Departments (Sales, Production, Finance)> Aligning Planning Level -> Rules for disaggregation
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Challenges so far…
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
TECHNICAL PROCESS AND DATA HARMONIZATION EFFORT
• IBP S&OP is completely flexible
• Software and implementation knowledge is key
• Product hierarchy development
• Connection to C4C*
• Across regions and companies
• Across departments (Sales, Production, Finance)
• Aligning planning level à Rules for disaggregation
Please do not underestimate the following factors
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Challenges so far…
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
1 : Technical
Debugging is not possible
Standard SAP IBP in the Cloud
Debugging is possible
Standard Process Process Design
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Challenges so far…
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
2 : Finding the right Planning Level
Company
Business UnitMarket Segment
Product Family
Product Sub Family
Brand / ModelPackaging Size
Stock-keeping Unit
Stock-keeping Unit by Customer
Stock-keeping Unit by Customer by Location
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Challenges so far…
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Consolidation of hierarchies between:Countries and regionsSystemsSales, Production, Finance (Engineer to Order)
è Level 1 – OEM
è Level 2 – CYCLONES, VALVES, PUMPS, SCREENS , etc.
è Level 3 – SLURRY PUMPS, POSITIVE DISPLACEMENT PUMPS, DEWATERING, etc.
è Level 4 – Type – Genesis Hydrocyclone, Separator
è Level 5 – Size – 300, 350, 400, 450
è Level 6 – Material – Metal, Rubber, FM120
è Level 7 – Build – Bareshaft Pump, Pumpset, Bareshaft Froth Pump
StandardProduct Hierarchy
Extended Product Hierarchy(Material Classification)
2 : Process and Data
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Regional Balancing
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
3 : Harmonization Effort
IntegratedPlan
Sales
OperationsFinance
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Regional Balancing
APAC Region
Default manufacturing facility
Customer location
Alternative manufacturing facility
Global BalancingDefault manufacturing facility
Customer location
Alternative manufacturing facility
APAC Region
Europe Region
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
3 : Harmonization Effort
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Roll-out Strategy1st stage : Foundation S&OP (AS-IS)
§ VOLUME BALANCING§ in-house production resource requirement / capacity requirement plan § load levelling / tactical outsourcing-insourcing
2nd stage: Capable S&OP (TO-BE Phase 1)§ SINGLE SET OF NUMBERS
§ Integrated sales, supply, and financial plan
3rd stage: Integrated Business Management (TO-BE Phase 2)§ STRATEGY DEPLOYMENT
§ Integrated sales, supply and financial plan§ new markets, product launches , acquisitions , supply chain developments
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Q & A
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Webinar describing the Weir Minerals IBP process: http://www.westernacher.com/en/webinar/sap-ibp-use-case
Sales and Operations Planning Maturity Modelhttps://www.gartner.com/doc/1460715/sales-operations-planning-maturity-does
Sales and Operations Planning – How-To HandbookThomas F. Wallace and Robert A. Stahl, 3rd Edition 2008
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
Additional Information
© 2015 Westernacher AG. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of Westernacher AG.The information contained herein may be changed without prior notice.
Some software products marketed by Westernacher AG and its distributors contain proprietary software components of other software vendors.National product specifications may vary.
These materials are provided by Westernacher AG and its affiliated companies (“Westernacher Group”) for informational purposes only, withoutrepresentation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warrantiesfor Westernacher Group products and services are those that are set forth in the express warranty statements accompanying such products andservices, if any. Nothing herein should be construed as constituting an additional warranty.
Westernacher and other Westernacher services mentioned herein as well as their respective logos are trademarks or registered trademarks ofWesternacher AG in Germany and other countries.
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Westernacher has a long history of optimizing Integrated Business Planning Processes solutions with Best Fit SAP Solutions
Multiple S&OP/IBP POCs to date
SAP “IBP” PioneerWesternacher’s been building custom ‘IBP-like’ solutions with the SAP toolset and add-ons since the late 90’s.
Leading IBP Process and SAP implementer in Discrete manufacturingusing best practice data models and our own system and methodology
Early deployment of SAP IBPSAP S&OP/IBP experience from the beginning, first hand experience and solution input as SAP partner
One of first to implement a Full Cycle SAP S&OP in the Discrete Industry. Strategy, approach, design to ensuring successful global rollout
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Why Westernacher
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A
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Westernacher brings over 10 years of experience in optimizing Planning Processes. We will bring this experience to a no obligation half / fully day on site workshop to discuss a potential engagement.
Workshop objectives
• Identification of specific organizational challenges in your company
• Provide SAP IBP solution overviews
• Establish potential solution approach, based on selected live SAP IBP demo scenarios
Offer for a half / full day (free of charge) workshop at your premises
Suggested participants from your side
• Managing Director / Board Member• Head of Corporate IT• Process owner Planning • Finance
Proposed agenda
Potential participants from Westernacher
• Lars Sondergaard, Managing Partner and Head of Global Planning Practice
• Dr. Steffen Blunck, Managing Partner Senior Consulting and Solution Architect
• Christian Schmaus, Managing Partner, Senior Management Consultant
• Meet & Greet, short introduction of participants and companies • Presentation and discussion of IBP-Processes • Discussion of challenges in your organisation
• Overview of SAP IBP solution • Potential solution approach, based on selected SAP IBP scenarios • Summary and next steps
The content for this workshop is only a proposal and we will be happy to incorporate any individual requirements. We recommend a short teleconference before the workshop to finalize the agenda.
Expected Benefit The process and tools Lessons learnedIntroduction of customer
Project approachWhy S&OP Q & A