Revenue Growth or Cost Control? Strike the Right Balance with S&OP and Demand Planning Technology

© StrataBridge 2014

WE GROWTH


Chris Turner Co-Founder, StrataBridge

We are a Boutique Consulting Firm.

We advise fast-moving, brand-led organisations on strategy,

innovation, and operations.

We help organisations achieve sustainable growth in

unpredictable circumstances.

We’re specialists in joined-up decision-making – Sales and

Operations Planning (S&OP), Integrated Business Planning

(IBP) et al – as a means to delivering strategy.

We’ve worked with companies of all shapes

and sizes, from the UK to Europe, from

the Americas to Asia and from the

Middle East to Africa.

We help companies create their future.

Our ideas, processes and interactions are

designed to allow organisations to bridge the

gap between where they are and where

they want to be.

A (very) Brief Introduction


So, what’s the BIG Idea, Question and

Opportunity?

A rapidly and

continually

changing context

is opening-up

increasing

opportunities for

growth against a

backdrop of

unprecedented

change and new

risks

Many (possibly

most?) organis-

ations decision-

making processes

(particularly

‘S&OP’, ‘IBP’

etc.) have been

designed on the

(often implicit)

assumption of

‘control’

How

do we adapt

routines

we’ve refined

for operational

efficiency to

enable similar

degrees of

strategic

flexibility?


Some Structure and Thought-

Provokers…

Mindset trumps Process – Think

‘Eco-system’ not ‘system’…

What’s going-on out there (and with

you)? Big trends and growth drivers…

Adapting the decision-making ‘eco-

system’ – Both Control and Growth…


Mindset trumps Process –

Think ‘Eco-system’ not

‘system’…






Provokers…


Thinking about this webinar… and developing a

Growth Mindset



Results

‘Eco-System’

Design/Behaviour

Strategy

Thinking about this webinar… and developing a

Growth Mindset


"Invention is by its very nature a disorderly

process," says current CEO George Buckley,

who has dialled back many of McNerney's

initiatives. "You can't put a Six Sigma process

into that area and say, well, I'm getting behind

on invention, so I'm going to schedule myself

for three good ideas on Wednesday and two

on Friday. That's not how creativity works.”

"You cannot create in that atmosphere of

confinement or sameness," Buckley says.

"Perhaps one of the mistakes that we made as

a company—it's one of the dangers of Six

Sigma—is that when you value sameness

more than you value creativity, I think you

potentially undermine the heart and soul of a

company like 3M.”

McNerney declined to comment for this story.

Control, Growth and ‘Culture’…





you)? Big trends and growth

drivers…




Provokers…

© StrataBridge 2014 © StrataBridge 2014

How do you expect your companies growth

prospects to change over the coming year or two

compared to the last year or two?

• Significantly increase

• Moderately increase

• About the same

• Moderately decrease

• Significantly decrease

Understanding your context… your

opportunities and expectations for Growth…


2009 2011 2012 2013 2014 2015 2010

10%

40%

50%

60%

30%

20%

How do you expect customer demand for your company’s products or services to

change, if at all, in the next six months?

Source: McKinsey Global Economic Conditions Snapshot Quarterly Survey April 2009 - June 2014

Increase

Stay the same

Decrease

Don’t know

47%

43%

9%

1%

Understanding the external context…


60% Asia 14% Africa

11% Europe

8% North America

6% South America

0.5% Australia

A tipping balance:

Understanding the external context – Big

Trends pointing towards growth…


2011 2030 2050

PPP

Rank Country

GDP @ PPP

(2011 US$bn) Country

Projected

GDP @

PPP

Country

Projected

GDP @

PPP

1 US 15,094 China 30,634 China 53,856

2 China 11,347 US 23,376 US 37,998

3 India 4,531 India 13,716 India 34,704

4 Japan 4,381 Japan 5,842 Brazil 8,825

5 Germany 3,221 Russia 5,308 Japan 8,065

6 Russia 3,031 Brazil 4,685 Russia 8,013

7 Brazil 2,305 Germany 4,118 Mexico 7,409

8 France 2,303 Mexico 3,662 Indonesia 6,346

9 UK 2,287 UK 3,499 Germany 5,822

10 Italy 1,979 France 3,427 France 5,714

11 Mexico 1,761 Indonesia 2,912 UK 5,598

12 Spain 1,512 Turkey 2,760 Turkey 5,032

13 South Korea 1,504 Italy 2,629 Nigeria 3,964

14 Canada 1,398 South Korea 2,454 Italy 3,867

15 Turkey 1,243 Spain 2,327 Spain 3,612

16 Indonesia 1,131 Canada 2,148 Canada 3,549

17 Australia 893 Saudi

Arabia

1,582 South Korea 3,545

18 Poland 813 Australia 1,535 Saudi

Arabia

3,090

19 Argentina 720 Poland 1,415 Vietnam 2,715

20 Saudi

Arabia

686 Argentina 1,407 Argentina 2,620

The World in 2050 – Actual and Projected top 20 economies based on GDP in PPP terms

Source: World Bank – 2011 Actuals

PWC – 2030, 2050 Estimates

Understanding the external context – Big

Trends pointing towards growth…


Disproportionate

& Sustainable

Growth

Growth Move Criteria:

• Favourable

demographics

• Macroeconomics

• Market ‘maturity’ –

where on the ‘curve’

• Channel dynamics

• Competitive

landscape/intensity

• Attractiveness vs.

Winability

Sources of Growth:

• Market Momentum – e.g.

Geographies/Categories/Segments with

high growth rates/potential (short-medium-

long term)

• Share Gain – e.g. win share from existing

competitors/block new competitors

• Grow Participation – e.g. expand

geographic/category participation

• Grow Total Market – e.g. innovation to grow

the total market and take the greater share

of growth

• Create options for future growth – e.g.

selective moves designed to create more

upside than downside for future growth

• M&A

Innovation Drivers and Intersections:

• Our Purpose, Proposition and Brands

• Consumer Trends, Insights and Unmet

Needs

• Technical evolution, development and

breakthroughs

• Shopper, market, trade, channel, competitor

landscape and evolution

Defining the ‘Strategic

Portfolio Role’:

• Disproportionate

Growth/Growth/Market

Entry/Maintain/Defend/Deem

phasise/Exit

• Exploit/Experiment/Explore

• Both Growth and Learning

Plotting the Routes to Growth –

e.g. Growing from the ‘Core’:

Implications across the Business:

• Connecting trends, insights and

innovation – Where to play? How to

Win? What do we need to do?

• Developing a ‘joined-up’ response

• Choices, trade-offs and

consequences – ‘optimisation of the

‘whole’

Developing your ‘Growth Map’ – Where to

Play? and How to Win?…









Provokers…


A Fundamental Conflict – The

Control ⇆ Growth Paradox…

The Pursuit of ‘Growth’

The creation of new value for customers and shareholders,

driving the need for new stuff – new products, new

services, new markets, new business models, etc. – by

definition, increasingly different from what we currently

do…

The Desire for ‘Control’

The focus on continuously tightening the grip on how we

do things today – driving predictability and productivity

by fine-tuning our knowledge of, and control over, our

existing business portfolio – products, customers,

channels, etc.


The Hungry Beast and the Ugly Baby –

Protecting the New…

© Pixar Animation Studios

Originality is fragile, initially

awkward, unformed, vulnerable

and incomplete. New ideas are

‘ugly babies’ that need

nurturing in order to grow.

They have a hard time

coexisting with the ‘beast’; any

large group that needs to be fed

an uninterrupted and consistent

diet in order to function.

As a business becomes

successful an inordinate amount

of energy is directed toward

feeding the breast – protecting

what has worked so far. The

key to preventing this is

balance.

Ed Catmull Co-founder Pixar and President Disney Animation

Studios

Creativity Inc.

“

”


Adapting our decision-making approach to

reflect our ‘uneven knowledge’ of the world


Heuristic

Principles/

Rules of

Thumb

Mystery

Hunches/

Questions/

Paradox

Algorithm

Repeatable/

Reliable/

Formulaic

0101001110110101001

Code

Repeatable/

Reliable/

Formulaic

Automated

‘Outsourcable’




Algorithm

Repeatable/

Reliable/

Formulaic

Mystery

Hunches/

Questions/

Paradox

Heuristic

Principles/

Rules of

Thumb




Mystery

Hunches/

Questions/

Paradox

Algorithm

Repeatable/

Reliable/

Formulaic

Heuristic

Principles/

Rules of

Thumb




Heuristic

Principles/

Rules of

Thumb

Algorithm

Repeatable/

Reliable/

Formulaic

Mystery

Hunches/

Questions/

Paradox

Exploration Exploitation Experimentation




Heuristic

Principles/

Rules of

Thumb

Algorithm

Repeatable/

Reliable/

Formulaic

Mystery

Hunches/

Questions/

Paradox

Exploration Exploitation Experimentation




Valu

e

Time

Creating New Value – The Sigmoid Curve

Increasing the ‘area under the curve’

Lower

Investment

More Cash

Generated

Increased

Longevity

Later

Investment

Faster

Payback

Multiple Levers; Two

Dynamics: • Magnitude

• Timing

(Levers and dynamics

are not mutually

exclusive)


Development Growth Maturity Decline

Time

Valu

e





‘Known’

Precision/

Fine-tuning

Continuous

Improvement

Analyse Assume

Probe

Time

Valu

e





‘Unknown’

Bets &

Options

Lead with

Hypothesis

Probe Assume Analyse

(Explore)

‘Knowing’

Learn-

by-Doing

‘Lead’

or ‘Lag’

Assume Probe Analyse

(Experiment)

‘Known’

Precision/

Fine-tuning

Continuous

Improvement

Analyse Assume

Probe

(Exploit)

~ Ditto ~

‘Growth -1

’

+

How to

profitably exit

or jump to the

next curve?

Time

Valu

e




Consistency

Standardisation

Proceduralisatio

n

Change

Innovation

Experimentation

Learning, Competitive

Advantage & Results

fuelled by…

Efficiency

Productivity

Agility

Adaptability

Hierarchical

and

Centralised

Flat,

Networked and

Distributed

Performance Beliefs…

Organisational Construct

and Location of Power…

Analytical Exercise

Fixed

Destination/Direct

Route

Systemic Intervention

Overarching

Direction/Course

Correction Mechanical

Formulaic

Wanting

Answers

Organic

Dialogue-based

Asking

Questions

Data-driven

Numbers based

Insight-driven

Assumptions based

??1+2=3

Approach to Strategy…

Decision-making

Routines…

Supporting

Information Focus…

Process (People are there

to ‘enact the process’)

People (Process

provides ‘enough

structure’)

Obedience

Compliance

Competence

Creativity

Stretch

Passion

Automate the

Processes

Enable the

People

Results Driven

Through…

Talent Hired For…

Technology used to…

C

o

n

t

r

o

l

G

ro

wt

h

More Volatile

More Uncertain

New ‘Rules’

Volatile

Uncertain

Changing ‘Rules’

External Environment - Competitor, Customer, Consumer

Landscape & Behaviour - & Macro Trends

Stable

Predictable

Consistent ‘Rules’

Volatile

Uncertain

Changing ‘Rules’

External Environment - Competitor, Customer, Consumer

Landscape & Behaviour - & Macro Trends

Decision-

making

Contexts

Mindsets and

Characteristics

© StrataBridge 2014 © StrataBridge 2012 © StrataBridge 2014

C

o

n

t

r

o

l

G

ro

wt

h

Striking the ‘Right Balance’?

In general, how would you rank your

organisational DNA on the 'Control-Growth

Spectrum’?

1 2 3 4 5

More 'Control’ More 'Growth’

About right

What do you need to strike the right

balance to deliver your strategy and

desired business results?


So, what’s the BIG Idea, Question and

Opportunity?

A rapidly and

continually

changing context

is opening-up

increasing

opportunities for

growth against a

backdrop of

unprecedented

change and new

risks

Many (possibly

most?) organis-

ations decision-

making processes

(particularly

‘S&OP’, ‘IBP’

etc.) have been

designed on the

(often implicit)

assumption of

‘control’

How

do we adapt

routines

we’ve refined

for operational

efficiency to

enable similar

degrees of

strategic

flexibility?


Chris Turner

mobile: +44 7802 252 003

e-mail: [email protected]

web: www.stratabridge.com

… and over to Ed

32 © 2014 Steelwedge Software, Inc..

Single Line of Sight: Plan, Perform, Profit

Steelwedge Agility Webinar Series

Revenue Growth or Cost Control

July 15, 2014

33 © 2014 Steelwedge Software, Inc. Confidential.

“ Steelwedge has grown into

the market's leading S&OP

solution in the cloud. ”

Rating: Positive

Global market share leader

Offices: USA, Europe, Japan & India

Founded in 2000, 50%+ year over year growth

Global organization focused on global delivery

Cloud Based Integrated Business planning platform

100% cloud-based for rapid deployment & value realization

Steelwedge: The S&OP Company


Pre-ESOP

Ground Reality: Trying It With Spreadsheets

Demand Planning, SCM/APS Systems

ERP, Financial, & Transactional

Systems SAP, Oracle, etc.

Industry

Data

Consolidation, Review,

Overrides

Data Collection,

Reconciliation

Consensus Process ESOP

Operations

Marketing

Sales

Finance

Manual

Complex

Security Risk

Not Scalable

What’s going on? Big Trend Visibility?

Systems Landscape

Exploring opportunities?

Decision-making eco-system?


Change Your Reality; Drive S&OP Adoption & Values

Time

L1

L2

L3

L4

Q1 Q2 Q3

Step Change

Maturity &

Performance

Avoid Process

Failure

Q4

Val

ue

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


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 this shouldn’t be a

central piece of management software”

–Rob Kugel, Ventana Research


S&OP Success with Steelwedge

Demand Planning, SCM/APS Systems

ERP, Financial, & Transactional

Systems SAP, Oracle, etc.

Industry

Data

Single Cross-Functional

Planning Environment

Automated Planning Prep

Interactive planning for:

• All S&OP Stakeholders

• Plan Review

• Opportunity/Risk

• Upside/Downside

• Planning Overrides

• Assumptions

• Scenarios

• Consensus Process

• Pre-S&OP

• Executive S&OP

• Audit Trail

Systems Landscape Product / Sub-Family Customer Revenue

Product / Family Territory / Region Revenue

Product / Family Promotions Revenue

Product / Family Region Units & Revenue

Product Stock Locations Units and Inventory

Family / Series Territory / Region Revenue, Margin & Cash

Family / Series / BU Geo Revenue, Margin & Cash

Product Production Site Units and Capacity



Planning Terms Stakeholders

Account Managers

Sales Managers

Marketing

Demand Planners

Supply Planners

Production Planners

Finance

Executives

Customers

Suppliers

Cross-functional Planning

Environment


Managing the Translation between Functions

Sales, Marketing, Product Management,

Demand Planning

Demand

Inventory, Production, Procurement and

Allocations

Supply

Profit & Loss,

Balance Sheet

Finance

Executive

Dashboards

Executive


Planning Dashboard

Steelwedge Enterprise Enabled Excel

Slice of view (hierarchy)

Time series of key figures

Planning data for review and

updates

Planning Views Combine Planning, Analytics in Familiar UI

Capture institutional knowledge / assumptions


Return on Investment is Substantial and Sequential

50-70% Reduction

15-30% Improvement

20%-25% Reduction

25% Reduction in Stock-outs

1-2% Lift in Revenue 3-5% Margin Increase

Time

$5M to $10M in Committed Savings per $1B in Revenue (avg. over all customers)


Steelwedge is a strong leader in S&OP and IBP

“Steelwedge is an ideal solution for a heterogeneous environment with multiple S&OP processes

with inputs from multiple ERP and APS technologies.”

Lora Cecere

Founder and CEO, Supply Chain Insights

“Steelwedge has grown into one of the market's leading S&OP solutions". “Steelwedge has

proven that it provides a capable and scalable Stage 3 S&OP solution suitable for global

deployments.”

Tim Payne

Research Vice President, Supply Chain Research Group, GARTNER

Steelwedge was among the highest ranked in capabilities scoring and was one of “the vendors

that were notable in portfolio strategy and portfolio benefits delivered.”

Simon Ellis

Supply Chain Practice Director, IDC


Crawl – Walk – Run Approach

• Key to success is incremental value

• Crawl: plan ahead with end in site

• Walk: implement single solution

• Run: measure, improve, expand

• Sprint: align, integrate, monitor

• Start with quick win as phase 1 & foundation

• Expand the roll-out adding value as you go


Why Steelwedge?

• Cross-functional, Collaborative Planning Solution

• Flexible, Scalable and Easy to Use

• Accelerated Time to Value

• Market’s Leading Cloud-based S&OP Solution

• 100% S&OP Focus & Best Practices

• Leverages Existing Investment in Systems

Date post:	01-Dec-2014
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