West Prior and STR 1© The Delos Partnership 2005 Integrated Enterprise Leadership Priority and...

West Prior and STR 1 © The Delos Partnership 2005

Integrated Enterprise Integrated Enterprise LeadershipLeadership

Priority and Senior Team Reviews



AACCTTIIOONN

AACCTTIIOONN

Week 1 Week 2 Week 3 Week 4

InnovationInnovationReviewReview

InnovationInnovationReviewReview

CustomerCustomerDemandDemandReviewReview

CustomerCustomerDemandDemandReviewReview

SupplySupplyPlanPlan

ReviewReview

SupplySupplyPlanPlan

ReviewReview

PriorityReview

PriorityReview

Stage 1Stage 1

Stage 2Stage 2

SeniorTeam

Review

SeniorTeam

Review

Stage 5Stage 5

Stage 7Stage 7

Stage 3Stage 3

SupportReview

SupportReview

Stage 6Stage 6

Stage 4Stage 4


Two Leadership StagesTwo Leadership StagesPrioritisation•Family Summary

– Major Changes– Main Assumptions– Threats & Opportunities– Decisions Taken– Decisions to Take– Recommendations,

Implications, Costs•Alignment to Business Plan•Innovation Status

Senior Team Review

SUMMARY BY FAMILY

MAJOR ASSUMPTIONS________________________________________________

DECISIONS OUTSTANDING________________________________________________

RECOMMENDATIONS________________AND COSTS ________________

________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________

VULNERABILITIES ________________________________________________________________




________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________


Demand Supply InventoryBudget Current Plan Previous Plan Prior Year

SUMMARY BY FAMILY




________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________





________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________



SUMMARY BY FAMILY




________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________





________________________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________________________________________



Total Number of Changes

Current Last Project

1020

30 4050

6070

Engineering

20

2530

35

40

Other


20

2530

35

40

Business Review

-8 -4 0 +4 +8


1020

30 4050

6070

20

2530

35

40

20

2530

35

40

-8 -4 0 +4 +8-8 -4 0 +4 +8

Current Goal

Current Plan FY9x

Plan Actual

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

Current

Margins

Revenue

Project Cost to Date

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

1st Pass Test Percent

-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

INVENTORY

ACTUAL

BUDGET

DEMAND PLANSUPPLY

ACTUAL

ACTUAL

VOLUME

TIME/MONTHS TIME/MONTHS-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

BUSINESS PLAN

ACTUAL

£ M'sREVENUE

BUSINESS PLAN

PROFITABILITY

ACTUAL

Weeks0

20

40

60

80

100

O/T Delivery Performance

3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time Deliveries

A

B

CMonths

Customer's Rating

A

B

C

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY

PLANNED CAPACITY(DEMONSTRATED OUTPUT)

RESOURCE A

Total Number of Changes


1020

30 4050

6070

Engineering

20

2530

35

40

Other


20

2530

35

40

Business Review

-8 -4 0 +4 +8-8 -4 0 +4 +8


1020

30 4050

6070

20

2530

35

40

20

2530

35

40

-8 -4 0 +4 +8-8 -4 0 +4 +8

Current Goal

Current Plan FY9x

Plan Actual

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

Current

Margins

Revenue

Project Cost to Date

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

1st Pass Test Percent

-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

INVENTORY

ACTUAL

BUDGET

DEMAND PLANSUPPLY

ACTUAL

ACTUAL

VOLUME

TIME/MONTHS TIME/MONTHS-3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

BUSINESS PLAN

ACTUAL

£ M'sREVENUE

BUSINESS PLAN

PROFITABILITY

ACTUAL

Weeks0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time DeliveriesWeeks0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time DeliveriesWeeks0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time Deliveries

A

B

CMonths

Customer's Rating

A

B

C

A

B

CMonths

Customer's Rating

A

B

C

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY


RESOURCE A

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY


RESOURCE A

Strategic Programme 1Strategic Programme 2 Strategic Programme 3 Strategic Programme 4 Strategic Programme 5 Strategic Programme 6 Strategic Programme 7 Strategic Programme 8 Strategic Programme 9 Strategic Programme 10 Strategic Programme 11 Strategic Programme 12 Strategic Programme 13 Strategic Programme 14

Strategic Programme 1Strategic Programme 2 Strategic Programme 3 Strategic Programme 4 Strategic Programme 5 Strategic Programme 6 Strategic Programme 7 Strategic Programme 8 Strategic Programme 9 Strategic Programme 10 Strategic Programme 11 Strategic Programme 12 Strategic Programme 13 Strategic Programme 14

Continuously reviewing the balance between strategy and operationsContiniuously reviewing the operational projection and strategic fit


Priority ReviewPriority ReviewObjectives

– To resolve issues around demand supply and innovation plans - timing and resources

– To provide proposed financial statement

– To facilitate what-ifs and provide basis for decisions (facts not opinions)

– To provide issues for resolution by Senior Team


Preparation of the budgetPreparation of the budget

Financial statement enables– Visibility of current year outturn – early– Visibility of subsequent year(s) to enable budget to

be one set of numbers – early

Requires culture change– No six month process– No sandbagging of the numbers– Simple cut-off period


Priority ReviewPriority ReviewRequirements

– Financial statement of all the plans– Alternatives for evaluation

• External events– Governmental

– Competitive

• Internal events– Launch threats

– Supply constraints

– Realistic set of plans


Budget – the timetableBudget – the timetable

MarketingPlan

ManufacturingPlan

FinancialPlan

Corporate“Input”

SuperCorporateInput

Budget

July August September October November December


Where does Value get added ?Where does Value get added ?

Budget

July August September October November December

MarketingPlan

ManufacturingPlan

FinancialPlan

Corporate“Input”

SuperCorporateInput


SolutionSolutionUse a monthly Integrated Enterprise Planning process

with 5 year horizon to manage strategic and operational planning, and get rid of [most of] the non value adding operations of the budgetary process.


Alternatives to testAlternatives to test• Sales volumes• Supply plans• Overtime• Capacity change (up or down)• Service level strategy• Phasing of development plans• Timing and size of capital expansion• Price/Volume effects• Manufacturing strategy• Marketing strategy• Outsource/In source

ONESETOF

NUMBERS


PrioritisationPrioritisation

• Led by Integrated Enterprise Leadership Director/Manager

• May mean a series of meetings to discuss options

• May require simulation capability for review of numbers

• Multiple sets of numbers based on one set of plans!


Integrated Enterprise Integrated Enterprise Leadership Gap AnalysisLeadership Gap Analysis

Strategic planStrategic plan

Time Now

Time Now

IEL ForecastIEL Forecast

Actual statusActual status

years

RevenueRevenue

ProfitProfit

ROCE %ROCE %

RevenueRevenue

ProfitProfit

ROCE %ROCE %

What is the GAP and what are the action plans to close it?What is the GAP and what are the action plans to close it?


TeamworkTeamwork

A common vision and shared strategy allows:

• Common goal

• Common objectives

• Agreed targets

• Consensus on performance measurement


ProblemProblem

FINANCEFINANCEHRHRITIT

FINANCIAL IMPLICATIONSFINANCIAL IMPLICATIONS

DEVELOPMENTDEVELOPMENT


FunctionalFunctionalAgendasAgendas


SUPPLYSUPPLYDEMANDDEMAND


Team SolutionTeam Solution

DEVELOPMENTDEVELOPMENT

FINANCEFINANCEHRHRITITDEMANDDEMAND

SUPPLYSUPPLY

BUSINESSBUSINESS IMPLICATIONS IMPLICATIONS

IntegratedIntegratedApproachApproach



• Provides sound basis for decision making

• Enables alternatives to be tested easily – on a spreadsheet ?

• Provides means for “doing away with” the budget


Priority ReviewPriority ReviewOutcome

– Decisions on capacity short term etc. where they can be made

– Options for Senior Management Team to review

– Review of current financial picture

– Options for closing the gap

– Numbers to form the basis of next year’s budget


Objectives for Senior Team Objectives for Senior Team ReviewReview

• Make decisions on major issues

• Review the long-term picture not short term crises

• Review process based performance measures

• Review and develop long-term strategy


Agenda for discussionAgenda for discussion

• Current Business situation– Plan versus Budget/Business Plan– Plan versus last plan (volume/value)

• Assumptions on which plan is based

• Issues for Resolution– Innovation development issues– Supply/Demand Allocation issues– Major Capacity changes required– Capital Expenditure Plans

• Performance measures


Family SummaryFamily Summary

0

5,000

10,000

15,000

20,000

25,000

30,000

Euros

Sales Contrib

Sales/Profit

Financial Analysis

Budget

Previous

Current

Major ChangesNew Product included in ForecastTender for Russia included

Major AssumptionsCompetition will reduce price by 5 %We Win Russian Tender

Major Threats

Decisions RequiredInvestment of Eur 0.5 m in Additional capacity for New Product


Financial justification for XYZ Financial justification for XYZ projectproject

Year 1 Year 2 Year 3 Year 4 Year 5

Volume 100 115 120 140 150

Sales 10 12 13 15 17

Contribution 2 2.5 2.75 2.5 2

Inc Overheads 0.5 0.5 0.5 0.5 0.5

Cash Flow 1.5 2.0 2.25 2 1.5

Wkg Capital 1 0.5 0.2 0.2 0.2

Cap Expenditure 4

Net Cash Flow -3.5 1.5 2.05 1.8 1.3

Net Present Value @ 15 % =


Forecast must be Forecast must be supported by assumptionssupported by assumptions

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

1254 145 145 156 156 170 170 135 135 135 145 160 160

1345 145 167 135 180 200 200 200 200 150 150 150 200

1256 100 200 200 200 200 200 300 300 200 200 200 200

1347 50 50 50 50 40 40 30 30 20 20 40 50

NUMBERS !

ASSUMPTIONS


The Core Measures and The Core Measures and Financial EffectFinancial Effect


WorkshopWorkshop

Define improvements to the inputs, Define improvements to the inputs, outputs and agenda for the Priority outputs and agenda for the Priority and Senior Team Review steps in and Senior Team Review steps in

the process.the process.

Define improvements to the inputs, Define improvements to the inputs, outputs and agenda for the Priority outputs and agenda for the Priority and Senior Team Review steps in and Senior Team Review steps in

the process.the process.



AACCTTIIOONN

AACCTTIIOONN

Week 1 Week 2 Week 3 Week 4

Stage 7Stage 7

InnovationReview

InnovationReview

CustomerDemandReview


SupplyPlan

Review

SupplyPlan

Review

PriorityReview

PriorityReview

Stage 1Stage 1

Stage 2Stage 2

SeniorTeam

Review

SeniorTeam

Review

Stage 5Stage 5

Stage 3Stage 3

SupportReview

SupportReview

Stage 6Stage 6

Stage 4Stage 4

InnovationReview

InnovationReview



SupplyPlan

Review

SupplyPlan

Review

PriorityReview

PriorityReview

Stage 1Stage 1

Stage 2Stage 2

SeniorTeam

Review

SeniorTeam

Review

Stage 5Stage 5

Stage 3Stage 3

SupportReview

SupportReview

Stage 6Stage 6

Stage 4Stage 4


Priority and Senior Team Priority and Senior Team ReviewsReviews• Long-term - not short-term• Strategic - not tactical• Assumption based - not opinion based • Formal - not informal rumours• Team based decisions - not functional• Forward looking - not backward looking• Decisions – not request for information

Date post:	01-Jan-2016
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West Prior and STR 1© The Delos Partnership 2005 Integrated Enterprise Leadership Priority and...

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