Achieving “Optimum” S&OP Results with
CPFRJanuary 27, 2011
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Agenda
Who is Optimum NutritionNeed for CPFR in the S&OP
ProcessImplementing CPFRGoal of CPFRRoadblocks to successOvercoming roadblocksFinal ThoughtsQuestions
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Optimum Nutrition (ON) is a dominant force in the sports nutrition industry with the highest quality products available in health food stores, specialty stores, gyms and progressive retailers everywhere
ON was founded in 1986 by two brothers in Chicago , IL Optimum Nutrition, Inc. (ON) is now a wholly owned subsidiary of
Glanbia, a leading international cheese and nutritional ingredients group based in Ireland
ON has two brands of nutritional supplements◦ Optimum Nutrition
◦ American Body Building
ON is the only sports nutrition company to manufacture items in every product category:◦ Protein Powders◦ Nutritional Bars◦ Ready-to-drink Sports Beverages◦ Vitamins
Optimum Nutrition’s History
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Significant growth in any industry drives the industry leaders to initiate change in order to be successful…
The Sports Nutrition Industry, until recently, was not truly focused on forecasting, collaboration or the Supply and Operations Planning Process
ON recognized that in order to continue their success and support their growth initiatives, change had to occur in these areas
Need for CPFR in the S&OP Process
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Collaborative Planning, Forecasting and Replenishment practice is the basis for achieving Optimum results from your Supply and Operations Planning Process
This collaboration must take place with both internal and external customers in order to drive results through to the S&OP process
Implementing CPFR
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Collaborative planning and forecasting must first
begin with the demand planning function at both the
supplier and trade partner
The baseline forecast is created at the customer level
by sku to drive improved forecast accuracy
◦ Input internally from the sales and marketing functions are
key
Trade Partners and Suppliers must then openly share
Implementing CPFR
forecasting information in order to begin
the collaboration process
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Implementing CPFR Supplier best practices:
Monthly in depth forecasting meeting with top trade
partners looking at a rolling 6 month forecast with a focus
on the next 90 days
Weekly meetings with top trade partners where possible
in order to react to changes more quickly
Compare both forecasts and manage the exceptions and
discuss any new information from both parties
New products
Promotional calendars
Supply constraints
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Goal of CPFR is to create a more accurate forecast in order to
drive a better S&OP process
The timely handoff from the demand planning function to the
supply planning function is critical
Speed is of the essence: the quicker you can alert the supply
planning group to changes, the more success you will have in
Goal of CPFR
altering your production schedules
Helping people understand the goal of
the CPFR process is in the end to
increase fulfillment rates, improve
customer satisfaction, increase
manufacturing efficiencies and
decrease inventory DOH
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Under developed demand planning function both at the
supplier and trade partner level
Under developed supply planning function
◦ Supply Planning vs Manufacturing?
Sales team not familiar with the collaborative planning
and forecasting model
◦ Forecasting viewed as a waste of time
Trade Partners not familiar with the collaborative planning
and forecasting model Weak S&OP process not supported by business
Potential Roadblocks to Success
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Make sure that the demand and supply planning functions have the right team in order to drive change both internally and externally with trade partners
Help the internal sales team understand the importance of the process by demonstrating what improved forecasting can do to their sales and fulfillment levels
Help trade partners understand the importance of the process by demonstrating that improved forecasting can have a positive impact on increasing fill rates, improving out of stocks and driving sales
Implement a very detailed S&OP process◦ Weekly “mini” S&OP meetings◦ Monthly S&OP Meeting
Over communication is a good thing
How to overcome Roadblocks
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In order to develop a great S&OP process it must first begin with a solid forecast
At least try something Monthly S&OP meetings are great, but in this industry
weekly meetings are critical to success Over communicate Goal of all good S&OP processes:
◦ Establish and achieve DOH targets while exceeding trade partners needs!!
Final Thoughts
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QUESTIONS/DISCUSSION?