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Sales&OperationsPlanning

Aworkshopon: whatitis how itcanhelp howtomakeitwork


by

TomWallace
for

OMTECChicagoJune16,2010
Tom Wallace www.tfwallace.com

ObjectivesofthisSession ObjectivesofthisSession
Enable each attendee to: Understand where Executive S&OP fits, what it does, why its important Understand and explain the logic and mechanics of Executive S&OP Explain the elements of the monthly process Be exposed to a highly effective implementation process. Other?
Tom Wallace www.tfwallace.com

WhereisYourCompany RelativetoExecutiveSOP? RelativetoExecutiveSOP?


1 Successfully implemented 2 Implemented but not working well 3 Implementing now 4 Not yet implementing

Tom Wallace

www.tfwallace.com

OutlineXXXXX OutlineXXXXX
Sales & Operations Planning Role, Scope, Benefits Display of S&OP Information The Executive S&OP Process Demand Planning (Forecasting) Supply (Capacity) Planning Pre-meeting Exec Meeting Global Executive S&OP Risk Management Implementation Problem Solving Session The Future of Sales & Operations Planning
www.tfwallace.com

Tom Wallace

Complexity,Changeand Coordination
E AT OF CH G AN E
S S: E OP &

M CO

X LE P

ITY

ND

TH

NE

ED

OR

E FF E

IVE T

O CO

DI N

TI O

PR

S CE

Impactof: LeanMfg? GlobalBusinesses? LengthySupplyChains?


www.tfwallace.com

Tom Wallace

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

TheFourFundamentals

X
Demand

Sales& Operations Planning

Volume

HowMuch? Rates TheBigPicture ProductFamilies Monthly/18months+ Strategy/Policy/Risk TopManagement WhichOnes? Timing/Sequence TheDetails Products,SKUs,Orders Weekly/Daily.56mos Tactics/Execution MiddleManagement

Supply

Mix

Tom Wallace

www.tfwallace.com

Sales&OperationsPlanning
ExecutiveS&OP
VolumePlanningforDemandandSupply MediumtoLongTermFinancialPlanning SupportforEarningsCalls,RiskMgmt,Strategy
Volume

DemandPlanning/ Demand Forecasting


Mix

Supply

Supply(Capacity) Planning

OperationalS&OP
MasterScheduling Plant,SupplierandDistributionScheduling (Kanban,APS,etc.)
Tom Wallace www.tfwallace.com

Slide9 b6 Ithinkthekeythingtohitis"whatisExecutiveS&OP"?Shouldwehavesomebulletpointssomewherethatgivesome basicdescription?Andcanwelinkthisbacktosomekeypoints:? 1)ThisisaboutExecutive"DecisionMaking" 2)Thisisabout"BusinessPerformance"(notjustdemand/supplybalancing) 3)Thisisnot"detailedexecutionreview"


bodell,8/16/2006

ExecutiveS&OP... ExecutiveS&OP...
Is an executive decision-making process Balances demand and supply Deals with volume in both units and $$$ Links operational plans to financial plans: one set of numbers facilitates risk management Is the forum for setting relevant strategy and policy
Tom Wallace www.tfwallace.com

ExecutiveS&OP... ExecutiveS&OP...
. . . is essential for the elements within Operational S&OP Master Scheduling Distribution Requirements Planning Plant Scheduling APS, Kanban, etc. Supplier Scheduling to function well and contribute to their full potential.
Tom Wallace www.tfwallace.com

From5,000Feet
Sales/Marketing (Units/$$$byFamily) Finance (Dollars)

ExecutiveS&OP Aprocesstoreconcile,agree upon,andcommunicatethe companygameplan

Centripetal SharedView Teamwork

Operations (Units/hours/Material)
Tom Wallace

ProductDevelopment (NewProductIssues)
www.tfwallace.com

WhereExecutiveS&OPFits
StrategicPlanning StrategicPlanning

BusinessPlanning BusinessPlanning

ExecutiveS&OP Disconnect!!! ExecutiveS&OP Disconnect!!!


DetailedPlanning, DetailedPlanning, Scheduling& Scheduling& Execution Execution
Tom Wallace www.tfwallace.com

BusinessPlanCharacteristics BusinessPlanCharacteristics
Dollars 3 to 5 Years Annual Budget Entire Business Ownership

Tom Wallace

www.tfwallace.com

LevelsofBusinessPlanning LevelsofBusinessPlanning
Y E A R S

1 Long Range Planning Annual $$$ Plan Executive S&OP


(unitsand$$$)

RollingmonthlycheckontheBusinessPlan
Tom Wallace www.tfwallace.com

TheRoleofTopManagement TheRoleofTopManagement
The Leader of the Business Unit (General Manager, President, COO) Needs to be Hands-On with Executive S&OP:

1. Stewardship

Tom Wallace

www.tfwallace.com

StrategicPlanning StrategicPlanning

BusinessPlanning BusinessPlanning

Disconnect!!! Disconnect!!! Disconnect!!! Disconnect!!!


DetailedPlanning, DetailedPlanning, Scheduling& Scheduling& Execution Execution
Tom Wallace www.tfwallace.com

TheRoleofTopManagement TheRoleofTopManagement
The Leader of the Business Unit (General Manager, President, COO) Needs to be Hands-On with Executive S&OP:

1. Stewardship 2. Leadership Break ties

Tom Wallace

www.tfwallace.com

TheRoleofThePresident (CEO,COO,GM,MD,etc.) (CEO,COO,GM,MD,etc.)


Sales/Marketing (Units/$$$byFamily) Finance (Dollars)

ExecutiveS&OP ExecutiveS&OP

President
Operations (Units/hours/Material)
Tom Wallace

ProductDevelopment (NewProductIssues)
www.tfwallace.com

TheRoleofTopManagement
The Leader of the Business Unit (General Manager, President, COO) Needs to be Hands-On with Executive S&OP:

1. Stewardship 2. Leadership

Break ties Set high standards Motivate


MonthlyTimeCommitment: 1.5hours
Tom Wallace www.tfwallace.com

HardBenefits
CustomerService Inventory Obsolescence FreightCosts OrderLeadTimes SupplierLeadTimes TimetoLaunchNewProducts PlantProductivity UP DOWN DOWN DOWN DOWN DOWN DOWN UP

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

SoftBenefits
EnhancedTeamwork ImprovedCommunicationsInstitutionalized BetterDecisionswithLessEffortandTime Better$$$PlanswithLessEffortandTime GreaterAccountability GreaterControl WindowintotheFuture

TopManagementsHandleontheBusiness
Tom Wallace www.tfwallace.com

Tom Wallace

www.tfwallace.com

BadDayatAcmeWidget
ProductManager,reviewingforecastfor1sttimein3mos.
Forecast(000) ActualSales Difference CumDifference Feb Mar Apr 100 100 100 90 10 95 5 15 85 15 30 May Jun Jul Aug Sep 100 120 120 120 120

ProductManagerrevisestheforecastdownward.
Forecast(000) ActualSales Difference CumDifference
Tom Wallace

Feb Mar Apr 100 100 100 90 10 10 95 5 15 85 15 30

OldForecast NewForecast

May Jun Jul Aug Sep 100 120 120 120 120 90 90 90 90 90

www.tfwallace.com

ProductionPlan
CurrentProductionPlan.
PlanProduction(000) ActualProduction Difference CumDifference Feb Mar Apr 100 100 100 98 2 2 100 101 0 +1 2 1 May Jun Jul Aug Sep 110 120 120 120 120

PlantManagergetsbadnews&adjustsProductionPlan.
PlanProduction(000) ActualProduction Difference CumDifference
Tom Wallace

Feb Mar Apr 100 100 100 98 2 2 100 101 0 +1 2 1

OldPlan NewPlan

May Jun Jul Aug Sep 110 120 120 120 120 110 100 100 90 90

www.tfwallace.com

InventoryReview
CFOobservesthehighinventories.
Feb Plan Inventory (1 Mo) 100 Actual Inv. 103 111 Difference +11 Mar 100 116 +16 Apr 100 132 +32 May 120 Jun 120 Jul 120 Aug 120 Sep 120

Average Standard Cost ~ $100 per unit April Ending Inventory ~ $13,200,000

Tom Wallace

www.tfwallace.com

InventoryReview
CFOgetsnewForecastandProductionPlan.
Feb Forecast (000) Actual Sales Difference Cum Difference Plan Production Actual Production Difference Cum Difference 90 10 10 98 2 2 Mar 95 5 15 100 0 2 Apr New Forecast 85 15 30 New Plan 101 +1 1 110 100 100 90 90 May 90 Jun 90 Jul 90 Aug 90 Sep 90

CurrentInventory132 NewInv.Plan 152 162172


Tom Wallace www.tfwallace.com

SallySmithsSpreadsheet SallySmithsSpreadsheet
FEB FORECAST ACTUAL SALES DIFFERENCE CUM DIFFERENCE 100 90 -10 -15 100 95 -5 -30 MAR 100 85 -15 APR 100 MAY 120 JUN 120 JUL 120 AUG 120 SEP

PLANNED PRODUCTION 100 ACTUAL PRODUCTION DIFFERENCE CUM DIFFERENCE

100

100 98 -2

110 100 0 -2

120 101 +1 -1

120

120

120

PLANNED INV (1 MONTH SUPPLY) ACTUAL INVENTORY (JAN=103) DIFFERENCE

100 111 +11

100 116 +16

100 132 +32

???

Tom Wallace

www.tfwallace.com

SallySmithsSpreadsheet SallySmithsSpreadsheet
FEB FORECAST ACTUAL SALES DIFFERENCE CUM DIFFERENCE 100 90 -10 100 95 -5 -15 MAR 100 85 -15 -30 APR 100 MAY 120 JUN 120 JUL 120 AUG 120 SEP

PLANNED PRODUCTION 100 ACTUAL PRODUCTION DIFFERENCE CUM DIFFERENCE

100

100 98 -2

110 100 0 -2

120 101 +1 -1

120

120

120

PLANNED INV (1 MONTH SUPPLY) ACTUAL INVENTORY (JAN=103) DIFFERENCE

100 111 +11

100 116 +16

100 132 +32

142

142

142

142

142

Is this plan okay?


Tom Wallace www.tfwallace.com

SallySmithsSpreadsheet SallySmithsSpreadsheet
FEB FORECAST ACTUAL SALES DIFFERENCE CUM DIFFERENCE 100 90 -10 100 95 -5 -15 MAR 100 85 -15 -30 APR 100 MAY 120 JUN 120 JUL 120 AUG 120 SEP

PLANNED PRODUCTION 100 ACTUAL PRODUCTION DIFFERENCE CUM DIFFERENCE

100

100 98 -2

110 100 0 -2

120 101 +1 -1

120

120

120

PLANNED INV (1 MONTH SUPPLY) ACTUAL INVENTORY (JAN=103) DIFFERENCE

100 111 +11

100 116 +16

100 132 +32

142

142

142

142

142

Tom Wallace

www.tfwallace.com

SallySmithsSpreadsheet SallySmithsSpreadsheet
FEB FORECAST ACTUAL SALES DIFFERENCE CUM DIFFERENCE 100 90 -10 100 95 -5 -15 MAR 100 85 -15 -30 APR 100 MAY 120 JUN 120 JUL 120 AUG 120 SEP

PLANNED PRODUCTION 100 ACTUAL PRODUCTION DIFFERENCE CUM DIFFERENCE

100

100 98 -2

110 100 0 -2

110 110
101 +1 -1

120

120

PLANNED INVENTORY (1-MO) ACTUAL INVENTORY (JAN=103) DIFFERENCE

100 111 +11

100 116 +16

100 132 +32

142

Tom Wallace

www.tfwallace.com

SallySmithsSpreadsheet SallySmithsSpreadsheet
FEB FORECAST ACTUAL SALES DIFFERENCE CUM DIFFERENCE 100 90 -10 100 95 -5 -15 MAR 100 85 -15 -30 APR 100 MAY 120 JUN 120 JUL 120 AUG 120 SEP

PLANNED PRODUCTION 100 ACTUAL PRODUCTION DIFFERENCE CUM DIFFERENCE

100

100 98 -2

110 100 0 -2

110 110
101 +1 -1

120

120

PLANNED INVENTORY (1-MO) ACTUAL INVENTORY (JAN=103) DIFFERENCE

100 111 +11

100 116 +16

100 132 +32

142

132 122 122 122

Tom Wallace

www.tfwallace.com

Outline Outline
Sales & Operations Planning Role, Scope, Benefits Display of S&OP Information The Executive S&OP Process
Demand Planning (Forecasting) Supply (Capacity) Planning Pre-meeting Exec Meeting

Global Executive S&OP Implementation Problem Solving Session The Future of Sales & Operations Planning

Tom Wallace

www.tfwallace.com

TheExecutiveS&OPProcess
vy e a in g H ft Li
Step#5 Executive Meeting Step#4 Pre Meeting Step#3 Supply Planning Step#2 Demand Planning Step#1 Data Gathering Decisions& GamePlan

ConflictResolution, Recommendations& AgendaforExec.Mtg.

Capacityconstraints 2ndpassspreadsheets

ManagementForecast 1stpassspreadsheets

EndofMonth Tom Wallace

SalesActuals, StatisticalForecasts & SupplyActuals www.tfwallace.com

RoleofFinanceand NewProductDevelopment NewProductDevelopment


rtm e tIn n ol v v nt e em
Exec Meeting

n na i

De e

pa

Pre Meeting

Supply Planning

Demand Planning

Data Gathering

Ne

r P

uc d

e D t

lop e

en m

tIn

lve o

nt e

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

AlternativeScenarios AlternativeScenarios
Situation: Indiana plant is heavily overloaded, cant meet the newly-increased demand plan Alternatives a. Add a shift at Indiana b. Offload to plant in Utah c. Outsource d. Combination Cost Issues Supervision, hiring, training Freight, cost difference Total cost to acquire Most or all of the above

Tom Wallace

www.tfwallace.com

AlternativeScenarios AlternativeScenarios
Alternatives a. Add a shift at Indiana b. Offload to plant in Utah c. Outsource d. Combination Cost Issues Supervision, hiring, training Freight, cost differential Total cost to acquire Most or all of the above

Other implementation issues: time, duration Other operational issues: quality, lead time, flexibility etc.

Tom Wallace

www.tfwallace.com

WhereWillTheDecisionBeMade?
Step5

Exec Meeting
Step4

Pre Meeting
Step3

Supply Planning
Step2

Demand Planning
Step1

Data Gathering

Tom Wallace

www.tfwallace.com

The5StepExecutiveS&OPProcess The5
Step5

y av g H e ft i n Li
Step3

Exec Meeting
Step4

Decisions& Updated GamePlan

Pre Meeting Supply Planning

Decisions, Recommendations, Scenarios,&Agenda forExecMeeting

ResourceRequirementsPlan CapacityConstraints 2ndpassspreadsheets

Step2

Demand Planning
Step1

ManagementForecast 1stpassspreadsheets

Data Gathering

Actual Demand,Supply, Inventory,&Backlog+ StatisticalForecasts andWorksheets www.tfwallace.com

EndofMonth Tom Wallace

SampleAgendaExecMeeting SampleAgendaExecMeeting
Macro $$$ Review All Families Combined Customer Service Performance Order Fill New Product Issues Family-by-Family Review and Decisions Production/Procurement Rate Changes Collective Impact on Business Plan Recap of Decisions Made Critique of Meeting
www.tfwallace.com

Tom Wallace

ExecMeetingParticipants
Essential:

Possible:
Controller CustomerServiceManager ForecastAnalyst HumanResourceManager MasterScheduler PlantManager ProductDevelopmentManager ProductManager PurchasingManager ????

SBULeader(Pres./GM) VPSales VPMarketing VPOperations/Logistics VPProductDevelopment VPFinance


Exec.S&OPProcessOwner PreMeetingFacilitator DemandManager SupplyChainManager

Probable:

Tom Wallace

www.tfwallace.com

ExecutiveS&OPTimetable ExecutiveS&OPTimetable
Working Day of the Month Step
Exec. Meeting Pre Meeting Supply Planning Demand Planning Data Gathering 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

l l

Tom Wallace

www.tfwallace.com

StrategicorTactical?
Strategy
Executive S&OP

Tactics

TomWallace

www.tfwallace.com

TomWallace

www.tfwallace.com

ExecutiveS&OPandRisk
st The21 CenturySupplyChain: Extended Brittle Longerleadtimes Morevariableleadtimes

SupplyChaindisruptions: Potential Actual

TomWallace

www.tfwallace.com

TypesofSupplyChainDisruptions
Supplycrash Demandspike Demandcrash Supplyspike

TomWallace

www.tfwallace.com

ExecutiveS&OPandRisk
st The21 CenturySupplyChain: Extended Brittle Longerleadtimes Morevariableleadtimes

SupplyChaindisruptions: Potential Actual ExecutiveS&OPcanhelpwith: Anticipatingpotentialdisruptions Recoveringfromactualdisruptions


TomWallace www.tfwallace.com

ExecutiveS&OPsRolein Anticipation
Initiallysethedges: safetystock safetytime location consignment finishedproducts components/rawmaterials Reviewandrevisehedgesduringthe ExecutiveS&OPcycle PermanentagendaitemPreMeeting andExecMeeting
TomWallace www.tfwallace.com

ExecutiveS&OPsRolein Recovery
MinorDisruption:probablynorole ModeratetoMajorDisruption: TheMiniS&OPCycle

TomWallace

www.tfwallace.com

TheMiniS&OPCycle TheMiniS&OPCycle
Focus on affected parts of the business Solve the problem at the earliest step possible:
Step5

Exec Meeting
Step4

Pre Meeting
Step3

Supply Planning
Step2

Demand Planning

TomWallace

www.tfwallace.com

TheMiniS&OPCycle TheMiniS&OPCycle
Focus on affected parts of the business Solve the problem at the earliest step possible:
Step5

Exec Meeting
Step4

Pre Meeting
Step3

Supply Planning
Step2

Demand Planning

Use the same people, report formats, and processes as in the regular monthly cycle
www.tfwallace.com

TomWallace

Outline Outline
Sales & Operations Planning Role, Scope, Benefits Display of S&OP Information The Executive S&OP Process
Demand Planning (Forecasting) Supply (Capacity) Planning Pre-meeting Exec Meeting

Global Executive S&OP Implementation Problem Solving Session The Future of Sales & Operations Planning

Tom Wallace

www.tfwallace.com

ExecutiveS&OPProcess
Step #5 Executive Meeting Step #4 PreMeeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering EndofMonth Tom Wallace Decisions& GamePlan

ConflictResolution, Recommendations& AgendaforExec.Mtg.

Capacityconstraints

ManagementForecast

SalesActuals, StatisticalForecasts & SupplyActuals www.tfwallace.com

TheGlobalChallenge: TheGlobalChallenge:
To coordinate an organization doing business in many different countries, on many different continents . . . . . . without inhibiting accountability, and stifling local initiatives and ways of doing business.

Tom Wallace

www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP
HowOneCompanyDoesIt:
Entities: areas (regions) where demand and supply align

Tom Wallace & Bob Stahl

www.tfwallace.com

Regions&Entities:Example Regions&Entities:Example
Regions North America South America Europe Middle East/Africa Asia/Pacific Plants Mexico, US Belgium China, Australia Entities

Tom Wallace

www.tfwallace.com

Regions&Entities:Example Regions&Entities:Example
Regions North America South America Europe Middle East/Africa Asia/Pacific Plants Mexico, US Entities Y N Y Belgium N Y China, Australia

Tom Wallace & Bob Stahl

www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP
HowOneCompanyDoesIt:
Entities: areas (regions) where demand and supply align Executive S&OP occurs within each Entity up to and including the Exec S&OP meeting

Tom Wallace & Bob Stahl

www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP

Step #5 Executive Meeting Step #4 PreS&OP Meeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering Tom Wallace & Bob Stahl www.tfwallace.com

i t n

A t y

GlobalExecutiveS&OP GlobalExecutiveS&OP
HowOneCompanyDoesIt:
Entities: areas (regions) where demand and supply align Executive S&OP occurs within each Entity up to and including the Exec S&OP meeting Inter-entity Coordination primarily within Demand Planning and Supply Planning, also at Pre-Meeting

Tom Wallace & Bob Stahl

www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP

Step #5 Executive Meeting Step #4 Pre Meeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering Tom Wallace & Bob Stahl

EntityA

EntityB

EntityC

www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP
HowOneCompanyDoesIt:
Entities: areas (regions) where demand and supply align Executive S&OP occurs within each Entity up to and including the Exec S&OP meeting Inter-entity Coordination primarily within the Demand Planning and Supply Planning phases Global Consolidation at world HQ, following Exec meetings in the Entities Global Exec Meeting primarily, but not exclusively, financial
Tom Wallace & Bob Stahl www.tfwallace.com

GlobalExecutiveS&OP GlobalExecutiveS&OP
Step #7 GlobalExec Meeting Step #6 Global Consolidation Step #5 Executive Meeting Step #4 PreS&OP Meeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering Tom Wallace & Bob Stahl

EntityA

EntityB

EntityC

www.tfwallace.com

GlobalExecutiveS&OP
Question: Ifyousellproductsaroundtheworld buthavesupplyinonlyoneregion, doyouneedGlobalS&OP?
Step #4 PreS&OP Meeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering Tom Wallace & Bob Stahl www.tfwallace.com Step #7 GlobalExec Meeting Step #6 Global Consolidation

Step #5 Executive Meeting

GlobalExecutiveS&OP
Question: Ifyousellproductsaroundtheworld buthavesupplyinonlyoneregion, doyouneedGlobalS&OP?
Step #4 PreS&OP Meeting Step #3 Supply Planning Step #2 Demand Planning Step #1 Data Gathering Tom Wallace & Bob Stahl www.tfwallace.com

Step #5 Executive Meeting

TheGlobalChallenge TheGlobalChallenge
We are a series of organizations doing business locally, with intense global coordination. Percy Barnevik Former CEO ABB

Executive S&OP should support these dual objectives.


Tom Wallace & Bob Stahl www.tfwallace.com

Tom Wallace & Bob Stahl

www.tfwallace.com

Outline Outline
Sales & Operations Planning Role, Scope, Benefits Display of S&OP Information The Executive S&OP Process
Demand Planning (Forecasting) Supply (Capacity) Planning Pre-meeting Exec Meeting

Global Executive S&OP Implementation Problem Solving Session The Future of Sales & Operations Planning

Tom Wallace

www.tfwallace.com

ImplementingExecutiveS&OP
BadNews
Change 812Months

GoodNews
FewPeople
(severaldozen)

EarlyResults
(23Months)

LowCost
(<$100K)

Tom Wallace

www.tfwallace.com

TheABCsofImplementation TheABCsofImplementation
C Computer

B Data

A People
Tom Wallace www.tfwallace.com

CItemSoftwareforS&OP CItemSoftwareforS&OP
Traditional: Spreadsheet Software Advantages: Ultra low cost Quick to come up No learning curve Disadvantages: Simulation > Slow Unit and Dollar Alignment > Weak Volume and Mix Alignment > Weak Blood, Sweat, and Excel Dead End
Tom Wallace www.tfwallace.com

SoftwareforS&OPContd SoftwareforS&OPContd
New: S&OP Specific Software Disadvantages: Can Slow Down the Implementation Cost Learning Curve Advantages: Simulation > Rapid, Real Time Unit and Dollar Alignment > Strong, Constant Volume and Mix Alignment > Strong, Constant Fast Preparation Supports Growth and Greater Complexity
Tom Wallace www.tfwallace.com

So,WhatToDoAboutSoftware? So,WhatToDoAboutSoftware?
Options: 1. Use spreadsheet software 2. Use S&OP specific software 3. Hybrid: start with spreadsheet switch to specific later

When in doubt, pick 3.


Tom Wallace www.tfwallace.com

BItem:DATAISSUES
FamiliesandSubfamilies Resources

Tom Wallace

www.tfwallace.com

ProductFamiliesand SupplyResources SupplyResources


Product Families - Customers - Markets - Application - How the Product is Used What works best for Marketing and Sales Supply Resources -Plants -Departments -Suppliers -How the Product is Made What works best for Operations, Supply Chain, Logistics, etc.
www.tfwallace.com

Tom Wallace

BItem:DATAISSUES
FamiliesandSubfamilies Resources UnitsofMeasure LoadProfiles/BillsofResources AverageSellingPricesandGrossMargins Actuals:Sales,Bookings,Production,Inventories,Backlog Demand/SupplyStrategies: Where MeettheCustomer (MTS,MTO,FTO) TargetFillRates TargetFinishedGoodsInv:DaysOnHand TargetCustomerOrderBacklog:DaysOnHand TargetModuleInv:DaysOnHand
www.tfwallace.com

Tom Wallace

AItem:People AItem:People
The problem is not understanding Executive S&OP. Its simple The hard part is

Organizational Behavior Change


. . . changing how we collectively manage the business.

Issues: Discipline/Self-discipline Accountability Conflict Management


Tom Wallace www.tfwallace.com

ImplementingExecutiveS&OPIs Different Different


The president must provide: Support Funding Commitment Leadership So whats new? Active, Hands-on Participation by the President and Staff Each and Every Month
Tom Wallace www.tfwallace.com

ImplementationPrinciples ImplementationPrinciples
People are the A item Implementation begins and ends with the Leader of the business Hold the high ground involve top management at the very outset of the implementation, and throughout and you will probably succeed Build it and they will come design it first, get the mechanics working, and then try to sell it to top management carries a lower probability for success
Tom Wallace www.tfwallace.com

ImplementationPath
Executive Briefing Go/NoGo#1
B U S I N E S S I M P R O V E M E N T

LivePilot Go/NoGo#2

Kickoff Session

PhaseIII Financial Integration

PhaseII Expansion

PhaseI LivePilot

Low Risk Low Cost High Impact

123456789 Months

Tom Wallace

www.tfwallace.com

IdentifyingaBrokenProcess IdentifyingaBrokenProcess
Executive S&OP is broken if: Top management is not involved Teamwork has not visibly improved Meeting attendance is poor Focus is on mix and the short term Conflict is not resolved Finger-pointing is not off limits Decisions are not made and so on
Tom Wallace www.tfwallace.com

FixingaBroken ExecutiveS&OPProcess ExecutiveS&OPProcess


Convene a group, including a member of the executive staff Conduct a self-audit Answer the question: do the President and staff participate each month? If yes, fix problems shown in self-audit If no, begin a re-implementation
Tom Wallace www.tfwallace.com

ReimplementingExecutiveS&OP ReimplementingExecutiveS&OP
Will top management agree to an Executive Briefing? If yes, proceed on the Implementation Path If no, will they agree to an Outsider Audit? If they agree: present audit results to top management include a mini Executive Briefing get agreement to do one product family correctly If no, dont give up Keep it alive, improve it, and keep the executive staff member involved.
Tom Wallace www.tfwallace.com

TheFutureofS&OP:Growth Factors Factors


Success breeds success Lean Manufacturing and S&OP Globalization New users outside traditional manufacturing S&OP specific software Greater financial integration, power and utility A growing presence in the executive suite

Tom Wallace

www.tfwallace.com

Tom Wallace

www.tfwallace.com

ThanksforBeingHere! ThanksforBeingHere!
Go to www.tfwallace.com for: S&OP 101 (free) Implementation Information (free) Periodic newsletters (free) White papers (free) S&OP Effectiveness Checklist (free) Books and videos ($$$) To talk: 513-281-0500 Good Luck and Godspeed
Tom Wallace www.tfwallace.com

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