Sales & Operations Alignment - Presentation @ Sales & Ops Bus Conf - Chicago - Biel 04 19 11

Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)

Sales & Operations Planning & Analysis 2011Sales & Operations Alignment

Tuesday, April 19, 2011Hotel “W” City Center

Chicago, IL

Jim BielManagement Consultant

E-Mail: [email protected]: 847.687.5379

http://www.linkedin.com/in/jimbiel

1


Who I Am – Jim Biel

• 20 Years Multi-Functional Experience, Concentrated in CPG Industry (Sara Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B

• Experience in Business Forecasting, Sales Operations & Planning, S&OP, Sales Systems, ERP, CRM, Demand Planning, Business Information Management, Supply Chain, Trade Promotion Management, IT, HR, Training & Development, and Finance (Corporate & Public Accounting, CPA)

• Core understanding of multiple supply chains – frozen, fresh, cold, dry, liquid

• Independent Management Consulting for large and small entities

• Client Services position with a SaaS (software as a service) provider of trade promotion software (Adesso Solutions)

• Practiced public accounting for 4+ years – McGladrey; Corporate Finance FP&A Roles

• Adept at integrating relevant business concepts and processes with enterprise-wide systems, a strong business process understanding and acumen including S&OP (boot strap and retrofit S&OP implementations)

2


Polling the Room

• Function• Industry• Interest• Experience with S&OP• Desired Outcome with S&OP• Your Burning Question About

S&OP Alignment

3


Presentation Flow

• Presentation of Concepts• Interactive As We Go – Brief Discussion / QA – Concept

by Concept – Share What We All Know• Fuller QA at End• Welcome / Encourage Contact After Presentation – E-

Mail, Phone, LinkedIn (Take a Business Card)• Will Be Available After to Talk 1-on-1• Lunch• Presentation Available – E-Mail Me and Posted to My

LinkedIn Profile

4


Overview of Discussion Topics

• Results Through Integration & Performance Management

• Cross Functional Alignment Through Effective Communication

• Accountability Systems For Internal Stakeholders

• Alignment Between Corporate Strategy and Operational Execution

• Methodological Approach Measuring, Managing, and Executing Strategies

5


Closing Remarks(Now & Later, Too)

• Key Learnings From My Experience– The Concept is Easy

– The Initial Buy-In is Fairly Easy

– The Change Mgt Required Can Be Hard• New Process• New Technologies / Systems• New Accountabilities / Roles• Traditional Functional Ownership Dies Hard – Silos• Transparency Hard For Some to Swallow

– Consistency & Month-to-Month Execution is Hard

– Leader Needs to Keep Functional Leads Feet to the Fire

– May Need a Process Coach

6


“Connecting the Knobs”(Why Integration is Important)

• “Before we had Executive S&OP in the Company, I Spent A Lot of Time Turning Knobs That Weren’t Connected To Anything”

– VP & GM Quote From Tom Wallace’s Book, Sales & Operations Planning, The Executive’s GuidePage 24

7


Alignment/Integration Defined• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)

• Integrate All Available Data (Internal & External)

• One Forecast (Used by All Functions * )

• An Integrated Business Management Model• Buy-In, Accountability, & Trust• Transparency

* With Some Caveats

8


One Forecast Caveat(Linkage – S&OP to Other Plans)

Latest Est / Frcst

S&OP

Business Plan

Demand Plan

SupplyPlan Financial

StrategicTarget /

Intent

StrategicPlan

Demand Plan

SupplyPlan Financial Annual

Plan

Demand Plan

SupplyPlan Financial Interim

Forecasts

Future Execution/ Forecast

FinancialSupplyPlan

Demand Plan

Use S&OPAs a GutCheck

Use S&OPAs Key

Input / Core, Plus Risks/Ops

Use S&OPAs Key

Input / Core, Plus Risks/Ops

Future ExecutionForecast / Details, Active Risk / Ops

Discussion

S&OP Outputs Validate, Supports Other Planning Processes

9


Results Through Integration & Performance Management

• Desired Results– Positive P&L Impact

• Increased Revenue• Reduction / Stabilization of Costs• Supply Chain Conversion Costs• Procurement Costs & Efficiencies

– Working Capital Management• Inventory: Finished, Raw Materials (Cash is King)

– Productivity / Value with Process• Planning / Forecasting Processes• New Product Launches (Cycle Time, Success)

– Decision Making Improvements• Speed• Quality

• Integration– Various Functions: Leadership - Demand - Supply - Finance– Integrated, Consistent, Efficient Forecasting & Management Process

• Performance Management– P& L Targets– Working Capital Targets (Forecast Accuracy Drives Inventory Levels)– Service Level Targets– Productivity Improvements– Decision Making Improvements

10


Connection – Integration, Performance Management (Metrics), Results

INTEGRATION

Leadership(Strategic Direction)

Demand FeedsSupply; Balancing

(Ops Execution, Future Forecast)

Finance($ Scorekeeper, Forward Looking

Economic Advisor)

Leadership(S&OP Process Owner)

DESIRED RESULTSPositive P&L Outcomes

Positive Working Capital OutcomesProductivity Improvements

Decision Making ImprovementsCustomer Service Levels

PERFORMANCE METRICSRevenue, Cost Targets

Forecast AccuracyWorking Capital Targets

New Product Launch SuccessCycle Time / Quality - Processes

Service Level Targets

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Cross Functional Alignment / Effective Communication

Provides P&L Proformas & Risk / Opportunity Assessment

Counsel, Input, Risk Assessment, Pro-Formas of Future Forecasts

Economic Oversight / Counsel

Finance

Daily, Weekly Interaction with Demand & Finance; Owns Monthly Supply Component of S&OP

Owns the Fulfillment of the Demand Forecast at Least Cost (Balancing with Demand Planning)

Demand Fulfillment, Least Cost

Supply > Finished> Raw

Daily, Weekly Interaction with Supply & Finance; Owns Monthly Demand Component of S&OP

Owns the Demand Forecast; Accountable for Excess Inventory Generated by a Forecast Miss

Translates Strategy intoDemand Generation; Dem Planning Reports to a Demand Leader;Unconstrained Demand

Demand > Sales> Marketing

Owns Monthly S&OP Meeting; Consulted Daily/Weekly as Needed (Exception)

Owns the Overall Process – The Process Owner

Strategic DirectionGeneral ManagerCommunicationS&OP RoleBusiness RoleFunctional Role

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Cross Functional Alignment / Effective Communication – The S&OP Flow

Demand

SupplyDaily

WeeklyMonthly

Balancing

FinanceGenerates Proformas,Cost, Risk /

Ops Monthly;As Needed In

Interim

Utilize DemandOutputs as BasisFor Forecasts,Annual Plans,

Strategic Plans, Add Risks / Opps /

Other Lifts / Discount Factors

As Needed

GMControls Monthly

S&OP

+ Results+ Metrics Review+ Var to Bus Pl+ Future Frcst+ Assumptions

+ Bulk of Meeting:Gaps, Opps in

Future Frcst

+ Create Business Rules (Between Demand/Supply)+ Forecast Time Fence: Rolling 12-24-36 Months+ Functional Leads & Leader Participate in Monthly S&OP Review

13


Cross Functional Alignment / Effective Communication – The S&OP Communication Flow

Owns Financial Component

Consulted As Needed

Consulted As Needed

Finance

Owns Supply Component

Active w/ Demand Planning

Active w/ Demand Planning

Supply Planning

Owns Demand Component

Active w/ Supply Planning; Sales;

Marketing;Customers

Active w/ Supply Planning; Sales;

Marketing; Customers

Demand Planning

Owns the Meeting

RarelyRarelyGMMonthlyWeeklyDailyRole

14


Accountability Systems For Internal Stakeholders

• Metrics – Common– 5 Basic Metrics:

• Forecast Accuracy (Demand Owner)• Perfect Orders (Cust Serv, Supply)• Revenue (Units & Mix)• Profitability (Mix, Margins, Costs)• Inventory (Demand Owner + Supply Owner)

– Simple Scorecard– Improvement From a Baseline

• Active Involvement By All Functions –– Accountability & Roles / Responsibilities

• Daily• Weekly• Monthly (Decisions Made + Follow-Up Assigned)

• Transparency Through Dynamic Communication Flow

15


Alignment Between Corporate Strategy and Operational Execution

Revenue TargetsMargins

Working CapitalNew ProductsNew Markets

New CustomersNew ChannelsExit Strategies

Capital Investment

Corporate Strategy Business Plan S&OP




Capital Investment




Capital Investment

Strategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review

Amount of Detail (Increases through various processes)

> Working Backwards from S&OP, Provides Validation of Plan & Strategy> S&OP Focuses on Gap / Opportunity Assessment vs. Plan

16


Methodological Approach Measuring, Managing, Executing Strategies

S&OP Meeting:MetricsBest FrcstAssumptionsNew ProductsGaps / OppsStrategic Issues

P&L Proforma with Gaps / Opps; Risks

Demand to Supply; Supply Back to Demand; Finance P&L w/ Risks / Opps

+ Demand Pre-Meeting+ Supply Pre-Meeting+ Capacitization

Monthly

If Needed, very rare

When needed, exception basis

Same as Above

Demand Planning:+ Same as

Above

Weekly

If Needed, very rare

When needed, exception basis

Dem Pl with System & Sources;Dem Pl w/ Supply –BalancingSupply Metrics

Demand Planning:+ Dem Planners+ Sales+ Marketing+ Customers+ Synd Data

Daily

GMFinanceTypical Interactions

ActivityFrequency

17


Methodological Approach Measuring, Managing, Executing StrategiesS&OP Time Fences

Short-Term

(1-3 Months)

Mid-Term

(4-12 Months)

Long-Term

(13-36 Months)

DemandDem Pl – SKUs

All Demand Streams

Sales

Customers

Promotions

New Products

SupplyFulfillment

Cust Serv

Finished Goods

Supply Contracts

DemandDem Pl – Prod Fam

All Demand Streams

Marketing

Customers

Promotions

New Products

SupplyFulfillment

Finished Gds, Raw

Supply Contracts

Demand - StrategyDem Pl – Prod Fam

All Demand Streams

Marketing

Customers

Promotions

New Products

Supply - StrategyFulfillment & Sourcing

Ingred Contracts

Plant/Cap Network/Invest

18


Methodological Approach Measuring, Managing, Executing StrategiesTool Box Needed to Execute

Systems of Record & Collaboration Tools- ERP System- Spreadsheets- Collaboration Tools - Purpose Built S&OP System Capability (i.e. SteelWedge)- Metrics Scorecard Capability

Need a well thought-out and efficient S&OP Reporting Toolto support Meetings and interactions

> Numbers> Metrics Reporting> Assumptions

Make your analysts “analysts” – not data and report generators

19


Alignment/Integration Defined• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)

• Integrate All Available Data (Internal & External)

• One Forecast (Used by All Functions * )

• An Integrated Business Management Model• Buy-In, Accountability, & Trust• Transparency

* With Some Caveats

20


Closing Remarks

• Key Learnings From My Experience– The Concept is Easy

– The Initial Buy-In is Fairly Easy

– The Change Mgt Required Can Be Hard• New Process• New Technologies / Systems• New Accountabilities / Roles• Traditional Functional Ownership Dies Hard – Silos• Transparency Hard For Some to Swallow

– Consistency & Month-to-Month Execution is Hard

– Leader Needs to Keep Functional Leads Feet to the Fire

– May Need a Process Coach

21


Resources• A Book: Sales & Operations Planning, The

Executive’s Guide, Thomas Wallace & Robert A. Stahl

• “Sales & Operations Planning: Transformation From Tradition” White Paper, AMR Research, May, 2009

• “The Transformation to Demand-Driven Industry Leader” White Paper, Oracle/Demantra, September, 2006

22


General QA & Closing

• Please ask now

• Ask After Session

• Or– Contact Me:

• Cell: 847.687.5379• E-Mail: [email protected]• Via LinkedIn: http://www.linkedin.com/in/jimbiel

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Sales & Operations Alignment - Presentation @ Sales & Ops Bus Conf - Chicago - Biel 04 19 11

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Transcript of Sales & Operations Alignment - Presentation @ Sales & Ops Bus Conf - Chicago - Biel 04 19 11