Debrief 2. Debrief after round 2 Strategy in The Fresh Connection –What is your strategy? –How...
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Transcript of Debrief 2. Debrief after round 2 Strategy in The Fresh Connection –What is your strategy? –How...
Debrief 2
Debrief after round 2
• Strategy in The Fresh Connection– What is your strategy?– How did you translate it into action?– Was everything clear?
• Please give us your reflection in headlines
• Review team results
Maturity scan:Alignment and collaboration
Stage of evolution
Characteristics
Stage I:React
Ad hoc decisions, no connection with business strategy, no specific sequence
Stage II:Anticipate
Functional organization with each function making separate decisions in its own silo, little or no connection with business strategy
Stage III:Collaborate
Joint decision making with a rough logical sequence, not formalized or detailed. Limited preparation on trade offs, connected to business strategy
Stage IV:Orchestrate
Formalized logical sequence of joint decision making based on business strategy. Individual preparation of decisions and trade offs beforehand
Sales&
OperationsPlanning
What is happening 6-12 months from now?
A typical board meeting:Let’s eavesdrop
President: “This shortage situation is terrible. When will we ever get our act together? Whenever business gets good, we run out of product and our customer service is lousy.”
VP Operations: “I’ll tell you when. When we get some decent forecasts from Sales and Marketing…”
VP Sales (interrupting): “Wait a minute. We forecasted this upturn.”
VP Operations: “… in time to do something about it. Yeah, we got the revised forecast – four days after the start of the month. By then it was too late.”
VP Sales: “I could have told you months ago. All you had to was ask.”
VP Finance: “ I’d like to be in on those conversations. We’ve been burned more than once by building inventories for a business upturn that doesn’t happen. Then we get stuck with tons of inventory and run out of cash.”
Source: Thomas F. Wallace, Robert A. Stahl, ‘Sales & Operations Planning’, 3rd ed., 2008
What is causing these type of discussions?
Business Strategy
Execution
We all mean well, but we get nowhere
No ownership, high forecast bias, no identification of gaps between
forecast, plan, budget etc…
No connection between business strategy and execution
Business Strategy
Execution
We all mean well, but we get nowhere
Where does S&OP fit?
No ownership, high forecast bias, no identification of gaps between
forecast, plan, budget etc…
What is S&OP?
S&OP, at heart, is a very simple idea: 1. make forecasts of what you are going to sell and
what you can make (or buy)2. take actions to balance the equation supply =
demand over the whole horizon you have decided you need to look at
3. look at the financial consequences of those actions versus your targets
4. initiate actions to address the difference between the target and the current, balanced forecast
S&OP is business planning in 5 steps…
Sales and Ops Planning
Meeting
Reconcile with financial plans
Supply
Reconcile demand and supply
Demand
From Forecasting to Demand Shaping
From Capacity Planning to Supply Network trade offs & design
“What if?” Rather than “Yes/No”
Getting the right info to make decisions into the last 60 minutes of the process
Source: Deep Parekh, Partner, Equus Group, LLC
S&OP is also about behavior and collaboration
“You have done well: you have consistently beaten your forecast.”
“You consistently under-forecast; please look into your process.”
“Your forecast is well below your target; this is unacceptable.”
“What options have you considered already and what can be done more to close the gap.”
“This is our bottom up forecast; this is our best outlook based on current plans; there is nothing I can do”.
“Our bottom up forecast fell short of target. We are working to improve our Q3/Q4 promotional program.”
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● Functional silo approach
● Ineffective behaviour
● Fire fighting
● Lots of ad-hoc meetings
● Lots of effort, little reward
● Key decision making forum
● Manage together
● Routine things done routinely
● Issues addressed early –
efficient response &
anticipation
oneconsensusplan
Sales:we can sell 200Sales:we can sell 200
Marketing:
the promotion will sell 400
Marketing:
the promotion will sell 400
Manufacturing:they will only sell 150
Finance:
we have budget of 300
Source: Red Pepper, Modified E&Y, 1999
Who Brings What to the Table?
Marketing
ProductDevelopment
ProductDemand
Capital
MPS and Supplier
ConstraintsBusiness
Plan
WorkforceAvailability
Finance
Materials
Operations
HumanResources
Engineering
GeneralManagement
Capacity
CustomerInterface
Sales
Source: Launchbury, Keith J. Principles of Planning Omeric, 1999
How to translate this to The Fresh Connection
ServicelevelDemand patternShelflife
Supply Chain
Operations
Purchasing Sales
LeadtimesQualityReliabilityTrade Unit
CapacityImprovements
FrequenciesStocklevelFixed period
Strategy
Adapted from: Launchbury, Keith J. Principles of Planning Omeric, 1999
Strategy into actionLevels in version 2013
Theme Sales SCM Operations Purchasing
Level 1 ReliabilityService level
Order deadlineShortage rule
Safety stocks# Shifts
# Pallet locations# FTE
Delivery windowDelivery reliability
Level 2 Batches and frequencies
Shelf lifeTrade unit
Lotsizing in production and purchasing
SMEDIncrease speed Trade unit
Level 3 Speed and quality Payment terms Frozen period
Intake timePreventive
maintenanceSolve breakdowns
trainingRaw materials
inspection
Supplier selectionPayment terms
QualityTransport mode
Extensionsin version 2013
Theme Sales SCM Operations Purchasing
Extension a S&OPPromotional pressureCategory management
ForecastingProduction interval
toolResource selection Dual sourcing
Extension b External collaboration
Promotion horizonVMI
Outsourcing warehouse (MCC)
Inflate PETVMI
Supplier development
Extension c CO2 footprintSustainabilty
CO2 sla Decrease of water usage
Decrease of energy usage
Decrease of start up productivity loss
Extension d KPIs and targets KPI selection KPI selection KPI selection KPI selection
Extension e Supply chain risk management
Risk eventsRelaunch (horizon) Scenarioplanner
Tracking & tracingQuarantineRisk events
Pooling warehouse FTE
Contract durationSupplier development
Dual sourcingRisk events
Decision making
sequence
Sales OperationsSupply chain
Purchasing
• Decision making– Who is involved?– What sequence makes sense?
Decide about portfolio/ customer service
Forecasting demand (pattern)
Production resources and allocation
Production policy (interval / fixed
period)
Inventory policy finished product (safety stock)
Production capacity plan (shifts/projects)
Capacity plan outbound warehouse
Inventory policy raw mat. (batch size,
safety stock)
Capacity plan inbound warehouse
Sales Operations Supply chain Purchasing
The value proposition
Supplier selection and agreements
Set up a logical sequence of decisions and roles involved for The Fresh Connection