From S&OP to IBP: how to align operations and financial plans? · Dick Ling Tom Wallace . 4 5-Step...

From S&OP to IBP: how to align operations and financial plans? Jeff Livingston, Sr Sales Executive

Pierre-Julien BUARD, Sr. Business Consultant

Wednesday, May 8, 2019

The Essence of S&OP/IBP…

From S&OP to IBP: how to align operations and financial plans?

2

“I want you to bring me the answers before I ask the questions”

Al Pacino as Willy Bank

in Ocean’s Thirteen

“Sales & Operations Planning is a collaborative

decision-making process used to develop and align demand, supply, and financial plans in support of the overall business objectives and strategic goals “

S&OP History and Foundation


3

Oliver

Wight Dick Ling Tom

Wallace

4

5-Step S&OP Process


Data Gathering

& Review

Demand

Review

Pre-S&OP

Meeting

Executive

Meeting

Capacity

Review

Capacity

Review

Step 1 Step 2 Step 4 Step 5

Global Local

Step 3

Demand Review

Product Management

Review

Supply Review

Management

Business

Review

Source: Tom Wallace/Oliver Wight

• S&OP – Mainly focused on: Balancing supply and demand (Units)

Resolving supply disruptions and shortages

• IBP – Evolved as focus shifted to: Strategic Management/Planning

Better understanding of external environment

Evolution of S&OP to IBP


5

6

More robust financial integration

Inclusion of strategic plans, initiatives, and activities

More robust product & portfolio review

Improved simulation, modelling & scenarios

Improved operational risk visibility management

Gap identification, improved decision-making

Easy, effective translation – aggregated & detail

Improved trust across the entire management team


How is IBP different from S&OP ?

• Incorporation of “Financial Planning”

Components of IBP


7

• Evolving Role = Lead the organization in making the numbers

Coordinate the S&OP/IBP process

Assist with business decisions/impact

Defining KPI’s, targets & priorities

Run “what-If” analysis to support cross-functional business decisions.

Integrating Finance into S&OP/IBP


8

• S&OP interacts with financial planning at four different points:

1. Monthly updates to financial plans

2. Development of annual plans and budgets

3. Capital investment decisions

4. Managing cash flow

(Dougherty & Grey):

Integrating Finance into S&OP/IBP


9

• Typical Budget Cycle/Forecasting Challenges

Data in a common format

Chasing Sales/Ops people’s input

Struggling with Volume vs. Mix

Frustrated with people putting

in bad data and archaic systems

Finance Team – Hair on Fire!!


10

• Leverage S&OP to Streamline the Budget Process:

• Define S&OP/IBP Categories

• Develop 12-14 month Forecast (Units/$’s)

• Minimizes budget prep crunch (Monthly S&OP)

• “Seed” next year’s Budget…it’s just another cycle

• Minimize the chaos/disruption of Budget preparation fire-drill

A Better Way to integrate Finance into S&OP/IBP


11

Validation Balance

Agree on

Concerted Actions

Communicate

Operational Objectives

Preparation

Todays Best in Class Planning Process Foundations From S&OP to IBP: how to align operations and financial plans?

12

Demand

Planning

Supply

Planning

Assess Business

Performance

Balance

Supply and

Demand

Estimate Financial

Impacts

Supply

Review

Demand

Review

Pre Exec

Meeting

P

1 Month

13


Where are you on your S&OP/IBP journey

1.React

No formal S&OP

No technology

Excel/ERP

2.Anticipate

S&OP

Supply centric

Location level

Point solutions

3.Integrate

Market insight

Formal balancing

End to End

Revenue plan

4.Collaborate

Profitability

Scenarios

Stakeholders

Tight integration with SCP

5.Orchestrate

Network wide decisions

More strategic

What-if

Extended collaboration

Source : Gartner S&OP maturity stages

QAD Dynasys DSCP

S&OP Improvement One Step at a Time

14

Financial Impact/Benefits of S&OP/IBP


• Typical Business Benefits of S&OP/IBP:

15

USER

S

4,000+ IMPROVEMENTS IN FORECAST ACCURACY

10 to 40%

QAD DynaSys Demand & Supply Chain Planning

30% CUSTOMER SERVICE

INCREASE SUPPORT

ALWAYS ON THE

RETURN ON INVESTMENT

< 1 YEAR

10 to 50% INVENTORY

REDUCTION

UP

TO

LATEST VERSION 24x7x365

17

Demonstration - Scenario #1

Business Challenge: Budget misalignment between finance and

operation

18

Demonstration 1

Business challenges #1

• How QAD DynaSys can enable your company to compare your annual financial plan to the operational supply chain plan in a way that allows access to potential gaps between the two plans and decide which actions to take to close the gap and check feasibility and

Budget misalignment between finance and operation

Active tile identifies

budget misalignment

Personalized homepage

Drill into product family identify

family with misalignment

Cannot reach the budget

Notice of opportunity to

close the gap

Activity feed notes new entry

Before After

The additional demand

partially closes the gap

28

Scenario #2 – Demonstration

Business challenge Execute S&OP decision

29

Demonstration 2

Business challenge

• How QAD DynaSys can enable the execution of decision being made in the S&OP process in terms of aligning the aggregate level S&OP decision with the more granular operational/tactical planning environment

Execute S&OP decision

30

Demonstration 2

What you will see

• Recently completed S&OP Meeting

• A series of decisions have been approved

• These are posted as Tasks in the activity feed

• A change in S&OP Demand at Family/Month will be translated to Operational Demand at Item/Week.

Translate S&OP decision into operation Demand

37

Scenario #3 - Demonstration

Business challenge Collaboration between entities

38

Demonstration 3

Business challenge

• How QAD DynaSys can enable a company to model, collaborate, and compare scenarios that facilitate getting S&OP planning decision in a global supply chain that operates in 3 regions (NA, EMEA, APAC) where relevant stakeholders of these regions needs to be involved.

Scenario to facilitate decision collaboration between entities

39

Demonstration 3

What you will see

• A global supply chain plan aggregated with three regions NA, APAC, EMEA

• APAC region has a Sales Opportunity in week 47 but shortage of capacity

• NA region has unused capacity for this period

• Stakeholder collaboration

• A What-if Scenario is created for analysis and collaboration

• Sales & Manufacturing agree on possibility

• After profit analysis, Finance and Logistics agree on feasibility

• Everyone on the plan agrees to the initiative and it is approved

Translate S&OP decision into operation Demand

APAC capacity shortages

APAC Stock Shortages

Global & Collaborative, Scenario Simulations

From S&OP to IBP: how to align operations and financial plans? · Dick Ling Tom Wallace . 4 5-Step...

Documents

Transcript of From S&OP to IBP: how to align operations and financial plans? · Dick Ling Tom Wallace . 4 5-Step...