Getting S&OP to work - EyeOn · “S&OP is a set of decision-making processes to balance demand and...
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Transcript of Getting S&OP to work - EyeOn · “S&OP is a set of decision-making processes to balance demand and...
Getting S&OP to work 12 building blocks for process design and implementation
EyeOn PID 2017
Rotterdam, 5 October 2017
S&OP and IBM as decision making processes
Process designed around decisions
Demand/Supply balancing at the basis
Integrated planning:-strategy, tactical, execution-financial & volume
Driven by business leaders
“S&OP is a set of decision-making processes to balance demand and supply, to integrate financial planning and operational planning, and to link high level strategic plans with day-to-day operations.”
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S&OP Maturity stages
Increasing horizontal and vertical integration
S&OP
Chaotic S&OP
• Unstructured• Scattered ICT landscape• No or scattered metrics• No collaboration
Supply Chain S&OP
• Balancing Supply / Demand• Supply Chain driven• Volumes• Local processes• Ownership in Supply Chain
or Operations
Financial S&OP
• Formalized S&OP process• Sequential• Optimizing financials as well
as volumes• Operational planning input
for q*p / LE / Rolling forecast
Integrated Business Management
• Aligned demand supply plan, proactive, profit optimization
• Suitable frequency of decision making
• Integral profitability• Customers and suppliers
integrated in process• Concurrent rather than
sequential
A framework to configure your process
Organizational readinessBalance demand & supply Integrated planningProcess designed around decisions
AGILE SUPPLY
ENRICHMENT
EVENT PLANNING
BUSINESS-LEADER DRIVEN
ONE PLAN
STRATEGY EXECUTION
ANALYTICS
DECISION-DRIVEN
SUPPORTIVE DATA & TOOLS
CONTINUOUS IMPROVEMENT
COLLABORATIVE BEHAVIOR
PLANNING COMPETENCE
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S&OP is a process where we make decisions
CONTINUOUS IMPROVEMENTAGILE SUPPLY BUSINESS-LEADER DRIVENANALYTICS
COLLABORATIVE BEHAVIORENRICHMENT ONE PLANDECISION-DRIVEN
PLANNING COMPETENCEEVENT PLANNING STRATEGY EXECUTIONSUPPORTIVE DATA & TOOLS
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S&OP is about balancing demand & supply
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CONTINUOUS IMPROVEMENTAGILE SUPPLY BUSINESS-LEADER DRIVENANALYTICS
COLLABORATIVE BEHAVIORENRICHMENT ONE PLANDECISION-DRIVEN
PLANNING COMPETENCEEVENT PLANNING STRATEGY EXECUTIONSUPPORTIVE DATA & TOOLS
S&OP is about integrated planning – horizontally and vertically
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CONTINUOUS IMPROVEMENTAGILE SUPPLY BUSINESS-LEADER DRIVENANALYTICS
COLLABORATIVE BEHAVIORENRICHMENT ONE PLANDECISION-DRIVEN
PLANNING COMPETENCEEVENT PLANNING STRATEGY EXECUTIONSUPPORTIVE DATA & TOOLS
S&OP –Organizational aspects
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CONTINUOUS IMPROVEMENTAGILE SUPPLY BUSINESS-LEADER DRIVENANALYTICS
COLLABORATIVE BEHAVIORENRICHMENT ONE PLANDECISION-DRIVEN
PLANNING COMPETENCEEVENT PLANNING STRATEGY EXECUTIONSUPPORTIVE DATA & TOOLS
PERFORMANCE
How to use Building Blocks for a successful S&OP (re)design
Internal Environment
External Environment
S&OP Design-Objectives-Process-Tool support-…
S&OP execution-Analysis
-Behavior-Decisions
-…
Implementation Gap
Configuration
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Mentimeter question 1
– How would you rate your S&OP maturity?
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S&OP
Chaotic S&OP
• Unstructured• Scattered ICT landscape• No or scattered metrics• No collaboration
Supply Chain S&OP
• Balancing Supply / Demand• Supply Chain driven• Volumes• Local processes• Ownership in Supply Chain
or Operations
Financial S&OP
• Formalized S&OP process• Sequential• Optimizing financials as well
as volumes• Operational planning input
for q*p / LE / Rolling forecast
Integrated Business Management
• Aligned demand supply plan, proactive, profit optimization
• Suitable frequency of decision making
• Integral profitability• Customers and suppliers
integrated in process• Concurrent rather than
sequential
Mentimeter question 2
– Indicate 1-3 building blocks that are major contributors to the success of S&OP in your organization
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Mentimeter question 3
– Indicate 3 building blocks that you think should to be improved in the S&OP process in your organization
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Configure your process: season to taste!
CONTINUOUS IMPROVEMENTAGILE SUPPLY BUSINESS-LEADER DRIVENANALYTICS
COLLABORATIVE BEHAVIORENRICHMENT ONE PLANDECISION-DRIVEN
PLANNING COMPETENCEEVENT PLANNING STRATEGY EXECUTIONSUPPORTIVE DATA & TOOLS
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Supportive data & tools
✓ Prepare information according to decision items on the agenda
✓ Differentiated level of aggregation (per horizon)
✓ Work on master data where possible, arrange for data cleaning where necessary
✓ Automated or optimized data collection processes
✓ Improve E2E visibility within the company (in case of complex structures)
✓ Improve E2E visibility across the chain (in case of high interdependency)
✓ Use tools that enable fit-for-purpose information processing, simulation and scenario building
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How to tackle
? Discussions about the data
? Back-and-forth between meetings
? Extreme effort to prepare for a cycle
? Lack of trust in the quality of decisions
? Disconnected view
? Excel hell: Lack of suitable support from the system
? Errors in the underlying data
? Difficult to build scenarios and simulate
Problem symptoms
One plan
✓ Integrate planning processes across disciplines (horizontal alignment with shared underlying assumptions)
✓ Integrate the input and output of these planning processes; enable to move between aggregation levels where needed
✓ Financial forecast is updated and discussed as part of S&OP
✓ Financial plan = financial forecast + risks and opps
✓ Remove focus from calendar year only (rolling forecast)
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How to tackle
? No alignment between plans (silo’s)
? Unclear financial outlooks
? Inability to monetize tactical plans
? Decision tracks on S&OP topics outside the S&OP process
? Lack of outlook on proper horizon
? Running out of budget near end of year
Problem symptoms
Strategy execution
✓ Separate target setting and action setting: remove budgeting from the forecasting process
✓ Aim for gap-closing actions that act upon the difference between budget / target and actuals / forecast
✓ Scenario-based evaluations against strategic outcomes
✓ Put controls on the focus of the process: evaluate time spent on business vs. supply chain decisions, and short-term vs mid/long term
✓ Structured handover of responsibilities between teams on different horizons, incl. joint operationalization of strategy to the tactical level (business plans, sourcing, expansion markets etc.) including timing
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How to tackle
? Strategical level and tactical level are disconnected
? Out-of-control top management
? Gaming
? Keep focusing on details
? Keep focusing on short term
? Keep focusing on operational or supply chain decisions instead of business decisions
? ‘Blindness’ outside preferred scenario, no fallback options or plan
? Target-seeking forecast
Problem symptoms
Collaborative behavior
✓ Cross-functional approach: take people with a collaborative mindset that supports decision making and organize them in teams with decision making authority
✓ Behavioral management: clear guidelines and priorities on content and process; coaching (especially leadership level), controls on appropriate behavior (for example escalation acceptance only with a plan attached)
✓ Communication plan & execution: continuous effort that promotes 2-way communication instead of implementing from the top or the sideline
✓ Balanced relative-to-market incentives in line with holistic objectives (business and behavioral) to prevent ‘gaming’
✓ Promote information transparency and information sharing
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How to tackle
? Reluctance to collaborate
? Blaming culture
? Not-my-problem
? No responsibility
? Individual agenda’s
? Incoherence in used formats and interpretation of numbers, KPIs, etc.
? Disconnected overall objectives
? “We didn’t know that…”
Problem symptoms
Enjoy your gift...
1. Take the box to your office
2. Separate the blocks you want to work on first
3. Use them daily as your favourite coasters
4. Forecast the tear and wear of your coasters and align your planning accordingly
5. Celebrate success and proceed with the next selection
6. Repeat until business is happy
And do get in touch when you want a sparring partner!
• The Netherlands : Marco van Alfen [email protected] +31 (0)6 2240 5945
• Belgium : Luc Van Wouwe [email protected] +32 (0) 478 87 2189
• UK and Ireland : Sabu Sheikh [email protected] +44 78 182 50 870
• Switzerland : Jean-David Risson [email protected] +41 78 776 2788
• Other countries: Menno Bruggeling [email protected] +31 (0)6 4736 5442
Ready to take your next steps? Want to read more?Visit us at www.eyeon.nl
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EyeOn reports Planning excellence Accelerated improvement
– Forecasting Benchmark
– S&OP benchmark
– Fast Forecast scan
– Inventory Management scan
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