Managing Constant Business Evolution, Nike
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Manage constant business evolution
NIKE S&OP PROCESS
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Torben S Hansen S&OP director Apparel and Action Sports About myself: •! 15 years at Nike •! Apparel •! Equipment •! S&OP •! Inventory Planning •! Demand Planning •! Sourcing
Prior to Nike: •! Logistics & Sales •! Pharmaceuticals & Seafood
business •! Worked/lived in Denmark,
England, Greenland & Netherlands
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24 BILLION GLOBALLY
22 OCTOBER 2012 | PAGE 3
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6 BILLION - 235M EUROPE
22 OCTOBER 2012 | PAGE 4
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165K
22 OCTOBER 2012 | PAGE 5
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1DC * (* 2 SATELITE DC’S RUSSIA & TURKEY)
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FUNCTIONAL EXPERTISE
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Finance
Operations
Sales
Retail
Merchandising
Territories
Demand
Supply
Categories
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DATA & INFO
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SO WHAT’S THE CHALLENGE ??
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ORG CHANGE => MULTIPLE VIEWS
22 OCTOBER 2012 | PAGE 10
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CATEGORY
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LINE CONSTRUCT
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PRODUCT ENGINE
22 OCTOBER 2012 | PAGE 13
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DISCONNECT ?
22 OCTOBER 2012 | PAGE 14
Category Product engine Finance
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CHALLENGES
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1.! Translate multiple views into one consolidated forecast
2.! Different understanding of “burning” supply chain issues
3.! Multiple point of views - which one to execute
4.! Short term fire fighting – distracts long term focus
5.! Mismatch in Demand & Supply – under/over utilisation of resources
6.! Data sources & definitions not (always) aligned x-functions
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GREAT TEAM - FOCUS
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RE-EDUCATE
22 OCTOBER 2012 | PAGE 17
1. DEFINITION: S&OP a continuous process for making Demand & Supply decisions across functions focused on reliable achievement of margin & growth plans & link day-to-day operational realities with business goals and functional plans.
3. SUCCESS: S&OP is successful when multiple levels of alignment are achieved, and functions use one aligned S&OP number as the operating plan to avoid surprises and to optimize results.
2. PURPOSE: S&OP enables decision-makers to reach consensus on a single x-functional operating plan including the allocation of critical resources to reach corporate performance targets.
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STRUCTURE
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1.! Visibility & Awareness (performance processes)
2.! Co-ordination & Collaboration (cross-functional & cross CAT. / PE)
3.! Decisions, Actions & Results (demand & supply results, EBIT)
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RELAY
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STEPS
Step 1: Planning
(Long range) 2-3 years out
Step 2: Merchandizing
9–12 months out
Step 3: Selling
6 months out
what do we bring to market
what’s our growth plans Financial plans
Long range source plan
Step 5: Supplying
Step 4: Buying
6 months out
when and how much do we buy
what will we sell
Primary focus: Product engine Execution
22 OCTOBER 2012 | PAGE 20
will products be on time)
Step 6: Retailing
Sell through
Primary focus: Category Planning
Step 7: Cleaning
“keep market clean”
Seasonal “learning’s”
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STEPS
Step 1: Planning
(Long range) 2-3 years out
Step 2: Merchandizing
9–12 months out
Step 3: Selling
6 months out
what do we bring to market
what’s out growth plans Financial plans
Long range source plan
Step 5: Supplying
Step 4: Buying
6 months out
when and how much do we buy
what will we sell
Primary focus: Product engine Execution
22 OCTOBER 2012 | PAGE 21
will products be on time)
Step 6: Retailing
Sell through
Primary focus: Category Planning
Step 7: Cleaning
“keep market clean”
Seasonal “learning’s”
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STEPS
Step 1: Planning
(Long range) 2-3 years out
Step 2: Merchandizing
9–12 months out
Step 3: Selling
6 months out
what do we bring to market
what’s our growth plans Financial plans
Long range source plan
Step 5: Supplying
Step 4: Buying
6 months out
when and how much do we buy
what will we sell
Primary focus: Product engine Execution
22 OCTOBER 2012 | PAGE 22
will products be on time)
Step 6: Retailing
Sell through
Primary focus: Category Planning
Step 7: Cleaning
“keep market clean”
Seasonal “learning’s”
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FRACI
22 OCTOBER 2012 | PAGE 24
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who
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CLEAR R&R
22 OCTOBER 2012 | PAGE 25
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PRODUCT MANAGEMENT- Align on SKU number requirement- Agree product spread offering through Season - Actions to maximize on time commercialization
FORECAST, SELL & BUY- S&OP number aligned on supply and demand- Align on Buy Risk for Season- Mid Range capacity planning based on projections- Review Negative Sales Actuals and Forecast
SOURCE & MAKE- Air freight strategy- Factory capacity issues and/or delays
DELIVERY AND ORDER MANAGEMENT- Holds and contract management - Inventory Re-alloaction- Inbound/Outbound flow planning
RETAIL AND CONSUMER- Review G2N performance and create action plan- Inventory account cover: issues &opportunities
SEASONAL CLEAN UP- Last season and prior inventory review and liquidation strategy- Dynamic life cycle
Product Mgt LEG 1
Forecast, Sell & Buy LEG 2
Source and Make LEG 3
Delivery and OM LEG 4
Retail and Consumer LEG 5
Seasonal Clean up LEG 6
KPI Systematic review process by category through a logical grouping of seasonal activities and KPI’s
One source, one definition and clear KPI’s for all related functions
METRICSFY ForecastSales Demand Forecast AccuracyDemand Planning Forecast AccuracyBuy RiskCancellations TrackingReturns ForecastGFP Capacity Simulations +2 QuartersOrder Entry AdherenceOrder Spread
SOURCEFFPPEPEPEFFPFFPOM
SalesSales
Specific KPI’s and targets per Leg
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22 OCTOBER 2012 | PAGE 27
S&OP OPERATING MODEL
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BALANCE
Service Cost
22 OCTOBER 2012 | PAGE 28
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THERE IS NO FINISH LINE
22 OCTOBER 2012 | PAGE 29
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KEY LEARNING’S
•!Open to constant business evolution •!Roles & Responsibility evolve over time •!Create (shared) understanding “who does what” •!Clear timelines for critical business decisions •!Constant education of S&OP participants •!We are never “done” with S&OP process •!Positive & receptive to change •!Don’t forget to have fun along the journey
22 OCTOBER 2012 | PAGE 30
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ULTIMATE S&OP GOAL
31
Product Creation
SELL and BUY
PRODUCT AVAILABILE DELIVER CONSUMER
APETITE MANAGE
INVENTORY
NIKE SUPPLY CHAIN
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KEEP IMPROVING
22 OCTOBER 2012 | PAGE 32