Roger Lindgren & Bob Stahl Gaylord Texan Resort & Convention Center December 11-12, 2008 Gaylord...

Roger Lindgren & Bob Stahl www.tfwallace.com

Gaylord Texan Resort & Convention CenterDecember 11-12, 2008

Gaylord Texan Resort & Convention CenterDecember 11-12, 2008

Roger Lindgren, CEOV&M Star

Bob Stahl, PresidentR.A. Stahl Company

Roger Lindgren, CEOV&M Star

Bob Stahl, PresidentR.A. Stahl Company

Resolving Conflict & Resolving Conflict & Building ConsensusBuilding Consensus

through the Executive S&OP processthrough the Executive S&OP process

Resolving Conflict & Resolving Conflict & Building ConsensusBuilding Consensus

through the Executive S&OP processthrough the Executive S&OP process

APICS / iBF Best of the Best S&OP ConferenceAPICS / iBF

Best of the Best S&OP Conference


ObjectiveObjectiveObjectiveObjective• Identify some of the types of conflict

that can exist in an business organization

• Explain and discuss how Executive S&OP can provide leadership with the tools and structure to raise and resolve that conflict in a defined and disciplined fashion

• Provide real life examples


What is What is Sales&Operations Sales&Operations Planning . . . Planning . . .

What is What is Sales&Operations Sales&Operations Planning . . . Planning . . .

Demand Supply

Volume

Mix

Executive S&OPExecutive S&OPExecutive S&OPExecutive S&OP

DemandPlanning

SupplyPlanning

Master SchedulingDemand Pull


What is Executive S&OP?What is Executive S&OP?What is Executive S&OP?What is Executive S&OP?

Sales & Operations Planningis a

Executive Decision-Making Processto

Balance Demand & Supply(at the volume level)

is

The forum for setting Relevant Strategy & Policy(aligning human energy)

and

Integrates Financial & Operating Plans (update/validate the Annual Business Plan)

Top Management’s Handle on the Business


An Essential An Essential Point . . .Point . . .An Essential An Essential Point . . .Point . . .

Executive S&OP is essential for the other pieces of

Sales & Operations Planning

to work at their best.

Whether they be traditional or Lean techniques


Types of Types of Conflict . . . Conflict . . . Types of Types of Conflict . . . Conflict . . . • Implementation conflict(s)

• Constituency conflict(s)

• Business Goal conflict(s)

• Organizational outlook conflict(s)

• Strategic conflict(s)

• Forecasting conflict(s)

• and many more . . .


Implementation Conflicts . Implementation Conflicts . . .. .Implementation Conflicts . Implementation Conflicts . . .. .

Run the Business todayRun the Business todayAA

Executive S&OPExecutive S&OP

BB Improving Short TermImproving Short Term

DD

CC Other ProjectsOther Projects

Supply-Chain ExcellenceSupply-Chain Excellence

Parallel PathsParallel Paths


Constituency Conflicts . Constituency Conflicts . . .. .Constituency Conflicts . Constituency Conflicts . . .. .

Customers

Employees(Suppliers, Community, Country,

Planet)

Owners

ExecutiveS&OP

ExecutiveS&OP

Desired Force = CentripetalNatural Force = Centrifugal


A Couple of TruismsA Couple of TruismsA Couple of TruismsA Couple of Truisms

• When a company is trading off one constituency against another, it’s on a slippery slope

• Being able to serve all constituencies has a lot to do with timing:1. In the short term, the customer is king2. Proper prior planning is necessary to serve

all constituencies well (Doesn’t happen by accident)

3. Executive S&OP is the tool to set conditions for success with regard to Supply Chain performance


Business Goal conflicts . . . Business Goal conflicts . . .

High Quality Low Cost (Low Inventory) Customer Service

Quick ResponseReliabilityWide Variety

Being Best in Class

Getting to AND . . . Diminishing ORGetting to AND . . . Diminishing OR


Organizational Conflicts . Organizational Conflicts . . . . . Organizational Conflicts . Organizational Conflicts . . . . .

Executive S&OPA process to raise, reconcile, agree

upon, & communicate onecompany game plan

Executive S&OPA process to raise, reconcile, agree

upon, & communicate onecompany game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Dollars)

Product Dev.(New Product Issues)

President


Process vs PersonalityProcess vs PersonalityDriven OrganizationsDriven Organizations

Process vs PersonalityProcess vs PersonalityDriven OrganizationsDriven Organizations

Sales &MarketingSales &Marketing OperationsOperations Product

DesignProductDesign FinanceFinance

Logistics&

Distribution

Logistics&

Distribution

President/General Manager

Supply Chain ManagementExecutive S&OPExecutive S&OP

Managing the White Space


Top Mgt. Top Mgt. andand Executive S&OPExecutive S&OPTop Mgt. Top Mgt. andand

Executive S&OPExecutive S&OPTop Management = The Leader of the Business

(General Mgr, Pres., COO)

+VP Sales &/or MarketingVP OperationsVP FinanceVP Development. . . others

Need to be Hands-On with the ES&OP Process:

Stewardship & Leadership(Manager/Trustee & Guide/Command)

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month


DoingThe

RightThings

DoingThe

ThingsRight

Strategic Conflicts . Strategic Conflicts . . . . .

Strategic Conflicts . Strategic Conflicts . . . . .

Ro

ber

t H

aye

s

HB

R-N

ov/

Dec

198

5

Str

ateg

ic P

lan

nin

g -

fo

rwar

d i

n r

ever

se

Exec

utiv

e S&

OP

Strategy

Tactics

Execution

ExecutiveS&OP

Ann

ual B

usin

ess

Plan


For Example . . . For Example . . . For Example . . . For Example . . . Capacity Planning =Strategy Question ??

Lead Capacity - Invest in capacity before customer orders materialize (That is, add to planned “demonstrated capacity” proactively with specific actions based on forecast.)

Tradeoff: market share for profit

Lag Capacity - Invest in capacity after customer orders materialize (That is, plan on adding to “demonstrated capacity” only after receipt of customer orders) (default strategy)

Tradeoff: Profit for market share

Executive S&OP is where the pros and cons of each strategy are discussed and decided upon.


Forecasting conflictsForecasting conflictsForecasting conflictsForecasting conflicts

1. Reasoned2. Reasonable3. Reviewed Frequently

4. Represent Total Demand

1. Reasoned2. Reasonable3. Reviewed Frequently

4. Represent Total Demand

Forecasts that are:Current CustomersNew CustomersCompetition

Economic OutlookNew Products

Pricing StrategyPromotionsBid Activity

Management DirectivesIntra-Company Demand

History (Data)Other

ProcessProcess

Inputs -- Process -- Output


Gaining Demand ConsensusGaining Demand ConsensusGaining Demand ConsensusGaining Demand Consensus

Energy Market - July Fcst ReviewDistribution Transformer (I0 Sub-Family)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

01/06 04/06 07/06 10/06 01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09

Period

Pounds

Distribution Transformer - History Distribution Transformer - Stat Fcst

Distribution Transformer - Plan08 Linear (Distribution Transformer - History)


Executive S&OP Executive S&OP ProcessProcess

Executive S&OP Executive S&OP ProcessProcess

Step #1Run Month

End Reports

End of Month

Sales Actuals, Statistical Forecasts

&Production Actuals

Step #5ExecutiveMeeting

Decisions &Game Plan

Step #4Pre-S&OPMeeting

Conflict Resolution, Recommendations &

Agenda for Exec. Mtg.

Step #2DemandPlanning Management Forecast

1st-pass spreadsheets

Step #3ProductionPlanning Capacity constraints

2nd-pass spreadsheets

HeavyLifting


Pre-MeetingPre-Meeting(Continued)(Continued)

Pre-MeetingPre-Meeting(Continued)(Continued)

Consensus requires that everyone:1. Has had their say, &2. Feels they had opportunity to influence3. Everyone can live with the outcome

‘informed debate’‘skillful discussion’‘positive provocation’

Conflict & ConfrontationConsensus & Harmony

Getting the Moose on the Table

‘informed debate’‘skillful discussion’‘positive provocation’

Conflict & ConfrontationConsensus & Harmony

Getting the Moose on the Table


Done Done Properly . . . Properly . . .

Done Done Properly . . . Properly . . .

Simpler(Not Easier)

Better


Resolving Conflict Resolving Conflict aligns human aligns human energy . . .energy . . .

Resolving Conflict Resolving Conflict aligns human aligns human energy . . .energy . . .

Accomplishment Accomplishment


The Real The Real Issue . . .Issue . . .The Real The Real

Issue . . .Issue . . .Understanding Executive S&OP is simple.

The hard part is . . .

Behavior Changechanging the way everyone does their jobs.

Keys: - Full cross functional buy-in

- Counter-experiential/intuitive

- Comfort vs Change- Path of low risk


Implementation AlternativesImplementation Alternatives

“Build it and they will come” Design it first, get the mechanics working, and

then attempt to sell it to top management.=

Low probability for success

“Hold the high ground” Involve top management at the very outset of

the implementation, and throughout.=

High probability for success


Thanks for Thanks for ListeningListeningThanks for Thanks for ListeningListening

Roger Lindgren & Bob Stahl Gaylord Texan Resort & Convention Center December 11-12, 2008 Gaylord...

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