S&OP Success: Achieving Transformational Business Results

Bob Stahl & Tom Wallace

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Objective of this Presentation

Learn how to achieve transformational benefits

Learn the proven path to that success

Expand your contribution to company’s success

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Agenda

• Introduction to Presentation Tom

• Characteristics of successful S&OP Bob

• Understanding the role of Top ManagementBob

• Questions for personal reflection Tom & Bob

• Resolving both parts of Disagreement Bob

• Engaging Top Management Bob

• Steps of successful implementation Bob

• Questions & Answers Tom & Bob

• Closing Thoughts Tom

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Tom Wallace Background

• Written 13 books, translated into Chinese (Mandarin), French, Italian, Korean, Mongolian, Portuguese (Brazil), Russian, Spanish and Thai

• Authored/co-authored the best selling book on S&OP

• Taught in Australia, Belgium, Canada, China, Denmark, France, Great Britain, Japan, Mexico, New Zealand and the United States

• Distinguished Fellow at Ohio State University’s Center for Operational Excellence

Introduction

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One of Top Management’s Major Tasks

“Keep the Herd Moving Roughly West”

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Energy Alignment

Accomplishment

Accomplishment

Before S&OP

After successfulS&OP

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Keeping the Herd Moving Roughly West

. . . is more Cultural and Behavioral than Technical

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Culture ChangeDefinition of Company Culture:

“how we do things around here”

Changing how we do the important things around here means:

Top Management providingcommitment, involvement, and leadership

This means engaging

Top Management

What is authentic S&OP?

What are the characteristics that make S&OP operate at its best?

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Bob Stahl Background 40+ years in manufacturing companies Started as Schedules Coordinator (1970) With help of Oliver Wight, achieved Class A success

(1979) Became an associate of Oliver Wight – 1981 (passed in

1983) Have worked with some of the best companies in the

world Today = S&OP Coach, Educator, Author Has written six books with Tom Wallace –

− three have been used for APICS Certification

S&OP Editor and Columnist – − Inaugural for the IIF’s Journal of Forecasting - Foresight

Heads up support services for TFWallace & Company “Retired” = choices

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Four Fundamentals . . .

Volume

Mix

•How Much?•Rates•Mkt Facing Families•The Big Picture•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Resp.

•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Mos•Middle Mgt. Resp.

Demand Supply

Balance

Different & separate practices,

but integrated!

Different & separate practices,

but integrated!

ProActive Behavior

ReActive BehaviorRoutinely

Sales & Operations Planning(eS&OP)

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Executive S&OP is . . . APICS Dictionary, 13th Edition, October 2010 (First Appearance)

The executive portion of the overall sales and operations planning set of processes.

It is a decision-making activity involving the leader of the business (president, general manager, COO, managing director), his or her staff, and a number of middle managers and specialists.

Its mission is to: − balance demand and supply at the aggregate level, − align operational planning with financial planning, − link strategic planning with day-to-day sales and

operational activities. − Is a forum for disciplined discussion about setting

Policy, strategy, risk, budget changes

It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization

Top Management’s Handle on the Business

Executive S&OP – does the proper prior planning to

allow the routine things in the MIX Space to be done

routinely!!

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The eS&OP Process

Step #1Data

Gathering

Decisions &Game Plan

Step #5ExecutiveMeeting

Step #2DemandPlanning

Step #4Pre-S&OPMeeting

Step #3Supply

Planning

HeavyLifting

Financia

l Involvement

Financia

l Involvement

New Product

Involvement

New Product

Involvement

Creates a Disciplined

Rhythm

Creates a Disciplined

Rhythm

It is a multi-step process involving demand planning, supply

planning, and middle and top management

meetings for decision-making and authorization

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eS&OP = Keystone of the Supply Chain

If supply chain practices can be compared to a stone arch, Executive S&OP is the Keystone:

−The Keystone alone does not make an arch, but−Without the Keystone, nothing else can stand

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Characteristic that make eS&OP Operate at it’s Best• Cross-functional, collegial, collaborative,

consensus building mindset, and a disciplined process that aligns human energy – Step #1 - #4

• Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers – Step #5

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Top Management and Executive S&OP

Need to be Hands-On with the Executive S&OP Process

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

PresidentPresident

VPOperations

VPOperations

VPSales/Mktg

VPSales/Mktg

VPFinance

VPFinance

VPR&DVP

R&DDemand Supply $$$ Tech

AuthorativeDeciderDone Properly . . .

It takes Top Management between

1 & 2 Hours per Month

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month

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Characteristic that make eS&OP Operate at it’s Best

• Cross-functional, collegial, collaborative, consensus building mindset, and a disciplined process that aligns human energy – Step #1-#4

• Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers – Step #5

• View the implementation of eS&OP as a Strategic Imperative

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“The Big Lie of Strategic Planning” (HBR – Jan/Feb 2014 by Roger Martin)

The Problem: “Executives know that strategy is important. But almost all find it scary, because it forces them to confront a future they can only guess at.” . . . “Strategy making is uncomfortable.”

The Solution: “Reconcile yourself to feeling uncomfortable, and follow three rules:

1. Keep it Simple2. Don’t Look for Perfection3. Make the Logic Explicit”

“A detailed plan may be comforting, but it’s not a strategy.”

The implementation of authentic eS&OP is (in and of itself) a Strategic Imperative!

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Characteristic that make eS&OP Operate at it’s Best

• Cross-functional, collegial, collaborative, consensus building mindset, and a disciplined process that aligns human energy – Step #1-#4

• Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers – Step #5

• View the implementation of eS&OP as a Strategic Imperative

• Integrated performance measurements that align with desired performance – Including Compensation Incentives

Top Management’s Role

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Routinely Raising Disagreement

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Revenue)

Product Dev.(New Product Issues)

President

In an authentic eS&OP process, it is not OK to disagree, it is necessary to disagree.

Disagree without being disagreeable *

Putting the Moose on the table. * Everett Dirksen

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Top Management’s Role (in part) . . .

Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that . . .

They can completely and effectively resolve disagreements and conflict, setting proper:−Policy−Strategy−Risk assessment−Performance measurements

Before it’s in the MIX Space!

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Leadership’s Role

During Change Lead educational process Manage cultural changes Assure proper resources Immerse themselves in the detail Approve procedures Insist on clear targets (goals) Participate Measure progress

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Leadership’s Role

Ongoing Insist on meaningful participation Insist proper homework be done Remove themselves from the detail Clearly raise and resolve disagreement and

conflict Make clear decisions Hold people accountable (process and results) Encourage and expect realistic improvement

Lead management development

Measure performance

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Corporate Role . . .

Mandate the fundamental concepts and principles of executive S&OP *

Demonstrate a willingness to “put the moose” on the table

Assure resources to develop necessary and appropriate tools; that may vary SBU by SBU

Measure progress – development and process discipline

Help address cultural and performance measurement issues

Reward success* S&OP Principles: The Foundation for Success

Robert A. Stahl and Thomas F. Wallace Foresight Journal Fall 2012

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Questions for Personal Reflection & Discussion

Do you have an environment where disagreement can be openly and thoroughly discussed and debated, regardless of “rank”?

Do all participants have the opportunity to engage in the debate?

Do you have clear lines of accountability when collegial, cross-functional, collaborative, consensus building results can not be achieved?

Raising and Resolving Disagreement

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Raising Disagreement

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Revenue)

Product Dev.(New Product Issues)

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Conflict Resolution * . . .

Disagreement has two parts:−Substantive issue−Emotion behind that issue

Disagreement becomes conflict when the emotional is not completely addressed

Lasting conflict resolution must deal with BOTH elements of disagreement

Doing that effectively can be learned:−With a motive to do so and−A framework on which to work * “Getting to Resolution”

Stewart Levine, JD

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Keeping the Herd Moving Roughly West

. . . is more

Cultural and Behavioral than Technical

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Culture . . . Is a “fuzzy” word

Here’s a more focused understanding:

Interpersonal relationships reflect the culture of an organization. The sum of those relationships is the culture! These relationships reflect a web of implicit and explicit agreements that are the organization (process).

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Research Reports * . . .

Success with Executive S&OP is:

60% = Culture/Behavior Change

30% = Process Definition &

Discipline

10% = Technology

* Altimiter/AMRBoston, Sept 2010

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A Truth . . .

If you align

human energy

an organization can do things not before

possible.

How to Engage Top Management

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The Top Management ‘Catch 22’ . . .

Getting Top Management involved from the start:

If you DON’T – you won’t address the cultural or behavioral changes

If you DO – they realize that success does not come from doing what they do better, but from doing things differently to be better

That translates to personal and/or organizational discomfort and risk for those in charge

* Overcoming the "Catch 22" of Implementationby Robert A. Stahl and Joseph F. Shedlawski

Foresight Journal Spring 2012

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How to Engage Top Management?

Identify and enlist an Executive Champion; someone with executive influence, willing to put skin in the game

Connect the hard benefits of executive S&OP to successful implementation

Mitigate risk – path of low risk/low cost Quick results to build confidence – 90 Days

Feedback on progress/success Generate local ownership and enthusiasm

Successful Implementation Steps

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Uninformed (before Go/No-go #1)

Boss: “Okay, let’s do an Executive Briefing”

Semi-informed (after Briefing: Go/No-go #1)

Staff: “Okay, let’s do a Live Pilot Demonstration”

Fully informed (after Pilot: Go/No-go #2)

Staff: “Okay, let’s go to full cutover.”

LowRisk

LowRisk

How to do that . . . Mitigate RISK

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Implementation Path

1 2 3 4 5 6 7 8 9Months

Bu

sin

ess

Imp

rovem

en

t

Phase IPhase IPilot Demo

Phase IIPhase IIExpansion

Live PilotDemonstrationGo/No-Go #2

Phase IIIPhase IIIFinancial

Integration

ExecutiveBriefing

Go/No-Go #1

KickoffSession

Low CostLow RiskHigh ImpactQuick Results

Low CostLow RiskHigh ImpactQuick Results

Questions & Answers

Closing

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Closing Thoughts

1. DISAGREE WITHOUT BEING DISAGREEABLE

2. ONE SET OF NUMBERS

3. HARD BENEFITS: CUSTOMER SERVICE, PLANT PRODUCTIVITY, INVENTORY, CUSTOMER ORDER LEAD TIMES, TIME TO LAUNCH NEW PRODUCT, ETC.

4. SOFT BENEFITS: ENHANCED TEAMWORK, IMPROVED COMMUNICATIONS, BETTER DECISIONS & FINANCIAL PLANS, GREATER ACCOUNTABILITY, WINDOW INTO THE FUTURE, AND ONE MORE . . .

5. ENERGY ALIGNMENT

6. TRANSFORMATIONAL

THE BEST BENEFIT?

Accomplishment

Bob Stahl508-226-0477

RStahlSr@aol.com

Tom Wallace 513-722-6105

wallacetf@gmail.com

Thanks For listening

& Good Luck