S&OP/ IBP

The power of an organisation that beats with one heart

Monika Wates

Sales and Operations Manager

Goodyear Tyre and Rubber

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the current process is not working

Guidelines for effective Change Management

Process Overview

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

Organisational Overview – Global Organisation

EMEA

ASIA

PACIFIC

NORTH

AMERICA

LATIN

AMERICA

GLOBAL S&OP

REGIONAL S&OP

COUNTRY CLUSTER S&OP

Organisational Overview – SA/SSA Organisation

GOODYEAR SOUTH AFRICA CLUSTER

Multiple countries, multiple economies

Organisational Overview – Supply Chain Segmentation (Finished Goods)

Consumer

• Original Equipment

• Replacement SA

• Replacement SSA

• Exports to EU

Commercial

• Original Equipment

• Replacement SA

• Replacement SSA

• Retreading

OTR

• Replacement SA

• Replacement SSA

Product Business Units (PBUs)

� Passenger

� 4x4/SUV

� Light Truck

� Ultra Light Truck

� Truck

� Bus

� Ultra Large

� Small Radial

� Bias

Uitenhage Factory

Imports

Supply

Where we were in July 2012

Characteristic Typically Poor S&OP

Planning Horizon 3 to 12 months

Focus Next two months

Process Long meetings to review numbers

Language SKU & detail; units only

Outcome Production Plan Output (Demand Push)

Involvement Middle Management

Decisions Execution - short term

Scenario Capability No “what-if” capability

Financial Integration Ineffective

Contingency Planning Virtually non existent

Culture “But we have always done it this way”

Behaviour Very Reactive

No clearly visible link between strategy & execution

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

What were our options?

Poor S&OP

Theory of the Dead Horse (Adapted)

Potential Alternatives:

Keep hoping that the dead horse will

eventually deliver results

Keep whipping the dead horse

Appoint a committee to study the dead

horse

What we actually did?

We found a New Horse!

Acknowledgement

We cannot continue to do the same things and expect different results…

we must stop beating the dead horse.

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

IBP begins and ends with PEOPLE

The key to unlocking potential =

B - Process

C - Data

D - Software

Excellence in S&OP / IBP requires a CULTURE change

A- People

Facilitating the Change Management Process

Follow Oliver Wight’s FastTrack Methodology for Sales and Operations Planning/Integrated Business Planning

Change Management – Each Phase is critical!

Leadership Phase

• “As-Is” Assessment

• Exec Leadership Briefing

• Identify/Appoint cross functional “Core Team”

• Key Stakeholders – identify potential “blockers”

Development Phase (TOGETHER)

• Design “To-Be” Process

• Identify Owners and Facilitators for each step

• Clarify Roles and Responsibilities

• Change Manage “blockers” (effective communication is key)

Ownership Phase

• Implement the process

• Assess

• Improve

Cycle 1 onwards

Cycle -1 to 0

Cycle -2

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

S&OP/IBP Role in the Supply Chain

Co

nsu

me

rs

SuppliersSuppliers’

Supplier

End-to-End Supply Chain

Retailers

Independent

Retailers/

Wholesalers

Demand Planning

Supply Planning Supply Execution

S&OP

Manufacturer

Distribution

Centre

Demand Pull

Monthly S&OP Cycle

Forecasting

Analytics

Customer

Collaboration

(Acc. Business

Planning)

2.

Unconstrained

Demand

Consensus

1. New Products/Technology

Credible Demand Plan – the key to success

� The result:

� One Consensus Unconstrained

Forecast “One Team, One Goal”

� Recorded assumptions which can be

tracked and evaluated

Cross functional collaboration to sign-off a

50:50 (most feasible)

unconstrained demand plan

Independent views based on:

� Strategy

� Economics, industry and brands

� Customer collaboration

� Demand planner analytics & statistics

A- People

Monthly S&OP Cycle

Consensus

Demand

Supply

Response

Financial

Plan

Risk &

Opportunities

Forecasting

Analytics

Customer

Collaboration

(Acc. Business

Planning)

2.

Unconstrained

Demand

Consensus

Network &

Inventory

Planning

Supplier

Collaboration

3.

Constrained

Supply

Planning

4. Scenario

Analysis

“What-if”

4. Financial

Planning

Analysis

4. Demand-

Supply

Balancing

5. Executive

IBP/S&OP

Ro

ot

Ca

use

An

aly

sis

Closed-Loop Planning Cycle

1. New Products/Technology

People to support the 5 Step Process

New Projects Review

Demand Review & Sign-off

Supply Review

Pre S&OP

IBP/S&OP Review

Step Process Owner Process Facilitator

New Projects Review Marketing Director Product Manager

Demand Review Sales Director Demand Planning Manager

Supply Review Supply Chain Director Supply Chain Manager

Pre S&OP Finance Director S&OP Manager

IBP/S&OP Review Managing Director S&OP Manager

People

� Alignment to strategy

� Decision makers

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview – focusing on demand planning

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

VIDEO CLIP

Why focus on alignment to Strategy?

From Strategy to Execution

Finance

Executive

Leadership

Supply

(Production &

Logistics)

Demand

(Sales &

Marketing)

Demand ForecastDemand Forecast

Demand PlanDemand Plan

Capacity ForecastCapacity Forecast

Operational PlanOperational PlanS&OP

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview – focusing on demand planning

Strategic Alignment – “One Team One Goal”

KPI’s – you WILL get what you measure

Key Success Factors

What does good look like?Characteristic Typically Good S&OP Typically Poor

Planning Horizon 24 months rolling 3 to 12 months

Focus Months 4 plus Next two months

ProcessShorter meeting to align and make

decisionsLong meetings to review numbers

Language Product Segments/Families SKU & detail; units only

Outcome Gap Closing Strategies Production Plan Output

Involvement Executive & Middle Management Middle Management

Decisions Tactical & Strategic - long term Execution - short term

Scenario Capability Strong “what-if” focus No “what-if” capability

Financial Integration Aligned financial plans Ineffective

Contingency PlanningFocused on mitigating risk and

capitalising on opportunityVirtually non existent

Culture CONTINOUS IMPROVEMENT“But we have always done it this

way”

Behaviour PROACTIVE Very Reactive

Very clear link from strategy to execution

Key Performance Indicators

Financial Perspective

(How do we look to our shareholders?)

• EBIT

• Working Capital

• Cash Flow

• Inventory Turns

Internal Perspective

(At what must we excel?)

• S&OP Class A

• Sales Stability and Forecast Accuracy

• Finished Goods Inventory

• Non-Productive Inventory

• Production Schedule Attainment

• Source Reliability

Innovative Perspective

(Can we continue to innovate & improve?)

• Share of Market

• New Product Vitality

• Projects delivered on Time

Tips:� Provide a visible link to strategy

� Create a direct link to compensation

� Avoid strong internal focus (good S&OP is extrinsic)

� Check management incentive scheme

� You will get what you measure!!!

Customer Perspective

(How do we look to our customers?)

• Delivery Performance

• Customer Satisfaction

Content

Introduction – S&OP in a Matrix/Complex Organisations

Acknowledgement – the process is not working

Guidelines for effective Change Management

Process Overview – focusing on demand planning

Strategic Alignment – “One Team One Goal”

KPI’s – you get what you measure

Key Success Factors

Why +/- 18 months?

� The concepts of S&OP/IBP are relatively easy

� The initial buy-in is fairly easy

� The financial cost of implementation vs. benefit is low

� But implementation is often difficult / unsuccessful

Confused?

Why +/- 18 months?

“But we already have S&OP!”

S&OP has been around for years (since the ‘80s)

REALITY CHECK

1

“You want us to do WHAT?”

S&OP requires cross-functional collaboration

REALITY CHECK

2

PEOPLE take time to embrace change

Excellence in S&OP / IBP requires a CULTURE change

REALITY CHECK

3

Key Success Factors

Acknowledge

NEED FOR CHANGE

LEADERSHIP

Drive

Identify/Recruit/Source

CHANGE AGENT

� stop beating the dead horse

� Catalyst for change

� Leadership from the front

� Providing a clear link from strategy to execution

� Balanced metrics

Change Agent Characteristics

1. Charisma

2. Credibility – good track record

3. Organised, structured and pragmatic

4. Supply Chain practitioner - understands cross-function integration

5. No fear – will question status quo

6. Strong leadership qualities

7. Ability to “sell”

8. Logical and likes long term thinking – a visionary

Key Success Factors

NEED FOR CHANGE

acknowledgement

LEADERSHIP

Drive

Identify/Recruit/Source

CHANGE AGENT

Gain key stakeholders

BUY-IN

� Create a feeling of ownership “our process”

� Facilitate a solid process structure with “room” for

input and engagement

Focus initial energy on

robust Demand & Supply

Processes

� Check your talent in Demand/Supply Planning

� Elevate the status of the Demand Planner

� stop beating the dead horse

� Leadership from the front

� Providing a clear link from strategy to execution

� Balanced metrics

� Catalyst for change

Our S&OP/IBP Journey

The journey of an organisation that now beats with one heart!

Video Clip