Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Sales & Operations Planning & Analysis 2011Sales & Operations Alignment
Tuesday, April 19, 2011Hotel “W” City Center
Chicago, IL
Jim BielManagement Consultant
E-Mail: [email protected]: 847.687.5379
http://www.linkedin.com/in/jimbiel
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Who I Am – Jim Biel
• 20 Years Multi-Functional Experience, Concentrated in CPG Industry (Sara Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B
• Experience in Business Forecasting, Sales Operations & Planning, S&OP, Sales Systems, ERP, CRM, Demand Planning, Business Information Management, Supply Chain, Trade Promotion Management, IT, HR, Training & Development, and Finance (Corporate & Public Accounting, CPA)
• Core understanding of multiple supply chains – frozen, fresh, cold, dry, liquid
• Independent Management Consulting for large and small entities
• Client Services position with a SaaS (software as a service) provider of trade promotion software (Adesso Solutions)
• Practiced public accounting for 4+ years – McGladrey; Corporate Finance FP&A Roles
• Adept at integrating relevant business concepts and processes with enterprise-wide systems, a strong business process understanding and acumen including S&OP (boot strap and retrofit S&OP implementations)
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Polling the Room
• Function• Industry• Interest• Experience with S&OP• Desired Outcome with S&OP• Your Burning Question About
S&OP Alignment
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Presentation Flow
• Presentation of Concepts• Interactive As We Go – Brief Discussion / QA – Concept
by Concept – Share What We All Know• Fuller QA at End• Welcome / Encourage Contact After Presentation – E-
Mail, Phone, LinkedIn (Take a Business Card)• Will Be Available After to Talk 1-on-1• Lunch• Presentation Available – E-Mail Me and Posted to My
LinkedIn Profile
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Overview of Discussion Topics
• Results Through Integration & Performance Management
• Cross Functional Alignment Through Effective Communication
• Accountability Systems For Internal Stakeholders
• Alignment Between Corporate Strategy and Operational Execution
• Methodological Approach Measuring, Managing, and Executing Strategies
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Closing Remarks(Now & Later, Too)
• Key Learnings From My Experience– The Concept is Easy
– The Initial Buy-In is Fairly Easy
– The Change Mgt Required Can Be Hard• New Process• New Technologies / Systems• New Accountabilities / Roles• Traditional Functional Ownership Dies Hard – Silos• Transparency Hard For Some to Swallow
– Consistency & Month-to-Month Execution is Hard
– Leader Needs to Keep Functional Leads Feet to the Fire
– May Need a Process Coach
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
“Connecting the Knobs”(Why Integration is Important)
• “Before we had Executive S&OP in the Company, I Spent A Lot of Time Turning Knobs That Weren’t Connected To Anything”
– VP & GM Quote From Tom Wallace’s Book, Sales & Operations Planning, The Executive’s GuidePage 24
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Alignment/Integration Defined• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)
• Integrate All Available Data (Internal & External)
• One Forecast (Used by All Functions * )
• An Integrated Business Management Model• Buy-In, Accountability, & Trust• Transparency
* With Some Caveats
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
One Forecast Caveat(Linkage – S&OP to Other Plans)
Latest Est / Frcst
S&OP
Business Plan
Demand Plan
SupplyPlan Financial
StrategicTarget /
Intent
StrategicPlan
Demand Plan
SupplyPlan Financial Annual
Plan
Demand Plan
SupplyPlan Financial Interim
Forecasts
Future Execution/ Forecast
FinancialSupplyPlan
Demand Plan
Use S&OPAs a GutCheck
Use S&OPAs Key
Input / Core, Plus Risks/Ops
Use S&OPAs Key
Input / Core, Plus Risks/Ops
Future ExecutionForecast / Details, Active Risk / Ops
Discussion
S&OP Outputs Validate, Supports Other Planning Processes
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Results Through Integration & Performance Management
• Desired Results– Positive P&L Impact
• Increased Revenue• Reduction / Stabilization of Costs• Supply Chain Conversion Costs• Procurement Costs & Efficiencies
– Working Capital Management• Inventory: Finished, Raw Materials (Cash is King)
– Productivity / Value with Process• Planning / Forecasting Processes• New Product Launches (Cycle Time, Success)
– Decision Making Improvements• Speed• Quality
• Integration– Various Functions: Leadership - Demand - Supply - Finance– Integrated, Consistent, Efficient Forecasting & Management Process
• Performance Management– P& L Targets– Working Capital Targets (Forecast Accuracy Drives Inventory Levels)– Service Level Targets– Productivity Improvements– Decision Making Improvements
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Connection – Integration, Performance Management (Metrics), Results
INTEGRATION
Leadership(Strategic Direction)
Demand FeedsSupply; Balancing
(Ops Execution, Future Forecast)
Finance($ Scorekeeper, Forward Looking
Economic Advisor)
Leadership(S&OP Process Owner)
DESIRED RESULTSPositive P&L Outcomes
Positive Working Capital OutcomesProductivity Improvements
Decision Making ImprovementsCustomer Service Levels
PERFORMANCE METRICSRevenue, Cost Targets
Forecast AccuracyWorking Capital Targets
New Product Launch SuccessCycle Time / Quality - Processes
Service Level Targets
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Cross Functional Alignment / Effective Communication
Provides P&L Proformas & Risk / Opportunity Assessment
Counsel, Input, Risk Assessment, Pro-Formas of Future Forecasts
Economic Oversight / Counsel
Finance
Daily, Weekly Interaction with Demand & Finance; Owns Monthly Supply Component of S&OP
Owns the Fulfillment of the Demand Forecast at Least Cost (Balancing with Demand Planning)
Demand Fulfillment, Least Cost
Supply > Finished> Raw
Daily, Weekly Interaction with Supply & Finance; Owns Monthly Demand Component of S&OP
Owns the Demand Forecast; Accountable for Excess Inventory Generated by a Forecast Miss
Translates Strategy intoDemand Generation; Dem Planning Reports to a Demand Leader;Unconstrained Demand
Demand > Sales> Marketing
Owns Monthly S&OP Meeting; Consulted Daily/Weekly as Needed (Exception)
Owns the Overall Process – The Process Owner
Strategic DirectionGeneral ManagerCommunicationS&OP RoleBusiness RoleFunctional Role
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Cross Functional Alignment / Effective Communication – The S&OP Flow
Demand
SupplyDaily
WeeklyMonthly
Balancing
FinanceGenerates Proformas,Cost, Risk /
Ops Monthly;As Needed In
Interim
Utilize DemandOutputs as BasisFor Forecasts,Annual Plans,
Strategic Plans, Add Risks / Opps /
Other Lifts / Discount Factors
As Needed
GMControls Monthly
S&OP
+ Results+ Metrics Review+ Var to Bus Pl+ Future Frcst+ Assumptions
+ Bulk of Meeting:Gaps, Opps in
Future Frcst
+ Create Business Rules (Between Demand/Supply)+ Forecast Time Fence: Rolling 12-24-36 Months+ Functional Leads & Leader Participate in Monthly S&OP Review
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Cross Functional Alignment / Effective Communication – The S&OP Communication Flow
Owns Financial Component
Consulted As Needed
Consulted As Needed
Finance
Owns Supply Component
Active w/ Demand Planning
Active w/ Demand Planning
Supply Planning
Owns Demand Component
Active w/ Supply Planning; Sales;
Marketing;Customers
Active w/ Supply Planning; Sales;
Marketing; Customers
Demand Planning
Owns the Meeting
RarelyRarelyGMMonthlyWeeklyDailyRole
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Accountability Systems For Internal Stakeholders
• Metrics – Common– 5 Basic Metrics:
• Forecast Accuracy (Demand Owner)• Perfect Orders (Cust Serv, Supply)• Revenue (Units & Mix)• Profitability (Mix, Margins, Costs)• Inventory (Demand Owner + Supply Owner)
– Simple Scorecard– Improvement From a Baseline
• Active Involvement By All Functions –– Accountability & Roles / Responsibilities
• Daily• Weekly• Monthly (Decisions Made + Follow-Up Assigned)
• Transparency Through Dynamic Communication Flow
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Alignment Between Corporate Strategy and Operational Execution
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Corporate Strategy Business Plan S&OP
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Revenue TargetsMargins
Working CapitalNew ProductsNew Markets
New CustomersNew ChannelsExit Strategies
Capital Investment
Strategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review
Amount of Detail (Increases through various processes)
> Working Backwards from S&OP, Provides Validation of Plan & Strategy> S&OP Focuses on Gap / Opportunity Assessment vs. Plan
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Methodological Approach Measuring, Managing, Executing Strategies
S&OP Meeting:MetricsBest FrcstAssumptionsNew ProductsGaps / OppsStrategic Issues
P&L Proforma with Gaps / Opps; Risks
Demand to Supply; Supply Back to Demand; Finance P&L w/ Risks / Opps
+ Demand Pre-Meeting+ Supply Pre-Meeting+ Capacitization
Monthly
If Needed, very rare
When needed, exception basis
Same as Above
Demand Planning:+ Same as
Above
Weekly
If Needed, very rare
When needed, exception basis
Dem Pl with System & Sources;Dem Pl w/ Supply –BalancingSupply Metrics
Demand Planning:+ Dem Planners+ Sales+ Marketing+ Customers+ Synd Data
Daily
GMFinanceTypical Interactions
ActivityFrequency
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Methodological Approach Measuring, Managing, Executing StrategiesS&OP Time Fences
Short-Term
(1-3 Months)
Mid-Term
(4-12 Months)
Long-Term
(13-36 Months)
DemandDem Pl – SKUs
All Demand Streams
Sales
Customers
Promotions
New Products
SupplyFulfillment
Cust Serv
Finished Goods
Supply Contracts
DemandDem Pl – Prod Fam
All Demand Streams
Marketing
Customers
Promotions
New Products
SupplyFulfillment
Finished Gds, Raw
Supply Contracts
Demand - StrategyDem Pl – Prod Fam
All Demand Streams
Marketing
Customers
Promotions
New Products
Supply - StrategyFulfillment & Sourcing
Ingred Contracts
Plant/Cap Network/Invest
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Methodological Approach Measuring, Managing, Executing StrategiesTool Box Needed to Execute
Systems of Record & Collaboration Tools- ERP System- Spreadsheets- Collaboration Tools - Purpose Built S&OP System Capability (i.e. SteelWedge)- Metrics Scorecard Capability
Need a well thought-out and efficient S&OP Reporting Toolto support Meetings and interactions
> Numbers> Metrics Reporting> Assumptions
Make your analysts “analysts” – not data and report generators
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Alignment/Integration Defined• One Integrated Process (Process)• People/Functional Alignment (People)• One Common Set of Metrics (Performance)• One System of Record (Platform)• All Demand Streams (Demand Supply)
• Integrate All Available Data (Internal & External)
• One Forecast (Used by All Functions * )
• An Integrated Business Management Model• Buy-In, Accountability, & Trust• Transparency
* With Some Caveats
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Closing Remarks
• Key Learnings From My Experience– The Concept is Easy
– The Initial Buy-In is Fairly Easy
– The Change Mgt Required Can Be Hard• New Process• New Technologies / Systems• New Accountabilities / Roles• Traditional Functional Ownership Dies Hard – Silos• Transparency Hard For Some to Swallow
– Consistency & Month-to-Month Execution is Hard
– Leader Needs to Keep Functional Leads Feet to the Fire
– May Need a Process Coach
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
Resources• A Book: Sales & Operations Planning, The
Executive’s Guide, Thomas Wallace & Robert A. Stahl
• “Sales & Operations Planning: Transformation From Tradition” White Paper, AMR Research, May, 2009
• “The Transformation to Demand-Driven Industry Leader” White Paper, Oracle/Demantra, September, 2006
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Jim Biel, Ph: 847.687.5379, E-Mail: [email protected], http://www.linkedin.com/in/jimbiel (April 19, 2011)
General QA & Closing
• Please ask now
• Ask After Session
• Or– Contact Me:
• Cell: 847.687.5379• E-Mail: [email protected]• Via LinkedIn: http://www.linkedin.com/in/jimbiel
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