20080410 bjelliott planning capacity and responding to · pdf file© oliver wight 2...

Planning Capacity andResponding to Change

© Oliver Wight

Barry Elliott

Agenda

�Background

�The Journey to Business Excellence

© Oliver Wight 2

�Integrated Business Management

�How to Deliver and Sustain Outstanding Business Performance

The approach is different

�The focus is on integration

�The approach is to:

�firstly, educate people and develop internal expertise

© Oliver Wight 3

expertise

�secondly, develop appropriate processes and behaviours

�The results are great sustainable benefits in any industry

Background

© Oliver Wight

Background

Defining what we mean by “Excellence”

� We “wrote the book”, figuratively and literally

� An excellent reference for how best to design and implement Integrated Business Management

� “Library” of hundreds of processes

� Nine Chapters, which we will discuss

© Oliver Wight

� Nine Chapters, which we will discuss

In more detail...

The nine chapters of the Checklist are the following:

1. Strategic Planning

2. Managing and Leading People

3. Continuous Improvement

4. Integrated Business Management

© Oliver Wight

4. Integrated Business Management

5. Product Management

6. Demand Management

7. Supply Chain Management

8. Internal Supply Management

9. External Supply Management

Focusing on where will be most beneficial

� Tackling the entire Checklist at once is not practical for any organisation

� Therefore, we have defined several “Milestones” to structure the appropriate approaches, depending on where focus should lie at various stages of development

© Oliver Wight

development

© Oliver Wight

Class ‘A’ Checklist Sixth EditionCapable Planning & Control Milestone

STRATEGIC PLANNING PROCESS (3)

1.3 Mission & Vision (a)

1.5 Strategic Planning (b,c)

1.11 Business Planning (a,b,d)

PEOPLE (4)

2.13 Leadership for change (a)

2.1 Trust (e)

2.7 People Dev+ Edn. & Training Supplement2.9 Communication (a,b,e)

DRIVING BUS IMPROVEMENT (6)

3.5 Ownership & Accountability

3.6 Ownership & Improvement

3.7 Continuous Improvement

3.8 Framework for sustained improvement

3.21 Coy Perf Measures –balanced & integrated

3.22 Velocity (a)

INTEGRATED BUSINESS MANAGEMENT (5)

4.1 Process designed (a,b,d)

4.2 Integration

4.3 Characteristics

4.9 Financial projections

4.16 Financial integration (definition + a,b,d)

MANAGING PRODUCTS & SERVICES (4)

5.3 Integration

5.4 Day to day process integration

5.9 New Product Master Plan

5.10 Project Planning (a,b)

8.14 Housekeeping & Organisation (d)

8-BPM1 Customer Service OTIF to Promise

8-BPM2 Aggregate Supply Plan (Production Plan Performance)

7.7e. Master Schedule Performance - applied to Supply Point (95%)

8.9 (a) Manufacturing Schedule Performance (95%)

8.9 (d) Supplier Delivery Performance (95%)

8.11(a) Item Master & Supporting Data Accuracy (95%) + 7.13d

8.11(b) Bill of Material Structure & Accuracy

(98%) + 7.13d

8.11(c) Routing Structure & Accuracy

( 95%) + 7.13d

8.11 (e) Work Location Record Accuracy

(95%)+ 7.13d

8.11 (f) Inventory Record Accuracy (95%) + 7.9 (b,c)

8.17 Behaviours demonstrate excellence characteristics

8.18 Behaviours demonstrate excellence characteristics

MANAGING EXTERNAL SOURCING (2)

9.4 Supplier capability (a,c)

9.13 Supplier Relationships (a,c,d)

MANAGING DEMAND (9)

6.10 Unconstrained demand planning

6.11 Process for multiple views

6.13 Demand Manager

6.14 Sales plans

6.16 Demand constraining

6.17Customer promising/satisfaction

6.18 Demand management

6.19 Demand Controller

6-BPM1 Aggregate Demand Plan

(Sales Plan Performance)

SUPPLY CHAIN MANAGEMENT (2)

7.13 Data Mgmt [definition + a,b,c,d at 95%]

7.10 Distribution & Logistics Planning

INTERNAL SUPPLY (20)

8.3 Integration: Integrated Business Management

8.5 Master Supply Planning Process

+ Master Scheduling Supplement8.6 Capable People

8.7 Material Requirements Planning (a,b,c,d)

+ Material Planning & Control Supplement 8.7e/8.9d Supplier Planning & Control

+ Supplier Planning & Control Supplement 8.8 Capability Planning & Scheduling

+ Capacity Planning & Control Supplement 8.9 Executing the schedule (b,c,)

+ Production Planning & Control Supplement 55 elements to scoreRequire avg 3.5 /5

Class ‘A’ Checklist Sixth Edition Revision 6

Capable Planning & Control Milestone


1.3 Mission & Vision (a) [3.0]

1.5 Strategic Planning (bc) [3.0]

1.11 Business Planning (abd) [3.5]

PEOPLE (4)

2.1 Trust (e) [3.0]

2.7 People Development (+ topic f *) [3.5]

2.9 Communication [3.0]

2.13 Leadership for change (a) [3.5]


3.5 Ownership & Accountability [3.0]

8-20 Customer Service OTIF to Promise (95%) [3.5]

8-21 Aggregate Supply Plan Performance [3.5]

8.22 Master Schedule Performance (95%) [3.5]

8.23 Manufacturing Schedule Performance (95%) [3.5]

8.24 Supplier Delivery Performance (95%) [3.5]

8.25 Item Master & Supporting Data Accuracy (95%) [3.5]

8.26 Bill of Material Structure & Accuracy (98%) [3.5]

8.27 Routing Structure & Accuracy( 95%) [3.5]

8.28 Work Location Record Accuracy (95%) [3.5]

8.29 Inventory Record Accuracy (95%) [3.5]


MANAGING DEMAND (9)

6.10 Unconstrained demand planning [3.5]

6.11 Process for multiple views [3.5]

6.13 Demand Manager [3.5]

6.14 Sales plans [3.0]

6.16 Demand constraining [3.5]

6.17 Customer promising/satisfaction [3.5]

6.18 Demand management [3.5]

6.19 Demand Controller [3.5]

6.23 Aggregate Demand Plan Performance [3.5]

SUPPLY CHAIN MANAGEMENT (2)

7.10 Distribution & Logistics Planning [3.0]

7.13 Data Mgmt (95%) [3.5]

© Oliver Wight D-W-L Notes 8

3.6 Ownership & Improvement [3.0]

3.7 Continuous Improvement [3.0]

3.8 Framework for sustained improvement [3.0]

3.21 Performance Measures – balanced & integrated [3.0]

3.22 Velocity (a) [3.0]


4.1 Process designed [3.5]

4.2 Integration [3.5]

4.3 Characteristics [3.5]

4.9 Financial projections [3.0]

4.16 Financial integration (abd) [3.0]

MANAGING PRODUUCTS & SERVICES (4)


5.4 Day to day process integration [3.0]

5.9 New Product Master Plan [3.0]

5.10 Project Planning (ab) [3.0]


9.4 Supplier capability (ac) [3.5]

9.13 Supplier Relationships (acd) [3.0]INTERNAL SUPPLY (20)

8.3 Integration: Integrated Business Management [3.5]

8.5 Master Supply Planning Process (+ h*) [3.5]

8.6 Capable People [3.5]

8.7 Material Requirements Planning (abcd + f *) [3.5]

8.8 Capability Planning & Scheduling (+ f *) [3.5]

8.9 Executing the schedule (bc + e*) [3.5]

8.14 Housekeeping & Organisation (d) [3.0]

8.17 Behavioural characteristics [3.0]

8.18 Planning behaviour characteristics [3.5]

8.19 Supplier Planning & Control (+ c*) [3.5]

55 definitions to score35 Drivers @ minimum score 3.520 Support @ minimum score 3.0

* Signifies a supplementary topic

NB: Original is a controlled Slide

Class ‘A’ Checklist Sixth Edition Revision 1

Capable Planning & Control Milestone for Distribution & Logistics


1.3 Mission & Vision (a) [3.0]

1.5 Strategic Planning (bc) [3.0]

1.11 Business Planning (abd) [3.5]

PEOPLE (4)

2.1 Trust (e) [3.0]

2.7 People Development (+ topic f *) [3.5]

2.9 Communication [3.0]

2.13 Leadership for change (a) [3.5]



INTERNAL SUPPLY (11)8.5 Master Supply Planning Process [3.5]8.6 Capable People [3.5]8.7 Material Requirements Planning (abcd) [3.5]8.8 Capability Planning & Scheduling (abde) [3.5]8.9 Executing the schedule (bc) [3.5]8.14 Housekeeping & Organisation (d) [3.0]8.17 Behavioural characteristics [3.0]8.18 Planning behaviour characteristics [3.5]8.19 Supplier Planning & Control [3.5]

8.24 Supplier Delivery Performance (95%) [3.5]

8.25 Item Master & Supporting Data Accuracy (95%) [3.5]

MANAGING DEMAND (8)

6.9 Collaboration with customers (ade) [3.5]

6.10 Unconstrained demand planning [3.5]

6.13 Demand Manager [3.5]

6.14 Sales plans [3.0]

6.16 Demand constraining [3.5]

6.17 Customer promising/satisfaction [3.5]

6.18 Demand management [3.5]

6.19 Demand Controller [3.5]

SUPPLY CHAIN MANAGEMENT (14)7.3 Integration through Integrated Business

Management [3.5]7.9 Inventory Accuracy Control (+d,e*) [4.0]7.10 Distribution & Logistics Planning (+f*) [3.5]

© Oliver Wight D-W-L Notes 9


3.6 Ownership & Improvement [3.0]

3.7 Continuous Improvement [3.0]

3.8 Framework for sustained improvement [3.0]

3.21 Performance Measures – balanced & integrated [3.0]

3.22 Velocity (a) [3.0]


4.1 Process designed [3.5]


4.3 Characteristics [3.5]

4.9 Financial projections [3.0]

4.16 Financial integration (abd) [3.0]

MANAGING PRODUUCTS & SERVICES (2)

5.4 Day to day process integration (bd) [3.0]

5.10 Project Planning (ab) [3.0]


9.4 Supplier capability (ac) [3.5]

9.13 Supplier Relationships (acdf) [3.0]

7.10 Distribution & Logistics Planning (+f*) [3.5]

7.13 Data Mgmt (95%) [3.5]

7.20 Inventory management process [3.5]7.21 Inbound process control [3.5]7.22 Outbound process control [3.5]7.23 Returns process control [3.5]7.24 Stock definition record accuracy [4.0]7.25 Shipping Schedule Performance [3.5]7.26 Aggregate Distribution Plan Performance [3.5]7-27 Customer Service OTIF to Promise 95% [3.5]7-28 Inventory Levels (turns) [3.5]7.29 Total Delivered Cost [3.5]

55 definitions to score2 Drivers @ minimum score 4.035 Drivers @ minimum score 3.518 Support @ minimum score 3.0

* Signifies a supplementary topic

NB: Original is a controlled Slide

The Philosophy

�People are the key to success

�Education drives behavioural change

�Create internal experts

�Develop multi-disciplined teams

�Improve business to World-Class / Best Practice �Improve business to World-Class / Best Practice levels

�Formal environment

�Consistent processes, clear responsibilities and accountabilities

�Continuously improve

�Deliver sustainable results through integration

© Oliver Wight 10

The Journey to Business Excellence

© Oliver Wight

Business Excellence

© Oliver Wight 11

Integrating the Business - Maturity

© Oliver Wight

Integrating the Business - Prioritising

One agenda Working together to

solve problemsConsistent working

Designing for our processes

Driving out defects in all

Automationand business integration

andset of

numbers

© Oliver Wight 13

With Education and Training at Every Step

Keeping to plan across the Business

True cost of work

Ownership and improvement

our processes defects in all processes

and business integration

OWI 0171-02

Integrating the Business - Prioritising

Sales andOperationsPlanning

Closed loop

Teamworking ISO 9000

ISO14000

Automationand business

© Oliver Wight

DFM/DFC

Supply/Demand/Project Management

Activitycosting

5S/TPM

Closed loopcontrol of allprocesses

and businessintegration

With Education and Training at Every Step

The Journey to Business Excellence

� All companies are on a journey to Performance Improvement but many do not recognise the journey or where they are on that journey or what to do next.

� One needs to understand the journey, how the techniques fit, when they should / shouldn’t be

© Oliver Wight 15

techniques fit, when they should / shouldn’t be deployed, and work through the multiple transitions showing how a business focus enables Performance Improvement.

� Enables upper quartile performance in any industry sector and hence become an industry leader. It also maps the way to becoming an upper decile business.

Integrating the Business - Maturity

The Maturity Journey

© Oliver Wight 16

© Oliver Wight

T121 1-0 OVE 11© Oliver Wight

Phase I

Phase II

The Maturity Journey Transitions on The Journey through Phases 1 & 2

Disconnected Management Processes •Informality and fire-fighting •Plagued by unplanned events

Foundations of Planning & Control•Data management•Understanding•Practices and Processes for Planning & Control in design and / or implementation for Supply, Demand, Product Management, S&OP and Financial Integration

Capable Planning & Control•Capable Planning & Control practices and standards attained across all processes•Co-ordination across the business and ‘one set of numbers’ secure through S&OP process•Educated workforce driving honesty and openness, ownership and accountability, realistic plans, data integrity, democracy in planning: autocracy in execution

•Business performance is 95% capable

Process Competence•Integrated Business Management drives rolling management, strategy deployment and directed business improvement. Upper quartile performance

•End-to-end process excellence – process thinking, streamlining and capability, process organisation, process measures - velocity, responsiveness, variability

•Managing the extended supply chain.

Process Excellence•Joined up processes, reliable, knowledge captured and failure free•Self managed teams•Responsive optimisation of the business in pursuit of business strategy•Upper decile performance

The Oliver Wight Journey to Class ‘A’

© Oliver Wight 17

Principle Objective of Integration

© Oliver Wight

Integrated Business Model

MANAGEMENT

BUSINESS REVIEW

DEMAND

STRATEGYBUSINESS PLANPERFORMANCE

SUPPLYREVIEW

PRODUCT MANAGEMENTREVIEW

© Oliver Wight

DEMANDMANAGEMENT

MARKETMANAGEMENT

SALESMANAGEMENT

DEMANDREVIEW

PROCUREMENTMANAGEMENT

PROCUREMENTMANAGEMENT

SUPPLIER

MANAGEMENT

SUPPLY POINT

MANAGEMENT

RESOURCEMANAGEMENT

PORTFOLIOMANAGEMENT

PROJECT MANAGEMENT

SUPPLY CHAIN

MANAGEMENT

How Do We Respond to Change ?

FUNCTIONAL PERSPECTIVE

� I “second guess” that plans may or may not happen

� I assess the impact this will have

© Oliver Wight IBMP1-20

� I assess the impact this will have

� I compensate for change based on what effect it will have on my function and it’s measures

� I take defensive action to protect my function

EAME 0207-02

Everyone has a view, takes different actions, no coordination

How Do We Respond to Change ?

BUSINESS PERSPECTIVE

�We have a process to identify change occurring in the business

�We ensure that we understand the change and its

© Oliver Wight IBMP1-21

�We ensure that we understand the change and its full business wide implications

�We enable cross-functional discussions and alternate planning

�We identify choices and recommendations to optimise the business

EAME 0208-01

Integrated BusinessManagement

© Oliver Wight

Management

© Oliver Wight 22

First Priority – A Company Must…

�Bring demand and supply in balance

�Understand impact of new products on demand and supply

© Oliver Wight

supply

If you don’t do these things first, your time will be

consumed dealing with the consequences of demand

and supply being out of balance.

There will be little time and energy to grow the business

Multiple Sets / Single / Integrated Set of Numbers

MULTIPLE SETS

UPSIDE

SINGLE INTEGRATED SET

© Oliver Wight 24

DOWNSIDE

GAP

Integration

STRATEGY / TACTICS / OPERATIONS

BUS. PLAN

STRATEGIC PLANNING

© Oliver Wight 25

TACTICAL PLANNING

OPERATIONAL PLANNING

BUS. PLAN S&OP

Source: Coldrick, Ling

� Brings together all the plans for the business (customers, sales, marketing, development, manufacturing, servicing & financial) into... integrated set of plans

� Monthly process

� Reviewed by management at an aggregate (product family) level

Integrated Business Management(Sales and Operations Planning)

aggregate (product family) level

� Reconciles supply, demand and new product plans at both detail and aggregate level and tied to the business plan

� Definitive statement of what the company plans to do for the near / intermediate term covering a horizon sufficient to:

� Plan cross-functional resources

� Support business planning

© Oliver Wight 26

STRATEGYBUSINESS PLAN

Integrated Business Management(Sales and Operations Planning)

MANAGEMENTBUSINESSREVIEW

© Oliver Wight 27

BUSINESS PLANPERFORMANCE

DEMANDREVIEW

SUPPLYREVIEW

PRODUCTMANAGEMENT

REVIEW

‘What if’Business Scenario Planning

Management needs to have the ability to evaluate

© Oliver Wight

Business Scenario Planning Management needs to have the ability to evaluate

the impact of changes to the plan

Management Business Review

SUMMARY BY FAMILY

MAJOR ASSUMPTIONS________________________________

MAJOR CHANGES ________________________________________________

MAJOR ASSUMPTIONS________________________________

MAJOR CHANGES ________________________________________________

Demand Supply InventoryBudget Current Plan Previous Plan Prior Year

SUMMARY BY FAMILY

MAJOR ASSUMPTIONS________________________________________________

MAJOR CHANGES ________________________________________________________________


MAJOR CHANGES ________________________________________________________________


KPI Dashboard

SUMMARY BY FAMILY


DECISIONS OUTSTANDING________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________


DECISIONS OUTSTANDING________________

MAJOR CHANGES ________________________________________________________________

DECISIONS MADE ________________________________


Total Number of Changes

Current Last Project

10

2030 40 50

60

70

Engineering

20

2530

35

40

Other


20

2530

35

40

Business Review

-8 -4 0 +4 +8


10

2030 40 50

60

70

20

2530

35

40

20

2530

35

40

-8 -4 0 +4 +8-8 -4 0 +4 +8

Current Goal

Current Plan FY9x

Plan Actual

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

Current

Margins

Revenue

Project Cost to Date

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

1st Pass Test Percent

ACTUAL

BUDGET

DEMAND PLAN

SUPPLY

ACTUAL

Weeks

0

20

40

60

80

100

O/T Delivery Performance

3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time Deliveries

A

B

C

Months

Customer's Rating

A

B

C

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY

PLANNED CAPACITY(DEMONSTRATED OUTPUT)

RESOURCE A

Total Number of Changes


10

2030 40 50

60

70

Engineering

20

2530

35

40

Other


20

2530

35

40

Business Review

-8 -4 0 +4 +8-8 -4 0 +4 +8


10

2030 40 50

60

70

20

2530

35

40

20

2530

35

40

-8 -4 0 +4 +8-8 -4 0 +4 +8

Current Goal

Current Plan FY9x

Plan Actual

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

Current

Margins

Revenue

Project Cost to Date

0

2550

75

100

10

1520

25

30

100

125150

175

200

100

125150

175

200

1st Pass Test Percent

ACTUAL

BUDGET

DEMAND PLAN

SUPPLY

ACTUAL

Weeks

0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time DeliveriesWeeks

0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time DeliveriesWeeks

0

20

40

60

80

100


3 1 3 2 0 0 0

7 7 12 6 8 6 11

#No. of Late Deliveries #No. of On-Time Deliveries

A

B

C

Months

Customer's Rating

A

B

C

A

B

C

Months

Customer's Rating

A

B

C

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY


RESOURCE A

STDHRSOR

UNITS

WEEKS

REQUIRED CAPACITY


RESOURCE A

Summary by Family� Business Trends – Demand, Supply & NPI� Change� Key Assumptions

Vulnerabilities / Opportunities

© Oliver Wight 29

________________________________

DECISIONS OUTSTANDING________________________________________________

RECOMMENDATIONS________________AND COSTS ________________

________________________________

________________________________

DECISIONS MADE ________________________________________________________________

VULNERABILITIES ________________________________________________________________

________________________________



________________________________

________________________________

DECISIONS MADE ________________________________________________________________




________________________________

DECISIONS MADE ________________________________________________________________




________________________________

DECISIONS MADE ________________________________________________________________


Alignment to Business Plans

Alignment to Strategy

________________________________________________


________________________________

________________________________________________


________________________________________________


________________________________

________________________________________________


Strategic Programme 1




























� Vulnerabilities / Opportunities� Financial Impact� Recommendation

The Maturity Journey -Example: Integrated Business Management

Mature Integrated Business Management•Drives responsive optimisation of the business in pursuit of business strategy• Continuous Reconciliation, managing gaps and alternative scenario planning

Integrated Business Management• Rolling business management process including gap analysis versus strategy and focus on competitive priorities

• Integrated Reconciliation is the driver: business analysis provides underlying understanding, drives improvement priorities and gap closing actions

• Process frequently reshapes to meet changing organisational structure•Used to deploy and drive the value proposition

Capable S&OP

© Oliver Wight IBMEP8-30

Capable S&OP• Process is established driving integrated operational and financial planning• Full suite of KPI’s to drive operational effectiveness, achieving 95%+ capability • Issues are identified and this is the decision making process• Annual budgeting process removed – S&OP numbers drive forward plans• Team working behaviours are demonstrated throughout the process

Foundation S&OP•All elements defined with correct accountability, KPI’s and structure• Focus is demand /supply tactical balancing• Initiate integrated supply chain KPI’s• Challenging behaviours but not yet team working

Disconnected Management Processes• Traditional management meeting focused on the past• Annual budgeting process with poor basis for forward projections • Functional/silo management – few/unaligned objectives & measures•Defensive functional behaviours

EAME 0183-09

Oliver Wight Class A

�All business processes integrated

�Integrated set of numbers

�Routine things happening routinely

�Planning ahead, preventing rather than correcting

© Oliver Wight 33

�Planning ahead, preventing rather than correcting

�Easier to deal with crisis when you are in control

�The whole is greater than the sumof the parts

Focus of Attention

Strategic

PlanBusiness

PlanS&OP

S&OP

Horizon Time Fence Topic

1 – 5 Years 3-4 Months Strategy

1-5 Months 1 Month TacticsSenior

Management

Managing

Director

Strategic

PlanBusiness

PlanS&OP

S&OP

© Oliver Wight 34

S&OP

& SCM

Demand &

Supply Mgmt

Execution

1-5 Months 1 Month Tactics

1-5 Weeks 1 WeekOperational Planning

1-5 Days - Scheduling

Management

Middle

Management

Team

Leaders

S&OP

& SCM

Demand &

Supply Mgmt

Execution

Business Performance Improvements

Class A Companies

20%

30%

40%

50%

60%

70%

80%

Class A

Companies17%

68%

29%24%

© Oliver Wight 35

0%

10%

20%

Customer

Service

Costs

Inventory

Perform

ance

Supplier

Delivery

Perform

ance

Continuous

Improvement

Activity

Companies17%

9%

Source: Benchmark Research Limited. Nov 1997

20080410 bjelliott planning capacity and responding to · pdf file© oliver wight 2...

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