s&op as a driving force for sustainability of change and business transformation

Sales and Operations Planning Conference

Amsterdam, 2010/03/11

S&OP as a Driving Force for Sustainability of Change and Business Transformation

Amsterdam Supply Planning Conference – Planning at CCE AG 2009-01-29 v0.2.ppt

Seite 2

Success Factor Franchise System

The Coca-Cola Company (TCCC)

• Located in Atlanta, Georgia, USA• Franchiser• Brand and Trandmark owner of more than 400 beverage

brands• Responsible for Brand, Product and Package development• Supplier of beverage base / concentrate

Division/Region

• Represents TCCC in each country / region

• Franchiser• „Protects the bands“• Develops and runs national

marketing programs• Product and Package development

Regional Bottling Partners

• Holds bottler contract with TCCC• Franchisee• Right to produce TCCC Product and

Packages • Sells in a defined area• Independent Company• Marketing / Communication


Seite 3

Structure of the German Coca-Cola organization

Coca-Cola GmbH– German division of TCCC

Coca-Cola Erfrischungsgetränke –German Bottler

• Founded 1929 in Essen• National marketing programs and

strategies• Product and package development

• Bottling

• distribution

• sales & regional marketing


Seite 4

NESTEA ist eine Schutzmarke der Sociéte des Produits Nestlé S.A. (Schweiz).

• More than 450 brands worldwide with around 2,800 products

• Germany: Over 20 brands with over 70 products in all nonalcoholic beverage categories

• Package portfolio designed to meet requirements from 200 ml for immediate consumption to the 2.25-liter family package

Products in all nonalcoholic beverage segments

http://www.ko-datenbank.de/cgi-bin/PromisPicture.dll?ProductGroups?P=2994a388-5a8c-4a1a-a2b6-e3168e2cf9c3&WGRID=46&NoSearch=1

http://www.ko-datenbank.de/cgi-bin/PromisPicture.dll?ProductGroups?P=33c5d2b3-be5a-4d7f-807a-1fe851e91d48&WGRID=1195&NoSearch=1

http://www.ko-datenbank.de/cgi-bin/PromisPicture.dll?ProductOverview?P=33c5d2b3-be5a-4d7f-807a-1fe851e91d48&WGRID=94


Seite 5

200 ml refillable glass contour

bottle

330 ml nonrefillable PET bottle

500 ml refillable PET bottle

1.0 l refillable PET

bottle

1.5 l refillable PET

bottle

500 ml refillable glass

bottle

330 ml refillable

glass bottle

1.25 lnonrefillablePET bottle

500 ml non-refillable

sports bottle

1.0 l non-refillable PET bottle

330 ml can 1.5 l non-refillable Pet bottle

500 ml non-refillable Tetra Pack

500 ml nonrefillablePET bottle

Tailor-made package portfolio

0.7 l refillable glass

bottle

2.0 lnonrefillablePET bottle


Seite 6

towards a

total beverage company

focus Customer First


Seite 7

German Customer, Sales, Production and Distribution landscape

130 tsd. Customer Ship To’s

serviced by

One national sales company

(National Key Accounts) and

10 Sales Centers

with

500+ SKU’s

350 mil ph. Cases shipped

from

60 warehouses and

25 plants with 73 production lines


Seite 8

Agenda

S&OP as a Driving Force for Sustainability of Change and

Business Transformation

Differentiating and integrating strategic, tactical and operational planning

Key prerequisites (process, people, technology) and the impact on

organization

Deployment strategies and options

Multi-level organization requiring national, regional and local S&OP routines

Critical success factors to ensure sustainability and ongoing improvements


Seite 9

Integrated Demand & Supply Planning – Why?

Streamline & ensure effectiveness of planning efforts between all functions Marketing, Sales (national & local), Logistics, Production, Purchasing & Finance

Work with „One set of numbers“ for volume planning

Improve Customer Service• Higher product availability

• Perfect Order ( DIFOTAI )• Improved response time• Increase visibility of resource requirements• Proactive customer management

We want to

Gain Economic Impact• Reduced Capital Need … Cost• Reduced OOS • Reduced Write Offs

• Reduced Freight Cost• Less Warehouse space needed

We expect to

Enable CCEAG to handle signif. increase of new SKU’s• Innovations eg. Juice, RTD Coffee, Glaceau, etc.

• Launches

• Customer specific SKU’s• Promotions / Displays / Secondary Placements

We need to


Seite 10

Strategic

1- 5 yrs

Sourcing Strategy

and Infrastructure (Plants,Lines, Warehouses)

National / Regional

by Package Groups

Marketing – Sales –

Supply Chain –

Finance

Strategic, tactical and operational planning…

Operational

1 – 13 weeks

Inventory-,

Master Production-,

Transportation- and

Material-Planning

Nat. – reg. – local

by all SKU’s


Supply Chain –

Finance

Tactical

3 – 12 months

Sourcing Matrix(Which articles produced

on which line for which

warehouse and which

customers)


by Main Packages


Supply Chain –

Finance

Horizon

Main Target

Details

Participation


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Strategic

1- 5 yrs

Sourcing Strategy

and Infrastructure (Plants,Lines, Warehouses)

National / Regional

by Package Groups


Supply Chain –

Finance

Operational

1 – 13 weeks

Inventory-,

Master Production-,

Transportation- and

Material-Planning


by all SKU’s


Supply Chain –

Finance

Tactical

3 – 12 months

Sourcing Matrix(Which articles produced

on which line for which

warehouse and which

customers)


by Main Packages


Supply Chain –

Finance

Horizon

Main Target

Details

Participation

… integrated by Sales & Operations Meeting Routines …

Sales & Operations Meeting Routines


Seite 12

Demand Planning

Supply Planning

regional weekly

regional monthly

National monthly

Reduced OOS / ensure availability ++ ++ ++ ++ ++

Reduced Inventory level ++ ++ ++ +

Reduced Write Offs ++ + + ++

Freight Cost - reduced matrix dev. + ++ ++ +

Production: optimized Lot Size + ++ ++ +

Impact of

on

Processes Sales & Operation Pl. Routines

Basic function

Advanced tool

(+) ++

+ ++

+ ++

(+) ++

(+) ++

Tool

… are driving customer satisfaction and economic value !!!

++ Significant Impact

+ Certain Impact

Neutral

• Aligned and effective launches / innovations

• Ability to run large promotions effectively

• Increased visibility of resource requirements

Proactive customer management

++ ++ ++


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Agenda





organization





Seite 14

The three Pillars for Success

Processes People Technology

Organization


Seite 15


Organization

Robust processes are the main prerequisite …

• Processes need to be aligned with operational business needs

• Review of best practice, internal and external benchmarks

• Align to one standard for the entire organization (functional as well as national-regional-local)

• Agree to clear definition of - Planning Process- S&OP Meeting routines- KBI’s

• Document on different levels of detail


Seite 16


Organization

… but the right people are also needed …

• People are key:

• get the right skill set and

• achieve sufficient motivation

• Training, training, training of

• Planners and

• Management

Good understanding of value drivers, standard processes and tools


Seite 17


Organization

… supported by adequate tools …

• Systems need to support and meet operational business needs

• Start with intermediate tools – introduce advanced planning tools later

• Ensure

• Master Data are clean

• Transparency is available

• Methods and logic are understood

• Statistical methods provide additional value

• KBI’s are accurate, flexible and timely available


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Organization

… and based on the appropriate organization

• Define clear, understandable role-sort:

• National – Regional – Local

• Funding of resources needed

• Cross-functional alignment

• Reporting lines – matrix management

• Get commitment of management to actively participate in S&OP meeting routines


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Agenda





organization





Seite 20

Demand & Supply Planning elements …

Financial Planning

(RE)

New Procucts/ Packages

Demand Planning and Forecast

per SKU / Customer/ Channel=> per Warehouse

MaterialPlanning

DetailledProductionPlanning

Demand Planning Supply Planning

Sales & Operations Planning Routinelocal – regional – national

Production-execution

Execution: Dispatching / Transport

Distribution Customer

MasterProduction Pl. per SKU & Line

Master Transport Planning

Inventory Pl. per SKU & Warehouse

Planning

Planning vs. Execution

Execution


Seite 21

… can be implemented in different approaches

Functional Scope

all elements element byat once element

or

certain setof elements

• Complexity of processes in place• Benefits to gain• Interests of stakeholders• Resources available

Regional Scope

across the location bywhole org. location

or

region byregion

• Complexity / diversity of regions• Resources available (project/planners/ cosutltancy)• Expected speed of implementation

Need to be combined in a pragmatic manner!


Seite 22

Agenda





organization





Seite 23 Confidential

Implement integrated Demand- & Supply Planning

processes (process, people & technology) across Germany

Supply Planning

Demand Planning

SupplyDemand

BusinessStrategy

Sales & Operations Planning

Execution

Monitoring

Demand, Operations & Inventory Planning …


Seite 24

… supported by S&OP Meeting Routines

National 24 Plants - strategic planning (plants/lines/whs.) Senior Management level 60 Whs.’s - inventory guidelines Marketing – Sales – Supply

- sourcing matrix Chain – Finance - (de-) launches / new products- toll filling and import / export- review KBI’s

Regional 4-7 Plants - inventory planning level 10-15 Whs.’s - master production planning Regional Management

- master transport planning Sales – Logistics – - material planning Production – Finance - review KBI’s

Local Plant/Whs. - Executionlevel - Detailed scheduling &

Production Local Management - Inventory management & control- Transportation management

GuidanceSupport Escalation

of issues

GuidanceSupport Escalation

of issues

Level Scope Content Participants


Seite 25

Agenda





organization





Seite 26

1. Ensure consistent support of (Top) Management Support

2. Keep all stakeholders informed

3. Create sense of urgency

4. Build Business Case – Benefits for all involved parties (Customer -Sales – Logistics – Production – Financials)

5. Compose Project Team incl. Operational Staff

6. Define KBI’s and track continuously

Critical Success Factors - Lessons learned

Always keep in mind – it is a Journey

7. Define and align deployment strategy

8. Build “Show Case”

9. Focus on process definition and people (training, training, training)

10.Ensure access to solid, reliable base data for planning and a understandable tool for support

11.Define the path to get and build advanced planning system

12.Regular Review

The 12 Factors