s&op: the power of an organisation that beats with one heart
TRANSCRIPT
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S&OP/ IBP
The power of an organisation that beats with one heart
Monika Wates
Sales and Operations Manager
Goodyear Tyre and Rubber
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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
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Organisational Overview – Global Organisation
EMEA
ASIA
PACIFIC
NORTH
AMERICA
LATIN
AMERICA
GLOBAL S&OP
REGIONAL S&OP
COUNTRY CLUSTER S&OP
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Organisational Overview – SA/SSA Organisation
GOODYEAR SOUTH AFRICA CLUSTER
Multiple countries, multiple economies
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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
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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
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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
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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
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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.
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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
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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
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Facilitating the Change Management Process
Follow Oliver Wight’s FastTrack Methodology for Sales and Operations Planning/Integrated Business Planning
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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
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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
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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
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Monthly S&OP Cycle
Forecasting
Analytics
Customer
Collaboration
(Acc. Business
Planning)
2.
Unconstrained
Demand
Consensus
1. New Products/Technology
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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
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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
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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
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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
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VIDEO CLIP
Why focus on alignment to Strategy?
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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
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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
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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
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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
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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
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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?
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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
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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
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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
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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
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Our S&OP/IBP Journey
The journey of an organisation that now beats with one heart!
Video Clip
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