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Improving Agility through S&OP Process


• Revenue Management• Sales and Operations Planning• Supplier Management• Corporate Social Responsibility

Agility and Alignment Improvement through Horizontal Processes


Supply Chain Insights

Definition of Agility

Evolution

Steps for Balance

Alignment

Metrics

Centers of Excellence


Definition of “Agility”


Agility


Those with More Mature S&OP Goals ReportGreater Supply Chain Agility


Agility




Evolution

Steps for Balance

Alignment

Metrics



At each stage of S&OP Maturity, ask the question:

1. What is the goal?

2. What should we measure?

3. What defines success?

Evolution


S&OP ProcessExistence, Goals & Processes


Common Practice Market-driven Focus

S Ask salesFocus on market drivers:How do we best shape demand?

& Direct integration to supplyDesign of the value chain to optimize trade-offs, minimize risk, balance cycles, and orchestrate demand

OP Manufacturing planTrade-offs between make, source and deliver

Getting to Letter Perfect

12


S&OP Evolution

Manufacturing-Driven

Deliver a Feasible Plan for Operations

Match Demand with Supply

Sales Driven

Match Demandwith Supply

Business-planning Driven

Maximize Profitability

Demand Driven

Maximize Opportunity Sense and

Shape Demand

Market Driven

Maximize Opportunity and Mitigate Risk. Orchestrate

DemandMarket to Market

Greater Benefit• Growth• Resilience• Efficiency


Technology Evolution




Evolution

Steps for Balance

Alignment

Metrics



S&OP Balance


Form of Inventory Function of Inventory

Raw Cycle Stock

Semi-finished Goods Safety Stock

Finished Goods In-transit Inventories

Returned Inventories Seasonal Builds

Slow and obsolete Promotional Inventories

Risk Hedging

New Product Launch Builds

Form & Function of Inventory


Ease of Getting Total Supply Chain Costs

___________________________________________________________Source: Supply Chain Insights LLC, Transportation (Aug-Oct 2012)Base: Transportation Users (Manufacturers, Retailers and Distributors) (n=34)Q18. How easy is it for your company to get total supply chain costs for your operations?

Users 12% 12% 24% 24% 29%

USERS: Ease of Getting Total Supply Chain Costs

Extremely/very easy 5 Neutral 3 Extremely/very difficult

24% EASY 53% DIFFICULT




Evolution

Steps for Balance

Alignment

Metrics



Mature Sales and Operations Planning


CostVolumeGrowth

CEO

Chief Customer Officer

Chief Marketing Officer Sales

Account Teams

COO

VP of Supply Chain

Customer Service Procurement Logistics

CFO

CIO

VP of Manufacturing

Quality

Typical Organization


Alignment


Finance


Information Technology


S&OP Maturity Improves Alignment


S&OP ProcessPlan Execution




Evolution

Steps for Balance

Alignment

Metrics



Current Focus


• “I wish that we could talk about forecast error without having to feel like we need an apology…”

• “We need a balanced scorecard not an encyclopedia of metrics…”

• “The metrics need to align around value…like I was trained in my Bonsai class, let the tree show you the way…”

• “Every industry has their own iron triangle that defines supply chain potential. Customer service is always in the middle…”

Quotes from Recent Interviews


• Revenue• Profitability• Inventory (DOI or Inventory turns)• Customer Service (case fill or perfect order)• Forecast Accuracy

Metrics: Focus on Balance


Benefits Received

Source: Supply Chain Insights, 2012What benefits have you received from your work with S&OP processes?

Increasing revenue

Improving forecast accuracy

Reduction of inventory

Improving asset utilization

Determining outsourced manufacturing

Determining procurement requirements

Improving new product launch

Transportation and warehouse management

Capital planning and asset management

Improvements in the perfect order

59%

57%

50%

42%

38%

36%

34%

32%

32%

30%

▲ 2%

▲ 5-7%

▲ 3-7%

▲ 3-6%

▲ 3-6%

▼ 10-15%

▼ 2-8%




Evolution

Steps for Balance

Alignment

Metrics



Functions of Center of Excellence


Center of Excellence


Value Network Strategy

Supply chain strategy

Business StrategyWhat are the right things to do to increase company value?

Value-network Supply Chain StrategyWhat are the right ways to support the business strategy?

What are the right trade-offs between value drivers for each value network?

Right productplatforms

Design the supply

response

Build organizational systems and

manage talent

Align supply relationships

Align demandrelationships

Effective Supply Networks

Execution of buy-side strategies

Continuous Improvement

Capabilities RequiredSupply Chain

Network Design

Design Networks

Innovation Methodologies

Demand Networks

Joint Value Creation Strategies

Business ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC


• S&OP has grown in importance.• The trade-offs of the supply chain cannot be

effectively modeled using a spreadsheet.• Each stage must be built with the goal in mind.• Focus on continuous improvement and serving

the business.

Wrap-up


Questions?


Save the Date!

Supply Chain Insights Global Summit 2014September 10-11, 2014

The Phoenician – Scottsdale, AZ USA


Who is Lora?

• Founder of Supply Chain Insights

• Partner at Altimeter Group (leader in open research)

• 7 years of Management Experience leading Analyst Teams at Gartner and AMR Research

• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA)

• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.


Where Do You Find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (4000 pageviews/month)

Twitter: lcecere 4640 followers.

LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (5600 in the network)