Top 10 S&OP Building Blocks - Valtitude

What are the critical requirements before you can embark on the S&OP process? This paper will discuss the key building blocks to implementing S&OP.

Company :

Valtitude formerly known as Demand Planning LLC provides specialized consulting for Demand Planning, S&OP, Sales Forecasting, and Supply Chain Optimization.

Valtitude was founded by ex-Gillette/P&G Senior Managers in 2004 as Demand Planning Net. Our initial focus was to help companies with implementing process and strategy for Demand Planning and Sales and Operations Planning. Over the years, we have grown to help many Fortune 500 companies and SMB businesses in the end-to-end supply chain transformation process.

We have helped a variety of businesses across industry verticals create value through SCM analytics and diagnostics, process re-design, solutions implementation, and customized on-site training.

We have clients from across different industries - Pharmaceuticals, CPG, High-Tech, Food and Beverage, Quick Service Restaurants, Utilities, Oil and Gas, Aerospace, Chemicals, and Industrial Manufacturing, Automotive, Financial Services, Publishing, etc. Our clients include some marquee Fortune 500 names such as Pepsi Foods, Abbott Labs, Honeywell, Facebook, Qualcomm and others who seek us for our niche in the area of SCM transformation.

Our consulting expertise includes Operations Forecasting & Planning, Strategic Forecasting, Financial Planning & Budgeting, Inventory Optimization, Production Planning, and Detailed Scheduling.

Through our unique diagnostics methodology, we help clients understand the specific business and organizational factors that inhibit the formation of a holistic Demand and Supply Management process. With the diagnostics as the foundation, we help you transform the business process with the right technology. We also undertake full-scale System Integration projects that include SAP, Oracle, JDA, Kinaxis.

Valtitude offers some mid-market solutions for SCM including PlanVida and Vanguard SW.

What we define as usability consulting helps our clients to better use their advanced planning tools for Demand, Inventory and supply chain optimization. Founded in 2004, the company is headquartered in Boston and has offices in India, China, and the UK.

For more information, on our consulting services visit https://valuechainplanning.com/consulting-details

1. 1 Mark Chockalingam Ph.D 🞄 Tel: [phone] 🞄 Email: [email protected] 🞄 www.demandplanning.net Is S&OP for you? Top 10 S&OP Building Blocks! August 21 st 2014 By Mark Chockalingam, Ph.D. © 2014 Demand Planning LLC www.valuechainplanning.com www.demandplanning.net

2. Outline © 2014 Demand Planning LLC About Demand Planning LLC Demand Planning LLC Client Base Webinar Abstract S&OP and Value Chain Matching Supply and Demand S&OP Building Blocks Pre-requisites or MUST have requirements Essential Building Blocks Business Resources

3. Demand Planning LLC © 2014 Demand Planning LLC Founded in 2004, Consultancy providing Process and Strategy Consulting and technology implementation Domain Expertise Business Forecasting and Demand Planning Sales & Operations Planning (S&OP) Inventory Optimization Outsourced Statistical Forecasting Usability Consulting for Technology and Software Applications Work with JDA i2 & Manu, SAP APO, Oracle Demantra and Logility Build Custom Software for SMB Clients Tweaking the ERP systems that boosts S&OP List of Clients on the next slide

4. Partial List of Clients © 2014 Demand Planning LLC

5. A b s t r act © 2014 Demand Planning LLC 5 Once out of favor in the Sales and Marketing circles as another "Supply Chain Conspiracy", now more sales and marketing people are talking the talk on S&OP. The corner office is also interested in a holistic business management practice that gets its answers from the S&OP process. But can every company embark on an S&OP process? What are the critical requirements before you can embark on an S&OP process? What are the key building blocks that will lead to success? We will outline the critical requirements step-by-step in this presentation, so you can make your S&OP implementations successful.

6. SALES AND OPERATIONS PLANNING SIOP S&OP IBP 6 © 2014 Demand Planning LLC

7. A business management process to keep demand and supply in balance. Cross-functional representation - Sales, Marketing, Finance, Operations, Logistics and R&D and Senior Management Monthly cycle focusing on aggregate unit & dollar volumes and reviewing both unconstrained and constrained forecasts Understand major item level and customer level exceptions Enables holistic views of past, present, and future. S&OP solves the Value Chain economics problem 7 © 2014 Demand Planning LLC

8. 8 S&OP Design: Closed Loop Process Develop, Communicate & Manage Demand Plans Balancing Supply & Demand And align operations through a Management Decision Process Plan Finished Goods Net Inventories Define Production Requirements (Rough Cut and Finite) © 2014 Demand Planning LLC

9. Matching Supply and Demand © 2014 Demand Planning LLC 9 S&OP Objective  Supply = Demand Match Supply and Demand at the aggregate level as well as the item level IF Demand > Supply What do we do in the Short-term? What do we do in the Long-term? If Demand < Supply Similarly what are the risks here?

10. KEY BUILDING BLOCKS TO S&OP © 2014 Demand Planning LLC 10 Pre-requisites or MUST have requirements Essential Building Blocks Business Resources

11. Once bitten Twice Shy! 11 © 2014 Demand Planning LLC 1. You need to have an S&OP Expert to guide you through the process Internal or External Educator and Consultant

12. Benefit vs. Cost 12 © 2014 Demand Planning LLC 2. Identify the Value Opportunity in implementing S&OP It is an expensive process Not in consulting fees but in management time

13. E du c a t e! 13 © 2014 Demand Planning LLC 3. S&OP Education is an important requirement before embarking on the journey Training on Demand Planning Best Practices in S&OP Executive training on S&OP Have a resource that provides on-going training.

14. SOP or SIOP? 14 © 2014 Demand Planning LLC Inventory visibility Clarity and visibility of inventory positions including inventory accuracy Ability to aggregate and value inventory dollars or to use a common UOM to understand aggregate supply

15. Look at the Big picture! 15 © 2014 Demand Planning LLC 5. Look into your Product Hierarchy and define appropriate Product Families for S&OP Review Discipline to look at aggregate demand and supply Define your business into a reasonable number of product families

16. Measure to mature! Define consistent Metrics! 16 © 2014 Demand Planning LLC You cannot improve the process unless you measure where it is right now. Design and deploy the right set of Metrics Service Metrics Demand and Supply Metrics Sales Growth and Profit Growth Stock Holder Value (very few organizations measure this)

17. Organizational Metrics Firm Value Metrics Firm Risk Metrics Service Metrics Profit Growth D e mand Metrics P r odu c tion Metrics E x e c u t ion Metrics Sales Growth and Market Share Pricing Power 17 © 2014 Demand Planning LLC

18. Demand Consensus first – S&OP next! 18 © 2014 Demand Planning LLC Demand Planning and Demand Visibility This is a Must have requirement! Important pre-requisite for a successful S&OP Show-stopper if you don’t have a demand planning process Plan, communicate and Manage Demand – SKU level plan is a critical building block.

19. S&OP is not consensus! It is conflict resolution 19 © 2014 Demand Planning LLC 8. S&OP is balancing - S&OP is conflict resolution Demand alignment - Discipline to use Demand Plan in Inventory and Production planning Demand and Supply work off of the same Demand Plan but resolve Demand – Supply imbalances. Example: Supply Planning creates its own forecast. Demand Planning creates its own forecast. They meet to discuss the two forecasts. ≠ S&OP. This is demand consensus between the wrong parties.

20. Does Demand equal supply? Roughly………. 20 © 2014 Demand Planning LLC 9. Rough Cut Capacity Planning This is where the rubber meets the road. Only with an RCCP, Demand/Supply balancing decisions can be made. The Sales Forecasting process and the production planning process become decisionable through the RCCP process!

21. Does the Corner office have a corner plan? 21 © 2014 Demand Planning LLC 10. Management support and involvement The most important building block for S&OP IF the Corner office executes to a corner plan developed by a few C-level officers, the S&OP will not flourish. The ability and willingness of Senior Management to engage and be present right, smack in the middle of the organization.

22. ABOUT US 22 © 2014 Demand Planning LLC Who is the author? What is Demand Planning LLC? Who are Demand Planning LLC clients? How can you contact the author of this paper?

23. About The Author Dr. Mark Chockalingam is Founder and President, Demand Planning LLC, a Business Process and Strategy Consultancy firm. He has conducted numerous training and strategy facilitation workshops in the US and abroad, and has worked with a variety of clients from Fortune 500 companies such as Wyeth, Miller SAB, FMC, Teva to small and medium size companies such as Au Bon pain, Multy Industries, Ticona- a division of Celanese AG. Prior to establishing his consulting practice, Mark has held important supply chain positions with several manufacturing companies. He was Director of Market Analysis and Demand Planning for the Gillette Company (now part of P&G), and prior to that he led the Sun care, Foot care and OTC forecasting processes for Schering-Plough Consumer HealthCare. Mark has a Ph. D. in Finance from Arizona State University, an MBA from the University of Toledo and is a member of the Institute of Chartered Accountants of India. 23 © 2014 Demand Planning LLC

24. Quick S&OP Diagnostic Project 24 © 2014 Demand Planning LLC Our Engagement will start with a quick Diagnostic of current planning process that will study Financial planning Demand forecasting and management Rough cut and finished goods planning and constraints management. Current score-card and metrics process. This will be followed by the design and implementation of a customized S&OP process that will be a cross-functional effort with commitment from all players. We add value to your process design in two ways: With our knowledge base of best practices and the benchmark industry process, we can analyze and recommend processes and benchmarks rather quickly Our central philosophy is exception management grounded in the Six-Sigma principles. This helps design a very effective process that is time-efficient as well

25. About Demand Planning LLC 25 © 2014 Demand Planning LLC NStar Abbott Labs Wyeth Au Bon Pain Teva Celanese Hill’s Pet Nutrition Campbell’s Soups Miller Brewing co. Texas Instruments Hewlett Packard World Kitchen Lifetime Products FMC Lithium McCain Foods Lnoppen, Shanghai North American Breweries Pacific Cycles Smead White Wave foods Ross Products Fox entertainment Limited Brands Nomacorc F . S c huma k er Demand Planning LLC is a consulting boutique comprised of seasoned experts with real-world supply chain experience and subject-matter expertise in demand forecasting, S&OP, Customer planning, and supply chain strategy. We provide process and strategy consulting services to customers across a variety of industries - pharmaceuticals, CPG, High-Tech, Foods and Beverage, Quick Service Restaurants and Utilities. Through our knowledge portal DemandPlanning.Net, we offer a full menu of training programs through in-person and online courses in Demand Forecast Modeling, S&OP, Industry Forecasting, collaborative Forecasting using POS data. DemandPlanning.Net also offers a variety of informational articles and downloadable calculation templates, and a unique Demand Planning discussion forum. Demand Planning LLC has worked with…

26. Contact Us 26 © 2014 Demand Planning LLC Mark Chockalingam, Ph.D. Demand Planning, LLC 26 Henshaw st Woburn, MA 01801 Email: [email protected] Web: www.demandplanning.net Phone: [phone]