Transcript TOPGRADING SOLUTIONS MRI NETWORK S&OP - Myths, Misunderstandings & Misinformation Hilton Garden Inn Waltham, Mass. March 23, 2011 Bob Stahl www.tfwallace.com Bob Stahl 508-226-0477 www.RAStahlCompany.com www.tfwallace.com www.RAStahlCompany.com.

TOPGRADING SOLUTIONS
MRI NETWORK
S&OP - Myths, Misunderstandings
& Misinformation
Hilton Garden Inn
Waltham, Mass.
March 23, 2011
Bob Stahl
www.tfwallace.com
Bob Stahl
508-226-0477
www.RAStahlCompany.com
www.tfwallace.com
www.RAStahlCompany.com
With apologies to
Charles Dickens . . .
Worst of Times . . .
These are perhaps the worst economic conditions in
a generation or two . . . and it may get worse before it
gets better. (What’s 9%??)
Best of Times . . .
For those who choose to use them, we have terrific
tools in our hands today to deal with the massive
uncertainty!
Sources: Myths,
Congressional
Budget Office; Department of
Labor, Bureau
Misunderstandings
and
of Labor Statistics; Department of Commerce, Bureau of Economic
Misinformation
Analysis.
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Gravitational Force Needed . . .
Customers
Desired
Natural Force = Centrifugal
Centripetal
Executive
S&OP
Employees
Owners
(Suppliers, Community, Country, Planet)
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
Muting Trade-Offs . . .
• When a company is trading off one
constituency against another, it’s on a
slippery slope
• Being able to serve all constituencies has
a lot to do with timing:
1. In the short term, the customer is king
2. Proper prior planning is necessary to serve
all constituencies well (Doesn't’t happen by accident)
3. Executive S&OP is the tool to set conditions
for success with regard to Supply Chain
performance
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
S&OP Morphing Terminology
(causing confusion)
• At first -- S&OP meant an executive led
process for balancing demand & supply at
the volume level
• Then -- S&OP meant any process that
dealt with balancing demand & supply at
both the volume & mix levels, blurring the
distinction
• Today -- S&OP is no longer exclusively a
term that describes any specific process,
but rather a set of words that mean
anything you want it to mean
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
The Four Fundamentals
Volume
ProActive
Behavior
Supply
Demand
Balance
Very
different,
Re
Active
separate, &
Behavior
distinct practices
but integrated!
Bob Stahl
•How Much?
•Rates
•The Big Picture
•Families
•Strategy/Policy/Risk
•Monthly / 18 - 36 Mos
•Executive Resp.
Mix
www.tfwallace.com
•Which Ones?
•Timing/Sequence
•The Details
•Products/SKU’s/Orders
•Tactics/Execution
•Weekly/Daily 1-3 Mos
•Middle Mgt. Resp.
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Sales & Operations Planning
Executive S&OP
Volume
Demand
Planning
Demand
Supply
Supply
Planning
Mix
Master Scheduling
Demand Pull
Bob Stahl
www.tfwallace.com
9
www.RAStahlCompany.com
Myth #1:
“S&OP’s a supply chain thing”
Reality: Executive S&OP is a Supply Chain thing.
and a Sales & Marketing thing
and a Finance thing
and a Manufacturing thing
and a Procurement thing
and an Outsourcing thing
and a New Product thing
and a General Management thing
Sept 2007 -- HBR -- “Are You the Weakest Link in Your Company’s Supply Chain?”
It is a company-wide, collaborative decision-making
process, reaching up to the top levels in the business.
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Process Driven
versus
Personality Driven
President/General Manager
Executive S&OP
Sales &
Marketing
Operations
Product
Design
Finance
Logistics
&
Warehouse
Managing the White Space
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Soft Benefits
“The Predicator”
Align Human
Energy and the
Power is Boundless
•
•
•
•
•
•
•
•
•
•
Enhanced Teamwork
Improved Communications - Defined & Disciplined
Better Decisions with Less Effort and Time
Better $$$ Plans with Less Effort and Time
Tighter Linkage with Strategy
Greater Accountability
Greater Control
Update to the Annual Business Plan
Window into the Future
Master of own destiny
Top Management’s Handle on the Business
Bob Stahl
www.tfwallace.com
1
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www.RAStahlCompany.com
Myth #2: “S&OP’s all about
balancing demand and supply”
Reality:
S&OP does help to balance demand and supply
and integrates financial and operational planning
and links strategic planning to ongoing operations
and shortens the annual planning process
and enhances risk management
and can impact strategic plans
Bob Stahl
www.tfwallace.com
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Bob Stahl
Doing
The
Right
Things
Executive
S&OP
Tactics
Master Schedule
Executive S&OP
Strategy
Annual Business Plan
Robert Hayes
HBR-Nov/Dec 1985
Strategic Planning - forward in reverse
“Strategic Planning . . .
forward in reverse”
Doing
The
Things
Right
Execution
www.tfwallace.com
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Myth #3: “S&OP takes too much
of Top Management’s time”
Reality:
Monthly Time Requirement
for the Leader of the Business ~ 1.5 hours*
* Executive staff time could be more than this.
Bob Stahl
www.tfwallace.com
1
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www.RAStahlCompany.com
The Executive S&OP Process
Step #5
Heavy
Lifting
Executive
Meeting
Decisions &
Game Plan
Step #4
Pre-S&OP
Meeting
Step #3
Supply
Planning
Conflict Resolution,
Recommendations &
Agenda for Exec. Mtg.
Capacity constraints
2nd-pass spreadsheets
Step #2
Demand
Planning
Management Forecast
1st-pass spreadsheets
Step #1
Month End
Data
End of Month
Bob Stahl
Sales Actuals,
Statistical
Forecasts &
Production Actuals
www.tfwallace.com
Creates a
Disciplined
Rhythm
www.RAStahlCompany.com
Myth #3A: “S&OP is too much
detail for Top Management to be
involved”
Reality:
That’s a misunderstanding of what
Executive S&OP should be.
If you’re trying to set policy & strategy
while living in the “suicide quadrant,” you’ll
not succeed.“
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Planning Perspective
Full
Granular
Detail
PTF
III
Building to
Customer
Demand
I
Suicide
Quadrant
Detail
II
Aggregate
Only
Quadrant
Executive
S&OP
Horizon
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
Problems Perspective
Mix Problems
Scream for Attention
Volume Problems
Barely Whisper
Creates the illusion that all problems are
MIX problems -- therefore need a forecast
for full granular detail for full horizon.
Bob Stahl
www.tfwallace.com
1
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www.RAStahlCompany.com
Myth #4: “We’ll Never Get S&OP to
Work; We Don’t Have Enough
Teamwork”
Reality:
Teamwork is not a Prerequisite.
It’s a Result!
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Soft Benefits
• Enhanced Teamwork
•
•
•
•
•
•
•
Improved Communications - Institutionalized
Better Decisions with Less Effort and Time
Better $$$ Plans with Less Effort and Time
Tighter Linkage with Strategy
Greater Accountability
Greater Control
Window into the Future
Bob Stahl
www.tfwallace.com
2
1
www.RAStahlCompany.com
Myth #4:
Continued
Q. What if you’ve implemented Executive
S&OP but teamwork hasn’t improved?
A. You flat didn’t do it right
Gaining teamwork must be one of the objectives of
implementing Executive S&OP from the get-go.
Harbinger = Teamwork starts in and within the
Design Team.
Bob Stahl
www.tfwallace.com
2
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www.RAStahlCompany.com
Myth #5: “S&OP Is Too Rigid; Our
Business Changes Too Rapidly For
S&OP”
Reality:
Executive S&OP is all about change.
It’s a coordination tool
Bob Stahl
www.tfwallace.com
2
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www.RAStahlCompany.com
Tools & Techniques
Increase
Reliability
Six Sigma, Total Quality,
Poka-Yoke, ISO
+ others
X
Reduce Waste
& Time
Lean Mfg., Just-In-Time,
Quick Changeover (SMED),
Flow + others
Bob Stahl
www.tfwallace.com
X
X
Enhance
Coordination
Sales & Operations Planning,
ERP, Kanban, VMI,
+ others
www.RAStahlCompany.com
Complexity, Change
and Coordination
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Coordination is all about:
Alignment of Human Energy
Accomplishment
Bob Stahl
www.tfwallace.com
Accomplishment
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Myth # 6: “We Can’t Use S&OP
Because We’re Totally Outsourced”
Reality:
Executive S&OP Doesn’t Care Who
Owns The Factory.
. . . nor do Customers care who owns the resources of
production! “Outsourcing” is a vital contributor!
Heavily Outsourced Companies May Need
Executive S&OP More Than Others.
(i.e., Just Bats)
Bob Stahl
www.tfwallace.com
2
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www.RAStahlCompany.com
Myth #7: “Our Company Is Too
Big (Too Small) for S&OP”
Reality:
Executive S&OP operates . . .
independently of company size
Procter & Gamble
Microsoft
Dow Chemical
Homac
Just Bats
Bob Stahl
www.tfwallace.com
~ $ 80 Billion
~ $ 60 Billion
~ $ 55 Billion
~ $ 00.0040 Billion
~ $ 00.0030 Billion
2
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www.RAStahlCompany.com
Myth #8: “Our Forecasts Are
Not Accurate Enough For S&OP”
Reality:
Executive S&OP Does Not
Require “Accurate” Forecasts
But by working on the process, it often
helps to improve the forecasts
Bob Stahl
www.tfwallace.com
2
9
www.RAStahlCompany.com
Forecasting
Inputs -- Process -- Output
Current Customers
New Customers
Competition
Economic Outlook
Market Trends
New Products
Pricing Strategy
Promotions
Bid Activity
Management Directives
Intra-Company Demand
History (Data)
Other
Bob Stahl
www.tfwallace.com
Forecasts that are:
1. Reasoned
2. Reasonable
3. Credible
4. Transparent
5. Reviewed
Frequently
www.RAStahlCompany.com
Forecasting . . .
A Three-Legged Stool
Market
View
Customer
View
Historical
View
Reconciliation Process
(The “DAM” Meeting)
Consensus
Forecast
Compare to Annual Business Plan
Applying “Puts & Takes” (Actions)
Company
Forecast
Bob Stahl
www.tfwallace.com
3
www.RAStahlCompany.com
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Myth #9: “S&OP Is Simple; All You
Need Is A Few Spreadsheets”
Reality:
The logic of Executive S&OP is SIMPLE
Implementing Executive S&OP
Is All About Change Management
. . . And that is not simple!
Bob Stahl
www.tfwallace.com
3
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www.RAStahlCompany.com
Research finding . . .
Lora Ceceri, Altimeter -- Boston, September 2010
The effective use of S&OP is:
•60% Change management
•30% Process improvement
•10% Technology
Bob Stahl
www.tfwallace.com
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www.RAStahlCompany.com
Myth #10: “We Can’t Do S&OP.
THEY Will Never Participate”
Reality:
Never Say Never
People Can and Do Change –
But . . . It doesn’t happen by
accident!
Bob Stahl
www.tfwallace.com
3
4
www.RAStahlCompany.com
Myth #10:
Continued
Who Are THEY?
• Top Management?
• Sales/Marketing
• Manufacturing?
• Finance?
• New Product
Development?
• Outsourcing?
• All of the above?
Bob Stahl
www.tfwallace.com
3
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www.RAStahlCompany.com
Myth #10:
Continued
• Why not? Are they bad people?
• They don’t understand it.
• They don’t understand it, because
they haven’t been taught.
• It’s “counter-experiential.”
That’s why education and “buy-in” from the get-go is important!
It’s all about changing mind-sets!
Bob Stahl
www.tfwallace.com
3
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www.RAStahlCompany.com
Executive S&OP is . . .
APICS Dictionary, 13th Edition, October 2010
• The executive portion of the overall sales and operations
planning set of processes.
• It is a decision-making activity involving the leader
of the business (president, general manager, COO,
managing director), his or her staff, and a number of middle
managers and specialists.
• Its mission is to
1. balance demand and supply at the aggregate level,
2. align operational planning with financial planning,
3. link strategic planning with day-to-day sales and
operational activities.
• It is a multi-step process involving demand planning,
supply planning, and middle and top management meetings
for decision-making and authorization.
Bob Stahl
www.tfwallace.com
3
7
www.RAStahlCompany.com
With apologies to
Charles Dickens . . .
Worst of Times . . .
These are perhaps the worst economic conditions in
a generation or two . . . and it may get worse.
Best of Times . . .
For those who choose to use them, we have terrific
tools in our hands today to deal with the massive
uncertainty!
Myths, Misunderstandings and
Misinformation
Bob Stahl
www.tfwallace.com
3
8
www.RAStahlCompany.com
Done Properly . . .
Implementation approach fits these
times:
Simpler
Better
“Ultimate
 Low Cost
(Not Easier)
Sophistication
• No capital
investment; no software; just time
Low RiskIs Simplicity”
• Parallel Pilot Approach
 Quick Results
(in 90 Days!!!)
• 90-Days for Complete
Pilot Demo
 High Impact
Oliver Wight
• Aligns Human Energy
Bob Stahl
www.tfwallace.com
3
9
www.RAStahlCompany.com
The Books . . .
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
4
In the Making . . .
Planned Publication:
3rd Quarter 2011
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
Making Change
“InThe
humanonly
affairs, time
the willed
future
that
always prevails over the
logical future.”
the “logical
future”
has ahappens
chance
is atifa
“Change
one step
time, by thinking globally, but
we
deny
its
acting locally.”
possibility.
Rene Dubos -1982
A Celebration of Life
An essay
Bob Stahl
www.tfwallace.com
www.RAStahlCompany.com
Thanks for Listening
Bob Stahl
508-226-0477
[email protected]
www.RAStahlCompany.com
www.tfwallace.com
Bob Stahl
www.tfwallace.com
4
3
www.RAStahlCompany.com