1 © The Delos Partnership 2003 Global Strategic and Operations Planning Prioritisation and Strategy Review

1 © The Delos Partnership 2003

Global Strategic and Operations Global Strategic and Operations PlanningPlanning

Prioritisation and Strategy Review


Strategic Operations PlanningStrategic Operations Planning

AACCTTIIOONN

AACCTTIIOONN

Week 1 Week 2 Week 3 Week 4

InnovationReview

InnovationReview

CustomerDemandReview


SupplyPlan

Review

SupplyPlan

Review

PriorityReview

PriorityReview

STAGE 1STAGE 1

STAGE 2STAGE 2

SeniorTeam

Review

SeniorTeam

Review

STAGE 5STAGE 5

STAGE 6STAGE 6

STAGE 4STAGE 4STAGE 3STAGE 3


TOP LEVEL GS&OP TOP LEVEL GS&OP PROCESS DIAGRAM:PROCESS DIAGRAM:

GlobalInnovation

CustomerDemand

Supply Priority Senior Team


LEVEL 1

Country

LEVEL 2

Business

Unit

LEVEL 3Global

R&T

3x BU Demand

Site (x6)Demand

CSDemand

PriorityBy

Site (x6)

PriorityBetween 3 BU/CS

SNRTR

Op’sInnovation

2nd week of month

GlobalPlanning

PriorityWithin

3 BU/CS

3 meetings:M-DT/B/G Programme

Innovation(x3)

Innovation

@Sites (x6)

GlobalPlanning

SupplyPlanning

By Site (x6)


Priority StagePriority Stage

Objectives– To resolve issues around demand vs

supply, project plans vs timing vs resources

– To provide financial review – revised Roll– To facilitate what-ifs– To provide issues for resolution by Senior

Team by exception


PrioritisationPrioritisation

Requirements– Financial statement of all the plans– Alternatives for evaluation

• External events– Governmental– Competitive

• Internal events– Launch threats– Supply constraints


Preparation of the budget/rollPreparation of the budget/roll

Financial statement enables– Visibility of current year outturn – early– Visibility of subsequent year[s] to enable

budget to be one set of numbers - early


Financial Planning SpreadsheetFinancial Planning SpreadsheetSales Plan -3 -2 -1

Demand Plan 120 120 120

Actual Demand 119 125 132

Difference -1 5 12

Cum Diff 4 16

1 2 3 4 5 6 7 8 9

Last Demand Plan 120 120 120 120 120 120 120 120 120

New Demand Plan

Difference

Cum Diff

Months Q4 Q1

360 360

Supply Plan -3 -2 -1

Supply Plan 125 125 125

Actual Supply 119 118 121

Difference -6 -7 -4

Cum Diff -13 -17

1 2 3 4 5 6 7 8 9

Last Supply Plan 125 125 120 120 120 120 120 120 120

New Supply Plan

Difference

Cum Diff

Q4 Q1

360 360

Inventory Plan -3 -2 -1

Stock Plan 71 76 81

Actual Stock 66 66 59 48

Difference -5 -17 -33

1 2 3 4 5 6 7 8 9

Last Stock Plan 86 91 91 91 91 91 91 91 91

New Stock Plan

Difference

Q4 Q1

Financials -3 -2 -1

Actual Sales 1190 1230 1310

Product Cost 476 492 524

Contribution 714 738 786

Admin Overheads 102 110 114

Manufacturing Overheads 104 104 105

Profit 508 544 607

Change in Stocks 0 +28 +44

CASH FLOW 508 572 651

1 2 3 4 5 6 7 8 9

Projected Sales 1200 1200 1200 1200 1200 1200 1200 1200 1200

Product Cost 480 480 480 480 480 480 480 480 480

Contribution 720 720 720 720 720 720 720 720 720

Admin Overheads 100 100 100 100 100 100 100 100 100

Manufacturing Overheads 100 100 100 100 100 100 100 100 100

Profit 520 520 520 520 520 520 520 520 520

Change in Stocks -152 -25

CASH FLOW 368 495 520 520 520 520 520 520 520

Q4 Q1

3600 3600

1440 1440

2160 2160

300 300

300 300

1560 1560

1560 1560


Gap IdentificationGap Identification

0

5,000

10,000

15,000

20,000

25,000

30,000

Euros

Sales Contrib

Sales/Profit

Financial Analysis

Budget

Previous

Current


SOP Gap AnalysisSOP Gap Analysis

Strategic planStrategic plan

Time Now

SOP ForecastSOP Forecast

Actual statusActual status

years

profitprofit

outputoutput

revenuerevenue

profitprofit

outputoutput

revenuerevenue

What is the GAP and what are the action plans to close it?What is the GAP and what are the action plans to close it?


Alternatives to testAlternatives to test

• Demand Volumes• Supply Plan• Overtime/capacity change• Timing of Capital Expansion• Price/Volume effects• Emergencies

ONESETOF

NUMBERS


Reviewing the GapReviewing the GapFinancial Strategic Forecast

0

5

10

15

20

25

1 2 3 4 5

Year

£m.

All New

New

Extend

Current

Aspiration


Global Strategic Operations Global Strategic Operations PlanningPlanning• Provides sound basis for decision

making

• Enables alternatives to be tested easily – on a spreadsheet ?

• Provides means for “doing away with” the budget/roll


Priority ReviewPriority Review

Outcome– Decisions on capacity short term etc.– Decisions for management team– Review of current financial picture– Presentation of next year’s budget


PRIORITY PLANNING BY SITE PRIORITY PLANNING BY SITE TOP LEVEL PROCESSTOP LEVEL PROCESS

Review & discuss operational solutions

“S&OP Co-ordination Team”

Supply Planning Identifies Issues and Potential Solutions

Op’s/Procurement/Finance/Quality Mgt

Propose evaluations for next run

Agree actions

Implement Site Actions

Agree outstanding issues for Priority Within BU’s/CS

To Priority Planning Within/Between BU’s/CS

To Next Supply Planning Cycle

Document issues for Priority Within BU’s/CS

Forward intersite issues to GPT


By SiteBy SiteSite Load & Capacity

Profile

Critical Workcentre Load & Capacity Profiles

-30

-20

-10

0

10

2030

2003 2004 2005 2006 2007

Variance to Demand plan

EFA

A320

A340

0

100

200

300

400

2003 2004 2005 2006 2007

Supply plan

EFA

A320

A340

Other Workcentre Load & Capacity Profiles

0

100

200

300

400

2003 2004 2005 2006 2007

Demand plan

EFA

A320

A340

• 5 year horizon - Rolling first 24 months - Fixed years 3 to 5 (re-establishment of year 5 @ Roll 1)

• OE by programme• Spares by major parts (product/process)

PRIORITY PLANNING BY SITE PRIORITY PLANNING BY SITE PROFORMA (1)PROFORMA (1)


PRIORITY PLANNING BY PRIORITY PLANNING BY SITE PROFORMA (2)SITE PROFORMA (2)

Outstanding Issue (Problem/Opportunity)

Proposed Solution Cost Impact Decision Point Risks

10% overload mar-may ‘04 Offload 5% reduction Increased L/T Next Cycle Late Delivery

15% Overload (constant) in Assembly Hire 2 men Increased overheads

Volumes could reduce

New Issue (Problem/Opportunity)

Action Taken/Solution Selected Owner Deadline

Overload in 1st half 2004 Reschedule repatriated gears & update MRP accordingly

Master Scheduler Next process cycle

Existing Action Update Owner Deadline

Change Cell layout •On schedule/budget•MRP not yet updated

Op’s Manager June ‘04

‘What If?’ scenario

Project €/£/$

Next Milestone

Final Milestone Impact Project Manager

Status

New m/c cap-ex £1m Approval: 07/03 Installation: 07/05 35% capacity increase A. Person

New material introduction


GPT PRIORITY PLANNING TOP GPT PRIORITY PLANNING TOP LEVEL PROCESSLEVEL PROCESS

Review & discuss intersite workshare potential solutions

Site Priority Planning identifies intersite workshare issues and

potential solutions

GPT/Op’s Mgt


Agree actions

Return To Site Priority Planning



GPT PRIORITY PLANNING GPT PRIORITY PLANNING PROFORMAPROFORMA

Use existing GPT Intersite Workshare document with:• Horizon extended to 5 years• And include assumption for current split•Amend current document to show proposed work split along-side current•Add assumptions for change


PRIORITY PLANNING WITHIN BU’s/CS PRIORITY PLANNING WITHIN BU’s/CS TOP LEVEL PROCESSTOP LEVEL PROCESS

Review & discuss potential solutions


Site Priority Planning identifies issues and potential solutions

BU’s/CS


Agree actions

Implement Actions

Agree outstanding issues for Priority Between BU’s/CS

To Priority Planning Within/Between BU’s/CS


Document issues for Priority Between

BU’s/CS



Profile


-30

-20

-10

0

10

2030

2003 2004 2005 2006 2007


EFA

A320

A340

0

100

200

300

400

2003 2004 2005 2006 2007

Supply plan

EFA

A320

A340


0

100

200

300

400

2003 2004 2005 2006 2007

Demand plan

EFA

A320

A340



PRIORITY PLANNING WITHIN PRIORITY PLANNING WITHIN BU’s/CS PROFORMA (1)BU’s/CS PROFORMA (1)


PRIORITY PLANNING WITHIN PRIORITY PLANNING WITHIN BU’s/CS PROFORMA (2)BU’s/CS PROFORMA (2)














Project €/£/$ Next Milestone Final Milestone Impact Project Manager Status




PRIORITY PLANNING BETWEEN PRIORITY PLANNING BETWEEN BU’s/CS TOP LEVEL PROCESSBU’s/CS TOP LEVEL PROCESS



Priority Planning Within BU’s/CS identifies issues and potential solutions

BU’s/CS


Agree actions

Implement Site Actions

Agree outstanding issues for Senior Team Review

To Senior Team Review


Document issues for Senior Team Review



Profile


-30

-20

-10

0

10

2030

2003 2004 2005 2006 2007


EFA

A320

A340

0

100

200

300

400

2003 2004 2005 2006 2007

Supply plan

EFA

A320

A340


0

100

200

300

400

2003 2004 2005 2006 2007

Demand plan

EFA

A320

A340



PRIORITY PLANNING BETWEEN PRIORITY PLANNING BETWEEN BU’s/CS PROFORMA (1)BU’s/CS PROFORMA (1)


PRIORITY PLANNING BETWEEN PRIORITY PLANNING BETWEEN BU’s/CS PROFORMA (2)BU’s/CS PROFORMA (2)














Project €/£/$ Next Milestone Final Milestone Impact Project Manager Status




MeasuresMeasures Schedule adherence MPS stability Expedited parts internal/external Concessions Actual/planned capacity

OutputsOutputs Load/capacity issues Statement of policy decisions Supply plan Requirements for cap-ex Security stocks Recording of actions taken “What if?” scenarios & alternatives for resolving issues Identification of risk on materials

See slide 27

InputsInputsGlobal Planning Demand:

– Intersite workshare (GPT Plan)

Global Planning Issues:Global Planning Issues:– Intersite balancingIntersite balancing– Risk managementRisk management

Feedback from previous cycle

PeoplePeople Process Owner:Process Owner:

– L. Schneider-Maunoury (ISO P6)L. Schneider-Maunoury (ISO P6) Site Operations Managers Maintenance Quality Master scheduler Site procurement/Supply Chain Mgr’s Global procurement GPT S&OP Co-ordinator Human resources

Scope/PurposeScope/Purpose Produce a realistic Manufacturing & Supply Plan Balance required capacity vs. planned capacity Define mismatches on capacity Resolve Operating Plan only issues Improve:

– Process– Quality– Job satisfaction– Flow to increase capacity

NOT to solve all issues

Links to Other ProcessesLinks to Other Processes Make/buy Load/capacity reviews MPS - where applied GPT

““Global Planning Team” ProcessGlobal Planning Team” Process


MeasuresMeasures Delivery Schedule adherence Perfect Order Delivery Non-Right First Time Stock Turns Forecast Accuracy Velocity Lead-Time Variance Plan vs. Forecast

OutputsOutputs Action plan (incl. filtered issues) Report for Senior Team Review Status vs. plan last time Decisions to be made Gaps identified Business performance Performance Measures Local decisions & associated action plan Proposals in order of preference Financial projections

InputsInputs Site Issues:Site Issues:

– Capacity Capacity overloads/underloadsoverloads/underloads– OvertimeOvertime– OffloadOffload– Cap-exCap-ex– ManningManning– Process improvementProcess improvement

Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review PeoplePeople

Process Owner:– L. Schneider-Maunoury

Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs

Scope/PurposeScope/Purpose Evaluate issues/scenarios Propose solutions & alternatives Filter issues Both site & global: 2 steps Document decisions taken Translate into Financial & Business termsPHASE 2: Review financial impact/ forecasts at sales margin levelLinks to Other ProcessesLinks to Other Processes

Finance Review PIC

““Site Priority Planning” ProcessSite Priority Planning” Process




InputsInputs Within BU’s/CS Issues:Within BU’s/CS Issues:

– Programme vs. programmeProgramme vs. programme– ReschedulingRescheduling– OE vs. sparesOE vs. spares– Financial gapFinancial gap– OE/Spares vs. testOE/Spares vs. test

Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review

PeoplePeople Process Owner:

– L. Schneider-Maunoury Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs


Finance Review PIC

““Priority Planning Within BU’s/CS” ProcessPriority Planning Within BU’s/CS” Process




InputsInputs Between BU’s/CS Issues:Between BU’s/CS Issues:

– Programme vs. programmeProgramme vs. programme– ReschedulingRescheduling– OE vs. SparesOE vs. Spares– Financial gapFinancial gap– OE/Spares vs. testOE/Spares vs. test

Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review


– L. Schneider-Maunoury Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs


Finance Review PIC

““Priority Planning Between BU’s/CS” ProcessPriority Planning Between BU’s/CS” Process


Top Level GS&OP Top Level GS&OP Cycle:Cycle:

M T W FT1

5 6 7 8

12 13 14 15

19 20 21 22

26 27

Calendar Month 1

2

9

16

23

28 3029

M T W FT62 3 4

139 10 11

2016 17 18

2723 24 25

30

Calendar Month 2

5

12

19

26

31

SNRTR


PriorityWithin

3 BU/CS

SupplyPlanning

By Site (x6)

3x BU Demand

3x CSDemand

Global

Planning

SNRTR

PriorityBetween 3 BU/CSGlobal

Planning

PriorityWithin

3 BU/CS

Priority By Site (x6)

R&T

ProgrammeInnovation

(x3)

Op’sInnovation

GlobalPlanning


SupplyPlanning

By Site (x6)

3x BU Demand

Site (x6)Demand

3x CSDemand

ProgrammeInnovation

(x3)Innovation

@ Sites (x6)

GlobalPlanning


Op’sInnovation

R&T

Global

Planning

Site (x6)Demand

Innovation@ Sites (x6)


WorkshopWorkshop

• Identify using the format how the local process will work in reality

• Don’t design it here – that’s for later

• Identify key people, sources of data, and process for putting together a real prioritisation process


Framework for Process ReviewFramework for Process ReviewProcessProcess

InputsInputs PurposePurpose OutputsOutputs

PeoplePeople Desired CultureDesired Culture MeasuresMeasures

Link to otherLink to other

ProcessesProcesses


Strategic Operations PlanningStrategic Operations Planning

AACCTTIIOONN

AACCTTIIOONN


InnovationReview

InnovationReview



SupplyPlan

Review

SupplyPlan

Review

PriorityReview

PriorityReview

STAGE 1STAGE 1

STAGE 2STAGE 2

SeniorTeam

Review

SeniorTeam

Review

STAGE 5STAGE 5

STAGE 6STAGE 6

STAGE 4STAGE 4STAGE 3STAGE 3


TOP LEVEL GS&OP TOP LEVEL GS&OP PROCESS DIAGRAM:PROCESS DIAGRAM:

GlobalInnovation

CustomerDemand

Supply Priority Senior Team


LEVEL 1

Country

LEVEL 2

Business

Unit

LEVEL 3Global

R&T

3x BU Demand

Site (x6)Demand

CSDemand

PriorityBy

Site (x6)


SNRTR

Op’sInnovation

2nd week of month

GlobalPlanning

PriorityWithin

3 BU/CS

3 meetings:M-DT/B/G Programme

Innovation(x3)

Innovation

@Sites (x6)

GlobalPlanning

SupplyPlanning

By Site (x6)


Objectives for Senior ReviewObjectives for Senior Review

• Issues for Resolution– Supply/Demand Allocation issues– Major Capacity changes required– Capital Expenditure Plans

• Current Business situation– Plan versus Budget/Business Plan– Plan versus last plan [volume/value]

• Assumptions on which plan is based• Performance measures


Family SummaryFamily Summary

0

5,000

10,000

15,000

20,000

25,000

30,000

Euros

Sales Contrib

Sales/Profit

Financial Analysis

Budget

Previous

Current

Major ChangesNew Product included in ForecastTender for Russia included

Major AssumptionsCompetition will reduce price by 5 %We Win Russian Tender

Major Threats

Decisions RequiredInvestment of Eur 0.5 m in Additional capacity for New Product


Financial justification for XYZ projectFinancial justification for XYZ projectYear 1 Year 2 Year 3 Year 4 Year 5

Volume 100 115 120 140 150

Sales 10 12 13 15 17

Contribution 2 2.5 2.75 2.5 2

Inc Overheads

0.5 0.5 0.5 0.5 0.5

Cash Flow 1.5 2.0 2.25 2 1.5

Wkg Capital 1 0.5 0.2 0.2 0.2

Cap Expenditure

4

Net Cash Flow

-3.5 1.5 2.05 1.8 1.3

Net Present Value @ 15 % =


Forecast must be supported by Forecast must be supported by AssumptionsAssumptions

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

1254 145 145 156 156 170 170 135 135 135 145 160 160

1345 145 167 135 180 200 200 200 200 150 150 150 200

1256 100 200 200 200 200 200 300 300 200 200 200 200

1347 50 50 50 50 40 40 30 30 20 20 40 50

NUMBERS !

ASSUMPTIONS


The Core Measures and Financial EffectThe Core Measures and Financial Effect


BNFL Site ProcessBNFL Site ProcessSite

ThorpHLWP

Magnox

Mox

LAEMG/WRD

SolidWaste

PlantServices

Week 1Week 1 Week 2Week 2 Week 3Week 3 Week 4Week 4

NPDNPD

NPDNPD

NPDNPD

NPDNPD

NPDNPD

NPDNPD

DemDem

DemDem

DemDem

Demand and SupplyDemand and Supply




SupSup

SupSup

SupSup

Site NPD Demand and SupplySite NPD Demand and Supply

Projects IntegrationProjects Integration

Mfg IntegrationMfg IntegrationOutage PlanOutage Plan

SSMMPR

SMRSMR

SMRSMR

SMRSMR

SMRSMR

SMRSMR

SMRSMR


Global Strategic and Operations Global Strategic and Operations PlanningPlanning• Long Term not short term

• Allows review of current projection versus strategic intent

• Based on realistic numbers

• Financial and volume numbers – one set of numbers


SENIOR TEAM REVIEW SENIOR TEAM REVIEW TOP LEVEL PROCESSTOP LEVEL PROCESS



Priority Planning Between BU’s/CS identifies outstanding issues and potential solutions

M-DI Executive Committee


Issue ‘Plan’


Document decisions within Senior Team Review proforma

Agree actions

Start of next cycle

Implement actions


SENIOR TEAM REVIEW SENIOR TEAM REVIEW PROFORMA (1)PROFORMA (1)


Profile


-30

-20

-10

0

10

2030

2003 2004 2005 2006 2007


EFA

A320

A340

0

100

200

300

400

2003 2004 2005 2006 2007

Supply plan

EFA

A320

A340


0

100

200

300

400

2003 2004 2005 2006 2007

Demand plan

EFA

A320

A340




SENIOR TEAM REVIEW SENIOR TEAM REVIEW PROFORMA (2)PROFORMA (2)






Proposed Solution

Cost Impact Decision Point

Risks

10% overload mar-may ‘04 Offload 5% reduction

Increased L/T Next Cycle Late Delivery

15% Overload (constant) in Assy

Hire 2 men Increased overheads





Master Scheduler

Next process cycle


MeasuresMeasures Progress against action plan/action due dates achieved Previous vs. current strategies Demand accuracy Not Right First Time Schedule Achievement Velocity On Time New products

OutputsOutputs Decisions made Actions requested Output for cascade Agreed set of Assumptions Agreed strategies Agreed financial plan Guidance/targets

InputsInputs Output from Output from Innovation Output from Customer Demand Output from Supply Planning Output from Priority Planning Reports form previous STR’s


– Martyn Hurst M-DI Exec Committee Steering Committee

Scope/PurposeScope/Purpose Understand & evaluate priorities &

assumptions

Make decisions based on priority

review output

Review performance data

Feedback & rationale for decisions

Discussion around gaps:– Actions resulting

Buy-off of financial changes

Sign off of financial projection

Provide update on strategy

Reach consensus on proposals &

assumptions from priority review

Links to Other Links to Other ProcessesProcesses

Executive Review Meeting Annual strategy meeting Feeds next S&OP cycle

““Senior Team Review” ProcessSenior Team Review” Process


Top Level GS&OP Top Level GS&OP Cycle:Cycle:

M T W FT1

5 6 7 8

12 13 14 15

19 20 21 22

26 27

Calendar Month 1

2

9

16

23

28 3029

M T W FT62 3 4

139 10 11

2016 17 18

2723 24 25

30

Calendar Month 2

5

12

19

26

31

SNRTR


PriorityWithin

3 BU/CS

SupplyPlanning

By Site (x6)

3x BU Demand

3x CSDemand

Global

Planning

SNRTR

PriorityBetween 3 BU/CSGlobal

Planning

PriorityWithin

3 BU/CS


R&T

ProgrammeInnovation

(x3)

Op’sInnovation

GlobalPlanning


SupplyPlanning

By Site (x6)

3x BU Demand

Site (x6)Demand

3x CSDemand

ProgrammeInnovation

(x3)Innovation

@ Sites (x6)

GlobalPlanning


Op’sInnovation

R&T

Global

Planning

Site (x6)Demand

Innovation@ Sites (x6)


WorkshopWorkshop

• Identify using the format how the local process will work in reality

• Don’t design it here – that’s for later

• Identify key people, sources of data, and process for putting together a real senior team review


Framework for Process ReviewFramework for Process ReviewProcessProcess

InputsInputs PurposePurpose OutputsOutputs

PeoplePeople Desired CultureDesired Culture MeasuresMeasures

Link to otherLink to other

ProcessesProcesses

Documents

1 © The Delos Partnership 2003 Global Strategic and Operations Planning Prioritisation and Strategy Review