Bob Stahl Gaylord Texan Resort & Convention Center December 11-12, 2008 Gaylord Texan Resort & Convention Center December 11-12, 2008

Bob Stahl www.tfwallace.com

Gaylord Texan Resort & Convention CenterDecember 11-12, 2008

Gaylord Texan Resort & Convention CenterDecember 11-12, 2008 Rick Hall

Director of Operations UPG ofThomas & [email protected]

Rick HallDirector of Operations UPG ofThomas & [email protected]

APICS / iBF Best of the Best S&OP Conference

APICS / iBF Best of the Best S&OP Conference

Executive S&OPExecutive S&OP How to Implement SuccessfullyHow to Implement Successfully

Executive S&OPExecutive S&OP How to Implement SuccessfullyHow to Implement Successfully

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Bob StahlR.A. Stahl Companywww.tfwallace.com


The The Evolution . . . Evolution . . . The The Evolution . . . Evolution . . .

Plant Scheduling/PullPlant Scheduling/Pull

MSMS

S&OP / Rough CutS&OP / Rough Cut

PTF

24MonthsTime

Most Detail Aggregate OnlyExac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space

VolumeMix

Detailed Forecasting &Detailed Forecasting &

Master SchedulingMaster Scheduling• Lost in the woods- Detail• Engage Top Management?• Added Little Value outside

the Planning Time Fence

Super MSSuper MS


An An Imperative . . . Imperative . . . An An Imperative . . . Imperative . . .

PTF

Horizon

Detai

lSuicideQuadrant

Aggregate Only

Quadrant

S&OP


Four FundamentalsFour FundamentalsFour FundamentalsFour Fundamentals

DemandDemand SupplySupply

MIXMIX

VolumeVolume


The Real Issue . . The Real Issue . . . . The Real Issue . . The Real Issue . . . .

Understanding Executive S&OP is simple.The hard part is . . .

Organizational Behavioral ChangeChanging the way everyone does their jobs.

Keys: - Full cross functional buy-in

- Counter-experiential/intuitive

- Comfort vs Change- Path of low risk


Successful Successful Implementation . . .Implementation . . . Successful Successful Implementation . . .Implementation . . .

A - PeopleB - Data

C - Software


C - Software . . C - Software . . ..C - Software . . C - Software . . ..•Data “warehouse”

– ERP Operating System, Forecasting Software, etc. (transaction level data)

•Data Cubes . . . •Excel (or equivalent)

– Organizer– Presenter (tables & graphs)

•More complex software – later/maybe


Rick Hall on Rick Hall on software . . . software . . . Rick Hall on Rick Hall on software . . . software . . .

• Change forecasting from detailed to families

• Extract data from BPCS; organize in Excel • Develop appropriate MIX assumptions • “Control Tools” to build confidence in these assumptions (Excel based)

• Be willing to put “the gator” on the table

• No financial investment for software.

This is not a software implementation; it is a knowledge application implementation!


B - Data . . . B - Data . . . B - Data . . . B - Data . . . •Getting out of “Suicide Quadrant”– Forecasting in Families

•Simplifying Data Assumptions– for Rough Cut Resource Planning– for financial conversion (units to $$$)

•Single process -– tied together– one source for data– one agreed upon output


Rick Hall on Rick Hall on data . . .data . . .Rick Hall on Rick Hall on data . . .data . . .

Getting MORE with LESS• MORE clear picture of the business condition

LESS crunching of massive amounts of ultimately useless data

• MORE understanding of where we want the business to beLESS confusion about where we are and where we are going

• MORE participation and agreement in how we will get the business thereLESS conflict surrounding business initiatives

• MORE accountability for the resultsLESS waste of human and financial resources


Rick Hall -- Rick Hall -- One Key to One Key to success . . .success . . .

Rick Hall -- Rick Hall -- One Key to One Key to success . . .success . . .

SimplifyingAssumptions


Validating AssumptionsValidating AssumptionsValidating AssumptionsValidating Assumptions

RRP Run Rate ConversionUnits to Hours Control Chart

0.42

0.44

0.46

0.48

0.5

0.52

0.54

0.56

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

2006 2007 2008

Hours per Unit

UCL LCL Hours per Unit Linear (Hours per Unit)

AssumptionSensitivity


Supply Supply Assumptions . . .Assumptions . . .Supply Supply Assumptions . . .Assumptions . . .

% of A that is IC 01

Instructions:1) Enter subgroup (sample) size. 3

2) Enter subgroup observations. 4

3) You may need to adjust the chart size to have the observations align with the data points

Note: If you clear all the cells, you will get an error - you may ignore it. The worksheet will perform properly with data in it.

Note: You may unprotect this worksheet should you wish to modify it: select T ools,

then Protection, then Un p rotect Sheet

3 Constants: A2

D3

D4

AVERAGES X = 32.25 UCL= 43.8 (X + A 2R) LCL= 20.7413 (X - A 2R)

RANGE R = 11.25 UCL = 28.9575 (D 4R) LCL = 0 (D 3R) (0 for Sample < 6)

Period Mar-07 Jun-07 Sep-07 Dec -07Apr-07 Jul-07 Oc t-07 Jan-08May -07 Aug-07 Nov -07 Feb-08

1 31 40 35 23

2 30 20 37 29

3 26 38 43 35

Sum 87.00 98.00 115.00 87.00

X 29.00 32.67 38.33 29.00

R 5.00 20.00 8.00 12.00

Subgroup (sample)

2) Observations

1.023

0

2.574

1) Enter Subgroup Size (1-10)

0.00

10.00

20.00

30.00

40.00

50.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00


Financial Financial Assumptions . . .Assumptions . . .Financial Financial Assumptions . . .Assumptions . . .

+1 -1 +2 -21.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.0044471.864624 1.291173 2.151349 1.004447

Average Selling Price Family H

$1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58$1.58$1.58

$0.10

$0.60

$1.10

$1.60

$2.10

$2.60

Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

Period

Observations

Average Selling Price Family H Range Chart

0

0.2

0.4

0.6

0.8

1

1.2

Oct-

06

Nov-

06

Dec-

06

Jan-

07

Feb-

07

Mar-

07

Apr-

07

May-

07

Jun-

07

Jul-07 Aug-

07

Sep-

07

Oct-

07

Nov-

07

Dec-

07

Jan-

08

Feb-

08

Mar-

08

Period

Range


Graphical ReportGraphical ReportGraphical ReportGraphical ReportResource Requirements Plan - Dept #8

0

50

100

150

200

250

Oct Nov Dec Jan Feb Mar Apr May Jun JulAug Sep Oct Nov Dec Jan Feb Mar

2007 2008 2009

Hours Per Month

Normal Capacity Normal Capacity +25%Medium Widget Required Capacity Large Widget Required Capacity


Simplifying AssumptionsSimplifying Assumptionsallow Homac to . . . allow Homac to . . . Simplifying AssumptionsSimplifying Assumptionsallow Homac to . . . allow Homac to . . .

• Get out of the suicide quadrant• Keep noise level MIX issues from clouding VOLUME space picture

• Maintain confidence in the process because the assumptions are monitored for validity

• Build believable future state projections


Done Done Properly . . . Properly . . . Done Done Properly . . . Properly . . .

Simpler(Not Easier)

Better


A - A - People . . . People . . . A - A - People . . . People . . .

• Top Management “centric”– The Leader of the business (CEO, President, GM, MD,

etc.) must not only provide• Support• Funding• Commitment• Leadership

– They must also be “hands-on” each and every month(Top Management must not only support it, they must be willing, ready, & able to do it!)

• It’s not doing what you do better, it’s doing something different to be better!

• Counter-experiencial & Counter-intuitive equals Discomfort & Risk


Engaging Top ManagementEngaging Top ManagementEngaging Top ManagementEngaging Top Management

•In Change, there is no Comfort(In Comfort, there is no Change)

Those who succeed withExecutive S&OP

are willing the endure the discomfort that is required!Ris

k


• Uninformed (before Go/No-go #1)

Boss: “Okay, let’s do an Executive Briefing.”

• Semi-informed (after Briefing: Go/No-go #1)

Boss: “Okay, let’s do a Live Pilot”

• Fully informed (after Pilot: Go/No-go #2)

Boss: “Okay, let’s go to full cutover.”

Low

Risk

Three Levels Three Levels of Commitment . . . of Commitment . . . Three Levels Three Levels of Commitment . . . of Commitment . . .


Homac Homac Getting Getting started . . .started . . .

Homac Homac Getting Getting started . . .started . . .• President was convinced this was worth looking at by Demand, Supply, and Finance executives.

• The Executive Briefing supplied all the necessary facts. The fact that it was a people based implementation was a strong selling point. After all, our people are our strength!

• After some Co-Chair possibilities a staff level chair person was chosen (support from the top) for Design Team Leader


Homac Homac Design Team Design Team Selections. . .Selections. . .

Homac Homac Design Team Design Team Selections. . .Selections. . .

• Chose the best people disregarding perceived workload constraints

• To a person, the team members were enthusiastic to take on the task of developing and implementing this new tool

• Initial progress was slow but progressed nicely as hurdles were overcome

• Live pilot demo was very convincing with all design team members sharing in the presentation process

• Implementation went forward on time and fully supported


Homac’s added plus . . Homac’s added plus . . ..Homac’s added plus . . Homac’s added plus . . ..• ES&OP output provided clear supportable data for marketing our company

• ES&OP process at our company is being modeled for all of the Utility Products Group within Thomas & Betts

• ES&OP process is being used in tough market conditions to drive business performance

• We are looking for new simplifying assumptions to help us broaden the proactive benefits of our ES&OP process (space requirements)


Implementation PathImplementation PathImplementation PathImplementation Path

1 2 3 4 5 6 7 8 9

Months

Business

Improvement

Phase IPhase IPreparation

Phase IIPhase IIExpansion

Live PilotDemonstrationGo/No-Go #2

Phase IIIPhase IIIFinancial Integratio

n

ExecutiveBriefing

Go/No-Go #1

KickoffSession

Low RiskLow Cost

High Impact

Low RiskLow Cost

High Impact


Implementation AlternativesImplementation Alternatives

“Build it and they will come” Design it first, get the mechanics working, and

then attempt to sell it to top management.=

Low probability for success

“Hold the high ground” Involve top management at the very outset of the

implementation, and throughout.=

High probability for success


Success RequiresSuccess RequiresSuccess RequiresSuccess RequiresDesign Team’s Job:

1. Defined set of practices (What, How, & Who)

2. Accurate, timely, & believed data

3. Valid, simplifying assumptions (Demand/Supply/Financial)

(Getting out of ‘Suicide Quadrant’)

Leadership’s Job:

• High discipline clear accountability (process & results)

• Constant improvement

• Changed performance measures

• Culture/Behavior change (Gator on table)


Thanks for Thanks for ListeningListeningThanks for Thanks for ListeningListening

[email protected]

www.tfwallace.com

Documents

Bob Stahl Gaylord Texan Resort & Convention Center December 11-12, 2008 Gaylord Texan Resort & Convention Center December 11-12, 2008