Bridging tactical S&OP and operational execution

Bridging tactical S&OP and operational execution

Sales & Operations Execution: Bridging tactical S&OP and operational execution

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Contents

Introduction

Our approach to S&OE implementation

> Fundamentals

> Process design

> Enabling tools

> Process deployment

Our company & qualifications

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05

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08

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07


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Is your Sales and Operations Planning (S&OP) process mature and thorough enough to generate a solid tactical plan? Or, are short-term issues and operational details forcing you dedicate precious time and energy to fighting “fires” and resolving problems caused by deviations between the S&OP plan and what should be executed?

The concept of “Sales and Operations Execution” or “S&OE” is not new; it was introduced

several years ago by Gartner, the global research and advisory firm. It came about since

many companies that have implemented an S&OP process for planning and decision-

making at a tactical level still struggle to make those plans meaningful and drive

operational planning within a shorter horizon (i.e., the horizon that falls between tactical/

operational planning and execution). The struggle stems from neither S&OP nor

operational planning being designed to process relevant information, manage issues, or

take required actions in this in-between horizon.

The purpose of S&OE is to eliminate this disconnect. S&OE complements the existing

planning process structure and brings discipline to information exchange and decision-

making to bridge S&OP and operations. Similarly to how S&OP is implemented, putting

S&OE into action requires you to run an initiative for additions and changes to planning

processes, the data model, meeting cadence, and IT systems. A good amount of change

management also is necessary to adopt S&OE, while simultaneously adjusting your S&OP

process to abandon decisions and tasks that should no longer fall under it.

By introducing S&OE, you will remove the chains from S&OP and allow the process to

concentrate on its primary task—providing a tactical plan of quality that bridges tactical

and operational levels with a process specifically designed for that purpose.


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S&OPS&OEOperationalplanning and

execution

Figure 1. The relationship between S&OP, S&OE, and Operational Planning & Execution


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Our approach to S&OE implementation

As with S&OP process design, you should begin designing your

S&OE process with the fundamentals needed to create an end-to-

end workflow before proceeding into the details of each sub-

process, data model, or logic of data processing.

Within Chainalytics’ approach, Fundamentals are the core building blocks tying the end-to

-end S&OE process together and connecting it to surrounding processes—mainly S&OP

and operational planning and execution (as depicted in Figure 1).

Design of the core S&OE Fundamentals defines answers to the following questions:

What are the decisions required from S&OE? S&OE is the process used to distribute the

latest monthly S&OP plan down to a weekly plan to identify and act on deviations between the

latest S&OP plan and operational details. These decisions help define the business logics

needed to make the S&OP plan actionable by bringing it down to more granular level and,

more importantly, defining business rules for criteria and thresholds for spotting significant plan

vs. actual deviations and the resulting actions you should take.

What are the S&OE inputs and outputs? Outputs (i.e. plans and decisions from S&OE) can

be actions and alerts to be looked into and executed on by human organization as well as data

that is fed into other processes and related IT systems. Each output requires a definition to

make it actionable by its receiver. Input definitions including input sources are created based

on requirements by outputs.

What is the S&OE horizon? Being a tactical planning process, the decisions made within

S&OP are implemented during the tactical planning horizon. Where the S&OP horizon begins,

that is where the S&OE horizon ends (as shown in Figure 2). The exact timing of your S&OE

horizon should be determined by your business needs. It can begin immediately or, using

many manufacturing businesses as an example, the end of the frozen production period.

S&OE fundamentals


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How should the data hierarchies be set? For S&OP, a design already exists for planning

hierarchies that enables users to access the right level of detail of planning data for their

purpose. Typically it is the various levels of customer, company organization, and product data

that are organized into the hierarchical structure. In S&OP design, these levels and their

content were defined to serve the needs of tactical planning. Since S&OE provides a more

detailed planning result, the definitions of planning hierarchies from S&OP design need to be

revisited and complemented to ensure the needed level of granularity as shown below in

Figure 3.

Operational

planning and

execution S&OE S&OP

Horizon Days Up to 3-4 months Up to 12-18 months

Time Bucket Day/shift Week Month

Figure 2. Typical planning horizons and time buckets

Figure 3. Example planning hierarchies

Year

Quarter

Month

Week

Day

S&OP S&OE

Company

Channel

Region

Sub-Region

Country

Customer

All Products

Business Unit

Product Area

Product Family

Product Group

Product Code

Material Code

Operational Planning & Execution

Time Customer/Geography Product


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Having defined the S&OE fundamentals, the next step is to create the design for the

S&OE process. Given the planning horizon, S&OE reads the S&OP plan in monthly

buckets, mixes it with operational data and comes up with the best possible S&OE plan

when considering the resource reservations set by S&OP.

S&OE process design helps answer the following questions:

How do we design the weekly process to maintain S&OE plan? To cover the S&OE

horizon at a weekly level, there is a need for a reoccurring, weekly S&OE process to review,

decide and perform actions that convert the tactical plan into the model serving as the basis for

decision on the S&OE plan. The S&OE process workflow defines the steps to providing visibility

at the right level, assembling the right people, and utilizing the appropriate IT systems for data

processing and decision-making. The S&OE Calendar is defined for timely execution of process

tasks.

Which deviations should trigger event-based process? To complement the weekly S&OE

process, event-based triggering actions should be identified in order to react to such deviations

that cannot wait for the next S&OE cycle but require immediate actions once discovered. For

example, an unexpected close delivery date of a large sales order can trigger the transfer of

material stock from one factory to the delivery facility within the supply network or setup of

additional shifts at the production line. These actions take time to complete and thus must be

initiated without delay. An event-based S&OE process requires definitions for criteria and

thresholds which determine when the process should be triggered as “event-based.”

Who needs to participate in S&OE? Process design requires identifying and defining who is

responsible for what, also known as S&OE process roles. While S&OP involves people from

mid-management and those in the VP level for tactical decision-making, S&OE is typically

conducted by the planning teams and operational managers involved in sales and supply

functions. These individuals are mandated to make quick and informed decisions. Only when

issues of a greater significance arise is escalation made to higher management.

How do we transform plans from S&OP to S&OE? S&OE requires more granularity in data

hierarchies than S&OP. Additional hierarchy levels create a need for additional data logics to

map the S&OP plan to the transactional data coming from operations to understand if supply

chain operations are achieving the levels planned for by S&OP, and if not, how significant the

deviations are and where they occur.

S&OE process design


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Implementation of S&OE to accompany S&OP will create new requirements for IT tools.

However, selection of a tool to run S&OE operationally is not a top priority of the to-do

list as long as you have not completed the validation of the S&OE Fundamentals and

Process Design, resulting in clearly stated requirements for IT.

What tools do I need to support the S&OE process design? The S&OE design and

development phases call for agility and flexibility from IT. From the very beginning, there is a

need for a tool to conduct data modeling, and Excel often works well for this purpose.

However, to organize data imported from operational, S&OP and potentially other

complementary sources, the need for a proper data management, data processing and

visualization systems may emerge. Such systems, i.e. a modeling system, may have already

been implemented for S&OP. A modeling system should enable agility for iterative

development of an S&OE model. Recommended IT tools include database software, workflow

tools for automated data processing and business intelligence software for analytics and

visualization.

Do I need an application specifically designed for S&OE? Together with the growth in

deployment scale and level of S&OE maturity needs for collaboration and integration across

business functions emerge. There are S&OP software suites in the market that are based on a

single data model and have the functionality for S&OP and operational planning integration. If

your organization uses such software, it would be logical to assess its capabilities to support

your S&OE process. In case your S&OP software does not have what your S&OE process

requires, you may also explore the possibilities by making use of the modeling system through

an extension of its functionality to support operational S&OE process.

S&OE enabling tools


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Project and change management

Deploy S&OEAssess current end-to-end planning

Designfundamentals

Design S&OE process

Develop solution

Interview stakeholders

Define changesto S&OP

Develop supporting IT tools

Deploy pilot

Review performance

Conduct data analysis

Define S&OE fundamentals

Educate people Deploy globally

Define detailed processes

Define data requirements

Define roles and responsibilities

A high-level overview of Chainalytics’ S&OE deployment methodology is depicted in

Figure 4 above. Specific considerations include:

How do we set the scene for an S&OE implementation project—i.e., what should be put

into a project charter? A project charter consisting of project definition, objectives, in-scope

and out-of-scope items, stakeholders, timeline, budget etc. typically reflects the current state of

the S&OP in a company. In the event today’s S&OP process truly exists for the sake of tactical

planning for visibility and decision-making in the S&OP horizon (illustrated in Figure 2), the

mission of an S&OE implementation project will be placing the S&OE process neatly into its slot

between S&OP and operational planning and execution to bridge these two (refer to Figure 1).

Unfortunately, this project scenario is not very common.

In a more likely implementation scenario, the starting point is essentially the ultimate reason for

the existence of S&OE. S&OP has mainly come to focus on near-term horizon, plans and

decisions that are mostly related to current issues instead of operating as the tactical process

originally intended. Furthermore, operational firefighting and ad-hoc activities outweigh the

originally designed objectives and process structure. An S&OE implementation project charter

will consist of scope items and tasks that are needed, not only to integrate S&OE to

surrounding processes, but also redesign the entire integrated planning process from tactical to

operational planning, including injection of execution details back in the process.

Figure 4. Chainalytics S&OE deployment methodology

S&OE process deployment


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Successful deployment of S&OP and S&OE calls for a strong emphasis on change

management. These processes exist to provide uniform structure for fact-based decision-

making and actions taken thereof that require alignment globally across business

functions. It goes without saying that sustainable deployment, as well as an abandonment

of old ways of working, entail a great deal of support and sponsorship after the initial

implementation. This support and supervision needs to be included in project charter.

Chainalytics’ experts have helped companies implement integrated planning processes

for over 20 years. That experience, together with a solid implementation methodology,

covers all phases of getting S&OP and S&OE up and operational. Chainalytics’ experts

can help in all phases of a project, from the initial value and maturity assessment to

process design, solution implementation and continuous support.


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Chainalytics is a recognized global leader

in supply chain consulting, analytics, and

market intelligence.

Our mission is simple: To help companies

capture the maximum value from their

supply chain. With end-to-end supply

chain expertise, we support supply chain

transformation at every planning horizon –

strategic, tactical, and operational – and

across multiple domains.

Our approach is unique: We combine

decades of experience with leading-edge

analytics and market intelligence to

provide proven methods and the

actionable insight necessary to help

organizations stay at the forefront of

changing trends and practices across all

areas of the supply chain.

Our specialties include supply chain

design, sales and operations planning

(S&OP), logistics operations,

transportation, service supply chains, and

packaging optimization.

With locations in North America, Europe,

and Asia-Pacific, we help companies

around the globe accelerate fact-based

transformations in a borderless fashion.

bright minds better methods best outcomes Maximizing the value of supply chain to the enterprise through fact-based

transformation using the brightest minds and a combination of innovative

and proven methods.

Our company & S&OP qualifications


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Analytics is at the core of everything

Chainalytics does; it’s in our DNA.

Our services include the categories of

strategy and transformation, process

excellence, and enabling technology,

spanning all major supply chain domains

— from strategic alignment and customer

segmentation to packaging optimization

and reverse logistics.

Three delivery models are available:

(1) consulting, (2) managed analytics, and

(3) market & performance intelligence.

Expertise behind supply chain headlines

Our services

Cost-to-Serve/Product & Customer

Profitability

StrategicAlignment

IntegratedDemand & Supply Planning

Diagnostics & Roadmapping

Supply ChainNetwork

Design

PackagingOptimization

TransportationSourcing & Supplier Management

Logistics Operations

Analytics

Dunkin’ Donuts saves $114 million

thanks to SCM cooperative”

— Supply Chain Digital

Coca-Cola consolidates U.S.

bottlers”

— Atlanta Business Chronicle

Kellogg Co. outlines plans for

financial savings from D.S.D. exit”

— Food Business News

Kimberly-Clark’s journey to

logistics procurement excellence”

— Logistics Viewpoints

Energizer Holdings’ new blister

brings benefits throughout supply

chain”

— Packaging World


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Chainalytics is uniquely qualified to support your organization in your S&OP and S&OE

journeys. Our team combines the right blend of required experience, seniority, and

technical skills, and our global network of experts provide a deep bench of local/region

specific knowledge as well as subject matter expertise.

In addition to top talent, our company is distinct in the following ways:

Real-life planning experience

Chainalytics has strong supply chain

planning experience with a thorough

understanding of planning concepts

and processes. It gives us both an

“inside out” and “outside in”

perspective.

1 4 Proven methodologies

Our proprietary segmentation

approach and deep expertise in

advanced analytics and

benchmarking ensures the right level

of planning detail is applied to the

right segments of demand.

2 5 Deep manufacturing experience

Our company has world-class

industry knowledge and experience

assisting CPG, Food & Beverage, and

other manufacturing clients with end-

to-end supply chain transformations.

Blended capabilities

Our overall expertise blends the best

of process excellence, data-driven

analytics, and systems

implementation to drive

improvement and value.

3 6 Speed to value

Our team can leverage proven

experience, frameworks,

methodologies, and standards to

help clients make the right decisions

in a shorter amount of time.

Global presence

Highly-qualified, dedicated teams

and wide range of experts with global

coverage including offshore data

analytics and solution support in

India.

Our unique qualifications

Atlanta | Denver | Minneapolis +1 (770) 433-1566 [email protected]

NORTH AMERICA

Amsterdam | Helsinki | Milan +31 (0) 20 658 6010 [email protected]

EUROPE

Bangalore | Singapore | Sydney +91 80 41254309 [email protected]

ASIA-PACIFIC

www.chainalytics.com

Chainalytics accelerates fact-based transformation spanning the entire planning horizon for supply chain

leaders around the globe, including 18 of Gartner’s Top 25 supply chains. Our peer-to-peer collaboration

and market intelligence platforms enable our clients to achieve industry-specific insights quickly. Our

mission is simple: To help companies reveal the maximum value from their supply chains. With locations in

North America, Europe, and Asia-Pacific, Chainalytics serves companies globally in a borderless fashion.

About Chainalytics Bright minds. Better methods. Best outcomes.

mailto:[email protected]



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Bridging tactical S&OP and operational execution