October 9, 2013 El Paso, TX Ramada Hotel

Bob Stahl www.RAStahlCompany.com

October 9, 2013El Paso, TXRamada Hotel

October 9, 2013El Paso, TXRamada Hotel

Bob Stahl508-226-0477

[email protected]

Bob Stahl508-226-0477

[email protected]

Sales & Operations Sales & Operations PlanningPlanning::

Top Management’s Handle on the BusinessTop Management’s Handle on the Business

Sales & Operations Sales & Operations PlanningPlanning::

Top Management’s Handle on the BusinessTop Management’s Handle on the Business

El Paso / Juarez Chapter


AgendaAgendaAgendaAgenda• What is authentic Executive S&OP

– “It ain’t your father’s Oldsmobile”

• What makes it work– Leadership’s (Top Management) Role

• What makes it fail (No notes allowed)

• How to implement effectively at:– low risk – low cost – high impact – quick results


Bob Stahl’s Background . . . Bob Stahl’s Background . . . Bob Stahl’s Background . . . Bob Stahl’s Background . . . • 40+ years in manufacturing companies

• Started as Schedules Coordinator

• With help of Oliver Wight, certified Class A success (1979)

• Became an associate of Oliver Wight – 1981 (passed in 1983)

• Have worked with some of the best companies in the world

• Today = eS&OP coach, educator, author

• Have written six books with Tom Wallace –

– three have been used for APICS Certification

• S&OP editor and columnist –

– for the IIF’s Journal of Forecasting - Foresight

• Head up consulting services for TFWallace & Company

• “Retired” = choices


Volume

Mix

•How Much?•Rates•The Big Picture•Families•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Resp.

•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Mos•Middle Mgt. Resp.

Demand Supply

BalanceVery different, separate, & distinct

practicesbut integrated!

Very different, separate, & distinct

practicesbut integrated!

Sales & Operations Planning

ProActive Behavior

ReActive Behavior

Executive S&OP (eS&OP)


Forecasting Forecasting (Worst of Two Worlds)(Worst of Two Worlds)Forecasting Forecasting

(Worst of Two Worlds)(Worst of Two Worlds)

PTF

Horizon

De

tail

ISuicide

Quadrant

IIAggregate

OnlyQuadrant

Exec.S&OP

IIIBuilding toCustomerDemand


Executive S&OP is . . .Executive S&OP is . . .APICS Dictionary, 13th Edition, October 2010APICS Dictionary, 13th Edition, October 2010

Executive S&OP is . . .Executive S&OP is . . .APICS Dictionary, 13th Edition, October 2010APICS 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. 4. Is a forum for disciplined discussion about setting

Policy, strategy, risk, budget changes• It is a multi-step process involving demand planning, supply

planning, and middle and top management meetings for decision-making and authorizationTop Management’s Handle on the Business

Executive S&OP – does the proper prior planning to allow the routine things to be done

routinely!!


Using Market-Facing Families & Using Market-Facing Families & Simplifying Data AssumptionsSimplifying Data Assumptions

Using Market-Facing Families & Using Market-Facing Families & Simplifying Data AssumptionsSimplifying Data Assumptions

ResourceDepartmentEquipment

Supplier

Operations(Supply)

//Sales &

Marketing(Demand)

MarketsSegments Channels

Customers

MarketsSegments Channels

Customers

Traditional Solutions:1.Full Granularity or2.Fcs’t in Supply Families

Traditional Solutions:1.Full Granularity or2.Fcs’t in Supply Families

Best Solution:1.Market-Facing Families2.Data MIX Assumptions

w/ Resource Planning

Best Solution:1.Market-Facing Families2.Data MIX Assumptions

w/ Resource Planning


ERPERPEnterprise Resource PlanningEnterprise Resource Planning

ERPERPEnterprise Resource PlanningEnterprise Resource Planning

Business PlanningBusiness Planning

Strategic PlanningStrategic Planning

Fo

reca

sti

ng

& D

eman

d M

anag

emen

tF

ore

cas

tin

g &

Dem

and

Man

agem

ent

VolumeExecutive S&OP

SalesPlan

OperationsPlan

Cap

acity

Plan

nin

gC

apa

city P

lann

ing

SupplyDemand

MixMaster Scheduling

MixMaster Scheduling

Detailed Planning &Execution Systems:

MRP, Plant Scheduling,Supplier Scheduling, etc.

Detailed Planning &Execution Systems:

MRP, Plant Scheduling,Supplier Scheduling, etc.

Transactional

Software


Where Does eS&OP Fit?Where Does eS&OP Fit?Where Does eS&OP Fit?Where Does eS&OP Fit?

Strategic PlanningStrategic Planning

Detailed Planning, Scheduling & Execution

Detailed Planning, Scheduling & Execution

Business PlanningBusiness Planning

Disconnect!!!Executive S&OPExecutive S&OP

TurningDisconnected

Knobs?

Where Executives

Live

Where Executives

Live

WhereMid-Mgt.

Lives

WhereMid-Mgt.

Lives


““Strategic Planning . . .Strategic Planning . . . forward in reverseforward in reverse””

““Strategic Planning . . .Strategic Planning . . . forward in reverseforward in reverse””

Ro

ber

t H

ayes

HB

R-N

ov/

Dec

198

5S

trat

egic

Pla

nn

ing

- f

orw

ard

in r

ever

se

Exec

utiv

e S&

OP

Strategy

Tactics

Execution

ExecutiveS&OP

Ann

ual B

usin

ess

Plan

Master Schedule

DoingThe

RightThings

DoingThe

ThingsRight

Linking Strategic Planning to Day-To-Day Operations


•Data Dump (Warehouse)•Information (Org Data)•Knowledge•Understanding

Two Parts of Exec. S&OPTwo Parts of Exec. S&OPTwo Parts of Exec. S&OPTwo Parts of Exec. S&OP

The mechanics:

Display of Info

Defined Process forDecision-Making


Holistic DisplayHolistic DisplayHolistic DisplayHolistic Display


Executive RolesExecutive RolesExecutive RolesExecutive Roles

Executive S&OPA process to raise and reconcile

conflict, agree upon, & communicate THE company game plan

Executive S&OPA process to raise and reconcile

conflict, agree upon, & communicate THE company game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Dollars)

Product Dev.(New Product Issues)

President


eS&OP Success . . . eS&OP Success . . . eS&OP Success . . . eS&OP Success . . .

• not only allows disagreement, to work it promotes and requires disagreement

• Learning how to disagree without being disagreeable is paramount to success

• Gaining collaborative consensus from this disagreement makes for best decisions

• Without a comfortable process to resolve disagreement/conflict, organizations will avoid it – “put the moose under the table”


Top ManagementTop Management’’s Role . . .s Role . . .(among other things)(among other things)


• Create an environment (culture) that allows the Ugly Moose to be put on the table --


The Ugly Moose . . . The Ugly Moose . . . The Ugly Moose . . . The Ugly Moose . . . • Big ugly animal• All companies have them (under the table)• Difficult & Contentious• Good companies know how to disagree

without being disagreeable• Put the ‘beast’ on the table• Thrive on conflict, not chaos• Moose is a symbol of agreement to do so

Getting the Moose on the Table




• Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that . . .

• They can completely and effectively resolve disagreements & conflict, setting proper:– Policy– Strategy– Risk Assessment– Performance Measurements

Before it’s in the MIX Space!


Conflict Resolution * . . . Conflict Resolution * . . . Conflict Resolution * . . . Conflict Resolution * . . .

• Disagreement has two parts:– Substantive issue– Emotion behind that issue

• Disagreement becomes conflict when emotion is not completely addressed

• Lasting conflict resolution must deal with both elements of disagreement

• Doing that effectively can be learned:– With a motive to do so &– A framework on which to work

“Getting to Resolution” Stewart Levine


•Data Dump (Warehouse)•Information (Org Data)•Knowledge•Understanding

Two Parts of Exec. S&OPTwo Parts of Exec. S&OPTwo Parts of Exec. S&OPTwo Parts of Exec. S&OP

The mechanics:

Display of Info

Defined Process forDecision-Making


The Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP Process

Step #1Data

Gathering

End of Month

Decisions &Game Plan

Step #5ExecutiveMeeting

Conflict Resolution, Recommendations &

Agenda for Exec. Mtg.

Sales Actuals, Statistical

Forecasts &Production Actuals

Step #2DemandPlanning

Step #4Pre-S&OPMeeting

Capacity constraints2nd-pass spreadsheets

Management Forecast1st-pass spreadsheets

Step #3Supply

Planning

HeavyLifting

Financia

l Involvement

Financia

l Involvement

New Product

Involvement

New Product

Involvement

Creates a Disciplined

Rhythm

Creates a Disciplined

Rhythm

It is a multi-step process involving demand planning, supply

planning, and middle and top management

meetings for decision-making and authorization


Top Management Top Management andand Executive S&OPExecutive S&OP

Top Management Top Management andand Executive S&OPExecutive S&OP

Need to be Hands-On with the Executive S&OP Process

Stewardship & Leadership(Manager/Trustee & Guide/Command)

PresidentPresident

VPOperations

VPOperations

VPSales/Mktg

VPSales/Mktg

VPFinance

VPFinance

VPR&DVP

R&D

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month

Done Properly . . .

It takes Top Management between

1 & 2 Hours per Month


Making eS&OP Successful . . . Making eS&OP Successful . . . Making eS&OP Successful . . . Making eS&OP Successful . . .

• The hard stuff (tools, techniques, processes) is easy

• The soft stuff (relationships, behavior, culture) is hard


Market Research . . . Market Research . . . Market Research . . . Market Research . . .

Success with eS&OP is:

60% = Behavior/culture change

30% = Process improvement

10% = Technology*Lora Ceceri

Altimiter/AMRBoston, Sept 2010


Overcoming the Catch Overcoming the Catch 22 of Implementation22 of ImplementationOvercoming the Catch Overcoming the Catch 22 of Implementation22 of Implementation

• If you don’t get top management involved from the start, you won’t address the cultural or behavioral changes that are required.

• If you do get top management involved form the start, they realize that success does not come from doing what you do better, but from doing things differently to be better. That translates to personal and/or organizational discomfort and risk for those in charge – resulting in reluctance to implement.


Discomfort = RISKDiscomfort = RISKDiscomfort = RISKDiscomfort = RISK

• 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!RiskRisk


• Uninformed (before Go/No-go #1)

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

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

Staff: “Okay, let’s do a Live Pilot Demonstration”

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

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

LowRisk

LowRisk

How to do that . . . How to do that . . . Mitigate RISKMitigate RISK

How to do that . . . How to do that . . . Mitigate RISKMitigate RISK


Implementation PathImplementation PathImplementation PathImplementation Path

1 2 3 4 5 6 7 8 9Months

Bu

sin

ess

Imp

rovem

en

t

Phase IPhase IPilot Demo

Phase IIPhase IIExpansion

Live PilotDemonstrationGo/No-Go #2

Phase IIIPhase IIIFinancial

Integration

ExecutiveBriefing

Go/No-Go #1

KickoffSession

Low CostLow RiskHigh ImpactQuick Results

Low CostLow RiskHigh ImpactQuick Results


Implementation AlternativesImplementation AlternativesImplementation 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

(because you can’t address the cultural issues without Top Management)

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

implementation, and throughout.= High probability for success


Parallel PathsParallel PathsParallel PathsParallel PathsRun the Business todayRun the Business todayAA

Business ExcellenceBusiness ExcellenceBB Projects to support ‘A’Projects to support ‘A’

Leadership Responsibility:1. Assuring resources for all2. Use Pilot for learning, not benefits3. Gain focus - application of principles

Executive S&OPExecutive S&OPXXZZ


ImplementationImplementation

PitfallsPitfallsImplementationImplementation

PitfallsPitfalls• Middle Mgt. only• It’s a Supply Chain thing• Top Mgt. but not

President (SBU Ldr)• No Education (‘Build It’)• Supply based Families• Too much granularity• No consensus on ‘end

game’• No discipline• Inadequate

Pre-S&OP

• Conflict Aversion• Executive S&OP

Meetings:– Show & Tell– Unfocused– Short Term– Too Much Detail (MS)– Meeting Too Long– Finger Pointing

• Ongoing Data Problems

• Lack of Progress


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

Understanding Executive S&OP is simple.

The hard part is . . .

Behavioral Changechanging the way everyone does their jobs.

Keys: - Full cross functional buy-in-

Counter-experiential/intuitive- Comfort vs Change- Path of low risk

Authentic S&OP must be a Strategic Imperative


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

Simpler(Not Easier)

Better


A CEO’S Perspective on eS&OPA CEO’S Perspective on eS&OP

• “We spent a lot of time gathering and validating data, which was time well-spent. But that challenge was nothing compared to the people side of things.”

• “The most difficult part was driving . . . constructive conflict in the demand alignment meetings.”

An Interview* with Phil Dolci, President and CEO Jarden Branded Consumables*In Foresight: The International Journal of Applied Forecasting, Winter 2012

(www.forecasters.org/foresight)


ContinuedContinuedContinuedContinued

“The measureable benefits are easy...– Service levels are up and inventory is

down. – For example, the two largest businesses

in my portfolio today each have service levels above 99.5% with inventory that is 20% less than 3 years ago.”


ContinuedContinuedContinuedContinued

• “I could argue, however, that the intangible benefits are just as valuable. We have much better teamwork because of the engagement and constructive conflicts that are natural components of S&OP. This approach has extended to almost every process and function within the business . . .”

• “Moreover, I feel much more in touch with the business without micro-managing it.”


Aligning Human EnergyAligning Human EnergyAligning Human EnergyAligning Human Energy

Accomplishment Accomplishment


Thanks for ListeningThanks for Listening& &

Good Luck!Good Luck!

Thanks for ListeningThanks for Listening& &

Good Luck!Good Luck!

[email protected]

www.RAStahlCompany.com

508-226-0477

Documents

October 9, 2013 El Paso, TX Ramada Hotel