1. The S&OP Control Paradox:
Folly in a Volatile World
02.07.2012
© StrataBridge 2012

2. e S&OP Control
Paradox:
Folly in a
Volatile World?
(or Babbage’s Analytical
Engine in an iPad World?)
© StrataBridge 2012

3. Some Structure & Thought-Provokers
The Case for ‘Agility’
• So, what’s Agility anyway… and ‘VUCA’?
• It’s a ‘VUCA’ World… Some Insights
• Most companies are compounding the situation
Contending with ‘VUCA’
• The ‘Growth ⇆ Control Paradox’
• Underneath it all… Three Laws
• An Architecture for Growth against a ‘VUCA’ Backdrop
‘Joined-up Decision-Making’ for Growth
• Where are you on the ‘Control ⇆ Growth’ Spectrum?
• Some Implications and Questions for Decision-Making
© StrataBridge 2012

4. What’s in a name?
© StrataBridge 2012

5. Some Insights…
It’s a ‘VUCA’ World…?
V U C
N O A
O
VUC
A
C M M
L E B
A P I
T R L
T E G
I A U
L X I
I I I
N T T
T T Y
Y
Y
Y
© StrataBridge 2012

6. Some Insights…
It’s a (naturally) ‘VUCA’ World…
Beyond the Human impact…
Massive disruption on both sides of the Demand and Supply
sides of the economic equation, amplified by an increasingly
interconnected world…
© StrataBridge 2012

7. Some Insights…
‘VUCA’ – It’s amplifying…
Brent
Crude
$/Barrel
140.00
130.00
120.00
110.00
100.00
90.00
80.00
70.00
60.00
50.00
40.00
30.00
20.00
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
‘10
‘11
‘12
Source: FT.com
© StrataBridge 2012

8. Some Insights…
‘VUCA’ – It’s ‘Everywhere’…
Price"
Index
(2003=100)
400
350
300
250
200
Sugar
150
Meat
Food
Cereals
100
Dairy
Oil
50
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
‘10
‘11
‘12
Source: Centre for
Security Studies"
– ETH Zurich
© StrataBridge 2012

9. Some Insights…
There are many drivers; 20th Century Technology Adoption…
Radio
Source: Karl Hartig/WSJ
Television
Telephone
Computer
© StrataBridge 2012
2010
© StrataBridge -

10. Some Insights…
The Context When S&OP Was Developed
Radio
Television
Telephone
Computer
© StrataBridge 2012
2010
© StrataBridge -

11. Some Insights…
The Internal Drive for Growth
61% 78% of CEOs expect their
innovations will lead to
of companies plan significant new revenue
to increase their opportunities over the
Innovation spending......
next three years
...while only
8%
Source: PwC, 14th Annual Global CEO Survey, 2011
plan to decrease it
Innovation 2010 – BCG Report – April 2010
© StrataBridge 2012

12. Some Insights…
CEO’s are turning to new product and service development for Growth
Percentage of CEO’s on the main opportunity to grow their business in the next 12 months
Increased share in existing markets
New product/service developments
New geographic markets
Mergers and acquisitions
New joint ventures and/or strategic alliances
40%
37%
38%
30%
29%
30
23%
20%
20%
20
21%
17%
17%
19%
15%
15%
14%
13%
14%
14%
13%
13%
10
11%
10%
10%
0
2007
2008
2009
2010
2011
Source: PwC, 14th Annual Global CEO Survey, 2011
© StrataBridge 2012

13. Some Insights…
How Common is Joined-Up Behaviour?
Stephen Covey in his book The 8th Habit, describes a poll
of 23,000 employees drawn from a number of companies
and industries. Here are the findings:
– Only 37% said they had a clear understanding of what their organisation was
trying to achieve and why.
– Only one in five was enthusiastic about the goals of their team and organisation.
– Only one in five said that they had a clear line of sight between their tasks and the
goals of their team and organisation.
– Only 15% felt that their organisation fully enabled them to execute key goals.
– Only 20% fully trusted the organisation they worked for.
The 8th Habit: From Effectiveness to Greatness
November 2004 Simon & Schuster
Or, put another way…
© StrataBridge 2012

14. 4
Only of the 11 players
would know which goal is
theirs
Only 2 would care
2
Only would know what
position they play and what
they are supposed to do
2
And all but players would,
in some way, be competing
against their own team
members rather than the
opposition
© StrataBridge 2012
2012
© StrataBridge -

15. ‘VUCA’ – How is it for you?
Are you experiencing, or can you
see the early signals of, 'VUCA' in
Yes No
your external environment?
89% 11%
Does your strategy call for
increasing degrees of 'new stuff' -
new products, new services, new
Yes No
channels, new markets/territories,
new technologies, etc?
91% 9%
© StrataBridge 2012

16. ‘VUCA’ – How is it for you?
Are you experiencing, or can you
see the early signals of, 'VUCA' in
your external environment?
Yes No
Does your strategy call for
increasing degrees of 'new stuff' -
new products, new services, new
channels, new markets/territories, Yes No
new technologies, etc?
You can check your e-mail now or be filling-in
your expense form or something else useful…
Keep improving what you’re doing and you’ll be
fine! (Or will you?)
© StrataBridge 2012

17. ‘VUCA’ – How is it for you?
Are you experiencing, or can you
see the early signals of, 'VUCA' in
your external environment?
Yes No
Does your strategy call for
increasing degrees of 'new stuff' -
new products, new services, new
channels, new markets/territories, Yes No
new technologies, etc?
You’ve obviously got some work to do, but as it
stands you can dictate the pace… Make sure your
strategy takes advantage of this; it won’t last
forever!
© StrataBridge 2012

18. ‘VUCA’ – How is it for you?
Are you experiencing, or can you
see the early signals of, 'VUCA' in
your external environment?
Yes No
Does your strategy call for
increasing degrees of 'new stuff' -
new products, new services, new
channels, new markets/territories, Yes No
new technologies, etc?
Wake-up! To quote Jack Welch:
“When the rate of change on the outside exceeds the
rate of change on the inside, the end is in sight”
© StrataBridge 2012

19. ‘VUCA’ – How is it for you?
Are you experiencing, or can you
see the early signals of, 'VUCA' in
your external environment?
Yes No
Does your strategy call for
increasing degrees of 'new stuff' -
new products, new services, new
channels, new markets/territories, Yes No
new technologies, etc?
It’s time to review our strategic and operational
planning and decision-making processes for
‘design overreach’. We’re in danger of taking them
past the limits of what they were designed for!
© StrataBridge 2012

20. Some Structure & Thought-Provokers
The Case for ‘Agility’
• So, what’s Agility anyway… and ‘VUCA’?
• It’s a ‘VUCA’ World… Some Insights
• Most companies are compounding the situation
Contending with ‘VUCA’
• The ‘Growth ⇆ Control Paradox’
• Underneath it all… Three Laws
• An Architecture for Growth against a ‘VUCA’ Backdrop
‘Joined-up Decision-Making’ for Growth
• Where are you on the ‘Control ⇆ Growth’ Spectrum?
• Some Implications and Questions for Decision-Making
© StrataBridge 2012

21. Contending with ‘VUCA’
The Growth Paradox…
The Pursuit of ‘Growth’
The creation of new value for customers and shareholders,
driving the need for new stuff – new products, new services,
new markets, new business models, etc. – by definition,
increasingly different from what we currently do…
The Desire for ‘Control’
The focus on continuously tightening the grip on how we
do things today – driving predictability and productivity by
fine-tuning our knowledge of, and control over, our existing
business portfolio – products, customers, channels, etc.
© StrataBridge 2012

22. Underneath it All"
3 Fundamental Laws that have shaped the StrataBridge approach…
The Law of CHANGE
No matter how hard you resist or deny it, things
are going to change, often unpredictably so
The Law of PERSPECTIVE
It all depends on ‘where you are coming from’
The Law of ENTROPY
Unless energy is expended to counter it, things
become random, break-down, over time
© StrataBridge 2012

23. An Architecture for Strategy Development, Deployment & Delivery…
Against a VUCA Backdrop
Long Term Plan (e.g. 5-10 Years) – Context, fundamental choices and boundaries, combining
Clea
rout
clarity about where you are going and flexibility about how to get there
r de
ines
cisio
to e
n rig
nact
Strategic
hts,
strat
integ
Direction
egy
rate
dp
ng
roce
oi
on-g
s
ses
Joined-up"
tive
Strategic
and
effec
Laws," Decision"
Dialogue
Making
ure
Principles"
els
ruct
ll lev
& Balances
to st
at a
ons
ices
rsati
cho
onve
gic
ns/c
trate
estio
nd s
Strategy
f qu
arou
‘Toolkit’
‘Big C’"
es o
gue
Capability
Seri
dialo
© StrataBridge 2012

24. Some Structure & Thought-Provokers
The Case for ‘Agility’
• So, what’s Agility anyway… and ‘VUCA’?
• It’s a ‘VUCA’ World… Some Insights
• Most companies are compounding the situation
Contending with ‘VUCA’
• The ‘Growth ⇆ Control Paradox’
• Underneath it all… Three Laws
• An Architecture for Growth against a ‘VUCA’ Backdrop
‘Joined-up Decision-Making’ for Growth
• Where are you on the ‘Control ⇆ Growth’ Spectrum?
• Some Implications and Questions for Decision-Making
© StrataBridge 2012

25. Striking the ‘Right Balance’?
In general, how would you rank your
C organisational DNA on the 'Control-Growth
o Spectrum’?
G
1
n 4%
2
42%
3
34%
4
19%
5
1%
r
t o
What do you need to strike the right balance w
r to deliver your strategy and desired business
o results?
t
More 'Control’ More 'Growth’
l 13%
About right
67%
h
21%
© StrataBridge 2012

26. Joined-up Decision-making
Key questions to provide a platform for Agility
Does ‘VUCA’ represent a strategic threat or opportunity in"
‘VUCA’ and Growth Drivers?
our environment and do we understand our drivers of growth? Are are these
reflected in our Strategy, Tactics and underpinning Assumptions and Plans?
‘Control ⇆ Growth’ Balance?
Are we ‘wired’ for Control or Growth? Are our internal mindsets,
processes, routines and behaviours synchonised with our external realities?
Do our decision-making processes and forums ask the right questions, bring
Right Conversations?
together the right perspectives from across the business, and generate insight and
coherent actions?
Right Capabilities?
Do we have explicit development actions building organisational capability –
Capability with a ‘Big C’ – to develop agility and use ‘VUCA’ to our advantage?
Pace, Experimentation and
Are we countering ‘VUCA’ with vision, understanding, clarity and agility, and
accelerating results through an aggressive transition, rapid experimentation and
‘Learning-by-doing’?
‘learning-by-doing’?
© StrataBridge 2012

27. Chris Turner
mobile: +44 7802 252 003
e-mail: chris.turner@stratabridge.com
web: www.stratabridge.com
© StrataBridge 2012

28. The S&OP Control Paradox:
Folly in a Volatile World
Plan. 02.07.2012
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 28

29. Agility
Measured in time (e.g., Order to Delivery lead-time)
Agile Characteristics
Market Driven
Bias Toward Information Over Inventory
Low Inventory Levels
Collaborative relations with trading partners
“The Triple –A Supply Chain responds to short term changes in supply and demand
more quickly”
Dr. Hau Lee
Thoma Professor of Operations, Graduate School of Business, Stanford University
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 29

30. Typical: Extended Lead Time = Reduced Agility
Enterprise
Customers
Suppliers
Info Raw &
Info FG
Info
WIP Plan Driven
Lack of Inventory Not
External Excess Vs. Excess Demand
Collaboration Inventory Demand Inventory Driven
Extended Lead Time
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 30

31. Improved Agility
Reduced
Enterprise
Customers
Carrying Costs
Suppliers
Increased
and Expedited Revenue and
Logistics Improved Information Flow Fill Rate
Reduced Inventory
Raw &
WIP FG
Being Market Driven
With Improved Information Flow
Reduced Inventory and Lead Time
Reduced Lead Time = Increased Agility
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 31

32. Flexibility
Rapidly change processes based on market events
• Short term flexibility
– Can be obtained through better execution
– Limited ability to respond in a strategic manner
– S&OP has smaller role
• Long term flexibility
– Can be obtained through better strategic and operational planning
– Provides ability to execute new strategies and programs
– S&OP has major role
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 32

33. Agility and Flexibility Metrics are
Integral to Best-in-Class Performance
Plan.
Perform. Source: Steelwedge/Accenture value assessment
Profit. © 2012 Steelwedge Software, Inc. Confidential. 33
33

34. Steelwedge: Business Agility Starts Here
Integrated Business Planning platform
Supply chain “shock absorbers” to react, respond, recalibrate
Collaborative S&OP solution: single view of
demand, supply, finance, partners
Powers “What if” scenario modeling
Cloud-based: fast, elastic, value
Trusted across Global 1000
Singular, obsessive focus
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 34

35. All Business Aspects Integrated
Business Strategy Scenarios S&OP Finance
M&A Strategy Capital Investment Financial Forecast Operating Budget
Executive S&OP
Executive S&OP
Final S&OP Plan
Final Consensus Plan Final Supply Plan
Statistical Forecast
Production Procurement
Rough Cut Capacity Procurement Plan
Marketing
Marketing Plan
Consensus
Sales Management Unconstrained Inventory Finance
Sales Plan Forecast Inventory Plan Inventory Investment
Finance
Revenue Plan Sourcing
Allocation Plan
Demand Planning S&OP S&OP
Demand Plan Sales Ops
Customer
S&OP Supplier
Forecast Collaboration Commit Plan
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 35

36. All Business Aspects Integrated
Business Strategy Scenarios S&OP Finance
M&A Strategy Market
Capital Investment Financial Forecast Finance
Operating Budget
Executive S&OP
ExecutiveExecutive S&OP Scenarios
Planning &
Final S&OP Plan
Final Consensus Plan Final Supply Plan
Statistical Forecast
Production Procurement
Rough Cut Capacity Procurement Plan
Marketing
Marketing Plan
Demand Supply
Consensus
Sales Management Unconstrained Inventory Finance
Inventory Plan Inventory Investment
Sales Plan
Product Forecast
Capacity
Finance
Revenue Plan Sourcing
Allocation Plan
Demand Planning S&OP S&OP
Demand Plan Sales Ops
S&OP
MarketCustomer
Forecast Collaboration Supplier
Supply
Commit Plan
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 36

37. Improve Agility and Flexibility
Focus on What Matters
Understand Complexity and Its Impacts
Statistical Forecast Collaboration
with with
Exception Monitoring Exception Monitoring
Impact
Stocking Strategy:
Min/Max, Safety Stock, etc.
with Exception Monitoring
Volatility
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 37

38. Demand Planning Policy
Steelwedge Policy Analysis Tools
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 38

39. Steelwedge Test Drive
Why Test Drive
Live System = Real User Input = Real Proof Point
Validate Requirements Assumptions (Customer & SW)
Validate Data Health and Availability (Customer & SW)
What is a Test Drive
Compass Express “Best Practices” platform hosted by SW
One time data load
8 hours of Hands-on Training
Optional: Integrated Planning Assessment / Design workshop
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 39

40. Ed Lewis
Ed Lewis joined Steelwedge in 2009 and brings over twenty years of leadership experience
providing sales and operations planning and supply chain solution design, development and
implementation. Prior to Steelwedge, Ed was CEO and President of Amitive, Inc (acquired by
GXS) which he founded in 2004. Under his direction the company grew from start-up to a
leading SaaS supply chain synchronization and execution provider controlling complex supply
chains around the globe. Prior to launching Amitive, Ed designed and implemented global SCM
solutions for numerous companies, including Mitsui & Co., as a Sales and Operations Executive
and consultant. Ed holds a Juris Doctorate from Western State University, College of Law.
The Steelwedge Solution
Steelwedge, like our name, is a powerful, yet simple tool.
The company is a pioneer in delivering cloud-based Integrated Business Planning (IBP.)
Steelwedge Sales and Operations Planning (S&OP) solutions supercharge well-established, but
complex collaborative planning processes that balance demand and supply, enable "what-if"
scenario planning connecting operations with business strategy and financial performance.
Our robust Integrated Business Planning Platform extends the value of customers' investments.
Large global enterprises, including five of the Fortune 100, trust Steelwedge to provide a clear
line of sight from plan to performance to profit across demand, supply and finance systems.
This visibility, in turn, empowers more agile "what if" scenario testing and decision-making to
minimize confusion, maximize efficiency and optimize profit in even the most volatile business
environment.
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 40

41. A Brief Introduction…
…Chris Turner
Co-founder of StrataBridge, Chris works with a range of clients worldwide, across
industry sectors, on strategy development, innovation and integrated decision making.
A highly respected facilitator, Chris has a unique ability to understand and simplify
complex business issues and opportunities and translate these into action. He has
worked with leadership teams around the world, helping them to articulate, share and
realise their strategies through aligning the organisation, integrating decision making
and capability building.
Chris’s long-term client relationships are built on his ability to balance the delivery of fast
results with sustainability, and Chris’s clients include Anheuser-Busch, Bakehouse,
Coca-Cola, Compass Minerals, Mars, Mass Mart SA, PZ Cussons, SC Johnson, Shell.
…StrataBridge
StrataBridge is a boutique consulting firm that specialises in advising fast-moving,
brand led organisations on strategy, innovation and operations.
StrataBridge help create and develop the relevant thinking, processes, capabilities and
behaviours to allow organisations to bridge the gap between where they are and where
they want to be.
In short, we connect the dots between hard and soft organisational issues to create the
bridge between a client’s real world and their ideal world.
Chris can be reached at:
e | chris.turner@stratabridge.com
m | +44 7802 252 003
o | +44 1277 633 433
w | www.stratabridge.com
© StrataBridge 2012

42. Thank You
Plan.
Perform.
Profit. © 2012 Steelwedge Software, Inc. Confidential. 42