From Surviving to Thriving - Leveraging People, Process and Systems to Achieve S&OP Excellence- Contech Engineered Solutions

1© 2014 Steelwedge Software, Inc. Confidential.
Single Line of Sight: Plan, Perform, Profit
SCOPE Spring 2014
From Surviving to Thriving
Leveraging People, Process and Systems to Achieve S&OP Excellence
Danny Smith – Vice President Industries, Steelwedge Software
Randy Ramsey – Director of Supply Chain, Contech Engineered Solutions

Agenda
• S&OP: Current State and Challenges
• Realizing the Business Value from S&OP
• Contech Engineered Solutions Case Study

A Brief History & Review of S&OP
• S&OP: “a better way to run your business”
• Evolved out of early work in Material and Production
Planning in the 1970s (by thought leaders like Oliver
Wight, TF Wallace, others)
• Expanded to include Sales, other groups in 1980s
• Continually evolving - latest version rebranded as
“Integrated Business Planning” (IBP) in 2000s
• Integrates Finance, R&D
• Executive value (i.e. risk mitigation; “what-if” simulations)
• Extended to external processes

S&OP: Process Led by and Primarily for Executive Mgt.

S&OP Accelerates Performance
“What kind of benefits is S&OP delivering?”
0% 10% 20% 30% 40% 50%
Forecast Accuracy
Customer Satisfaction
Asset Utilization
Inventory Value
Order Fill Rate
Revenue
Working Capital
Perfect Order
Return on Assets
Gross Margin
Inventory Turns
Substantial Overwhelming
Sales and Operations Planning Research Study 2006: Ventana Research

Why Isn’t Everyone Benefiting From S&OP?
A different perspective…
0% 20% 40% 60% 80% 100%
Forecast Accuracy
Customer Satisfaction
Asset Utilization
Inventory Value
Order Fill Rate
Revenue
Working Capital
Perfect Order
Return on Assets
Gross Margin
Inventory Turns
Substantial Overwhelming
Sales and Operations Planning Research Study 2006: Ventana Research
?

Great Results When Executives Are Fully Engaged
“How involved is your executive team?”
Closing the Gaps in S&OP Study 2013: CSCO Insights

Reality: Most Execs NOT Engaged in S&OP Process
“Does your executive team own the S&OP process?”

Most Efforts NOT Supporting Executive Needs
“Rate your S&OP capabilities”
16.7%
25.4%
29.4%
35.1%
45.0%
57.4%
55.7%
57.3%
54.2%
46.1%
25.9%
18.9%
13.4%
10.7%
8.9%
Integrated Supply/Demand
Integrated Financial Plans
Strategy Deployment
Strategic Initiatives
Scenario Planning
Low Medium High

Most Missing BIG Opportunities
“Describe your S&OP approach”
12.5% 70.8% 16.7%
Focus
Backward Results In-Between Forward Planning
29.5% 65.2% 5.3%
Strategic Perspective
Short-Term Problem Solving In-Between Exploiting Opportunities
18.9% 67.8% 13.3%
Approach to Results
Passive In-Between Actionable

34.2%
25.7%
28.4%
46.7%
44.4%
50.2%
Hit Financial Targets Synch Operating Strategies Ensure Execution of Strategies
Current Benefits Future Desired
Executives Want More
“Rate your current vs. desired capabilities”

Gap Between Best Practices & Current Situation
“Rate your S&OP process” (maturity)
32.2%
14.7%
8.4%
1.7%
Below Average
Only Adequate
Excellent
World Class

Agenda

Best Practice S&OP Aligns People, Process & Systems
“We continue to look at S&OP
as an aspect of business
that needs terrific improvement…
It’s hard to argue that this
shouldn’t be a central piece of
management software.”
–Rob Kugel, Ventana Research

Aligning Planning Horizons and Capabilities …
(It's Not the Same as Integrating!)
Time Horizon
Resolution
Execution
Operational Planning
S&OP Stage 4 or 5
Strategic Plan/Goals
4 wks 12 mths 2 yrs 5 yrs >5yrs
Current Op. Model
Future/Alternative
Op. Model
Respond
Optimize
Design
Financial Budget/AOP
S&OP Stage 3

Blocking S&OP Results: Gaps With Existing Systems
“How satisfied are you with your current systems capabilities?”
Source: Executive Sales & Operations Planning: Process & Technology Strategies. Survey of 380 companies. Aberdeen Group 2007+
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Demand Supply Matching (entry level)
What-if Analysis (exec)
S&OP Plan Quality & Metrics (exec)
Role Based (x-functional collab)
Alerts & Exceptions (make it easy)
Fully Meets Needs Doesn't Fully Meet Needs

Gap Between Best Practices & Current Situation
“What tools do you use for S&OP?”

Pre-ESOP
Ground Reality: Trying It With Spreadsheets
Demand
Planning,
SCM/APS
Systems
ERP, Financial,
& Transactional
Systems
SAP, Oracle, etc.
Industry
Data
Consolidation,
Review,
Overrides
Data
Collection,
Reconciliation
Consensus
Process ESOP
Operations
Marketing
Sales
Finance
Manual
Complex
Security Risk
Not Scalable
Does this Give Executives
an Agile Decision Making Process?
Systems Landscape

Change Your Reality:
Drive & Sustain S&OP Adoption & Values
Time
L1
L2
L3
L4
Q1 Q2 Q3
Step Change
Maturity &
Performance
Avoid Process
Failure
Q4
Value
Accelerated
Time to Value
“Companies can have a hard time getting past basic levels of S&OP without
technologies like Steelwedge to support the process.”
-Tim Payne
VP Supply Chain Analysis, Gartner

Return on Investment Is Substantial
Typical: $5M to $10M in Committed Savings per $1B in Revenue
Value Levers
50-70% Reduction
15-30% Improvement
20%-25% Reduction
25% Reduction in
Stock-outs
1-2% Lift in Revenue
Typical Results Customer Example

What Your System Needs to Deliver to Support S&OP
• S&OP is about human collaboration
• Handle the translation between functions
• Automate and enforce the process
• S&OP needs engaged participants
• Make it easy for stakeholders to participate
• Give participants access to information they haven’t had before
• S&OP is a tool for leadership to manage the business
• Give executives the information they need: forward-looking KPIs
• Let executives ask “what-if” questions
• Make it actionable

Tom Wallace – Godfather of S&OP
“Sometimes people ask me about the
S&OP module from their ERP provider.
I respond that the next really good S&OP
software package that comes from a main
line ERP vendor … will be the first. We
have yet to see that happen.
You need to look at best-of-breed. And the
best of the best-of-breed is Steelwedge.”
Tom Wallace,
Founder, T. F. Wallace & Co
Watch the video: http://www.youtube.com/watch?v=SVWaNiBC4Jo&index=4&list=PLF5EAC415A68DC43B
Integrated Business Planning for S&OP – Master Class with Tom Wallace: http://www.youtube.com/playlist?list=PLF5EAC415A68DC43B

Agenda

© 2012 Contech Engineered Solutions LLC
• Leading provider of site solution products & services
• Sell into Agricultural, Military, Airports, Commercial & Residential,
Rail, Government, Wind Farms, Mining, Recreational markets
• Bridges, drainage products, retaining walls, sanitary sewer,
stormwater, erosion control, soil stabilization solutions
• Sales Offices (US, Mexico, Australia, Canada, China, Central
America)
• 40+ mfg facilities
 US
 Mexico
 Australia
 Canada
Who We Are

Structures

Drainage Solutions

Filtration / Separation

Erosion Control

Our Competitive Environment
• Unpredictable demand
 Make to Stock
 Make to Order – Project Based
 Configure to Order
• Competing against smaller competitors
• Global business, global impacts
• Rapidly changing commodity supply situation – varying prices
and government regulated
• Need for “Immediacy” – capability to respond quickly to
opportunities

Our Business Environment
• Expansion through acquisitions and organic growth
• Fragmented systems (5 different ERP systems)
• No centralized supply chain team
• No Formal Sales & Operations Planning Process
• Disjointed Planning process
 Multiple Demand Plans
 No formal Production Plan
 No formal Inventory Strategy

• Find Leadership Champions
• Training, Education, and Gain Buy-in
• Develop Proof of Concept
• Partner search
• Cross-functional involvement
• Solid implementation team
Our Journey for Success

Our Focus
• The Goal – GROWTH & OPTIMIZATION
• Leverage lead time (manufacture to delivery)
• Leverage working capital
• Optimize the supply chain network
• Become more agile as an organization – analyze opportunities quickly
• Gain market share
• MAKE MORE MONEY!!!!!
• More robust, systematic process to planning: S&OP
• Put a centralized team in place
• Hire the right people – change agents
• Get the team collaborating with discipline
• GAIN CONTROL!!!!
• System to empower the team (Steelwedge)
• Holistic view of demand, supply and inventory
• Facilitates collaboration
• Enforcement of the process
• Quick analysis of opportunities for executives

Our Process
People
Systems
Process

SOIP
Powered by…

Agility & Discipline Provides Results
• 5+ year journey
• 5-10% increase in customer service levels
• 30-40% reduction in working capital needs
• Examine “what-if scenarios” for opportunities and business
planning
• Ability to capitalize on opportunities that we couldn’t respond
quickly enough to before

Our Improvements & Future Vision
• Network Optimization
• A look at a raw material network not seen before
• Analyzing distribution/inventory cost dynamically
• Metrics
• Unique site-level metrics for the entire supply chain picture
• Network optimization metrics, distribution plans tied to lowest total landed
cost
• Agility
• Tying of multiple systems for visual indicators

Network Optimization
• Analyzed the entire North American network from a lowest total landed cost
perspective and built a “reverse” hub and spoke system for our raw material
network
• Built a system tool that auto-populated raw material requirements (kanban & order
driven) for each site that maximized outgoing TL’s on a daily basis

Metrics
• Created a supply chain optimization metric at the site level
known as the Supply Chain Excellence Site Rankings
• Each site’s daily inventory, inbound supplier freight, intra-network freight
(site to site), outbound freight and slow moving inventory was ratio’d to
their COGs
• Metrics are cumulative to account for day-to-day issues such as order
holds, strategic inventory decisions, etc.
• These ratios were compared to best-in-class ratios and weighted in terms
of financial cost to Contech for each category
• Weighted scores were added to come up with an SCE Score and sites
are ranked top to bottom
• Created a “BCS” like atmosphere for Supply Chain and we award a
specific site with a “Supply Chain Plant of the Year Award”

Excellence & Financial Influence

Agility in the Future
• Swings to a Make-To-Order business with short customer lead times are
causing the need for constant network analysis, accounting for mix/volume
changes, new distribution points, and strategic stocking decisions
• Agility in the future is obtained by:
• Centralizing our planning/forecasting systems with our ERP and CRM
systems to give a dynamic view of supply chain that allow us to make
decisions on the fly
• Giving visual metrics and indicators to all areas of supply chain
involvement
• The continued increase in upper management support and one forecast
now, the rest are run-rate projections and scenarios

Q&A

Danny Smith
VP, Industries
www.steelwedge.com
dsmith@steelwedge.com
Today’s presentation is on SlideShare
http://slidesha.re/OtpcwI
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From Surviving to Thriving - Leveraging People, Process and Systems to Achieve S&OP Excellence- Contech Engineered Solutions

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