Who Owns the “S” in S&OP?

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© 2014 Steelwedge Software, Inc. Confidential.
Speaker
•Danny Smith, VP Industries
•Responsibilities/Role
•In-house expert on S&OP/IBP
•Leads Industries initiatives
•Background
•BS Industrial Management; MS Decision Sciences
•Strategic Planning, Fortune 300: corporate planning efforts (i.e. S&OP)
•Career: “an effort to find a better way”
•Most recent – global solution champion for Integrated Business Planning at Oracle
Management (Georgia Tech); MS Decision Sciences (GSU)
a 20+ year effort to find a better way”
prior to Steelwedge – global solution champion for Integrated Business Planning at Oracle

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“The successful business executive is a forecaster first, everything else follows.”
Peter Bernstein
‘Against the Gods: The Remarkable Story of Risk’
Predict

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Our benchmarking studies show that the best forecasters have 15% less inventory, 17% stronger fulfillment, and 35% shorter cash-to-cash cycle times, all having a direct impact to the bottom line.
“
”
Who Owns the “S”: Visibility to the Customer Matters
Rob Bois, AMR Research (now Gartner) S&OP Benchmarking Report

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How Often Is Sales Involved in S&OP?
64%
Involved
NOT Involved
AMR Research (Gartner)
S&OP Benchmarking Report

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How Far Can You Forecast?
70%
said “one quarter
or less”
CFO Magazine Survey

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“Expectation Lead Time” & the Bullwhip Effect
Operations
Wrong products are deployed
Excess inventory; Stock outs
Financials
Wrong numbers promised to street;
Missed results
Loss of credibility;
Share price impacts
Customers
Customers don’t receive orders
Lost sales;
Lost customers
Miss on revenue, product, customer, or timing
Placing a Bet on the Future
Stock market reactions when “supply chain” glitches reported:
•Ramp-up/roll-out issues: -11%
•Delays in prod. dev.: -10%
•Production problems: -10%
•Quality problems: -9%
•Parts shortage in mfg.: -7.5% Source: Dr. Vinod Singhal, Georgia Institute of Technology
Expectation Lead Time: “customers don’t want to wait”
vs.
Supply Chain Lead Time:
“it takes time to supply”

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Classic Disconnects…
Most: Inward Focus
but remember…
Demand-Driven Leaders (Outward Focus)
Out-Perform Competition

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Everything Is Increasingly Connected
Internet of Things

September 2012:
• Facebook: 900 Million
• LinkedIn: 177 Million
• Twitter: 140 Million Today:
• Facebook: 1.3 Billion
• LinkedIn: 277 Million
• Twitter: 646 Million
Social Listening for Competitive Advantage:
Bruce Richardson, Chief Enterprise Strategist, Salesforce
From Steelwedge Webinar April 2014 “Social Supply Chain: Linking Sales Intelligence to Supply Chain and Finance”

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Are We Using the Information?
Customers
Traditional Approach: Statistics
?

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Is this the Answer?
missing something?

3%
5%
5%
8%
10%
13%
12%
15%
22%
3%
6%
5%
5%
6%
7%
10%
9%
12%
8%
14%
16%
3%
7%
7%
6%
8%
10%
11%
6%
12%
14%
13%
Other
Lack of external cross-functional collaboration
Managing relationships + processes with outsourcing partners
Cost volatility
Logistics constraints, performance, or costs
Supplier performance/variability
Lack of visibility across supply chain
Supply chain talent
Lack of internal cross-functional collaboration
Supply chain network complexity
Difficulty or inability to coordinate and synchronize end-to-end SC processes
Forecast accuracy + demand variability
Ranked First
Ranked Second
Ranked Third
Sum = 51%
42%
30%
29%
32%
31%
20%
17%
11%
16%
Q07. What do you consider to be the top three obstacles to achieving your organization's supply chain goals and objectives?
14%
6%
... and it has been this way for years!
Despite Spending All That Money on Planning …
Tim Payne, Research Vice President, Gartner
From Steelwedge Webinar June 2013 “From Re-think Your Planning Technology Priorities”

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Poll 1: Who Owns “S” in S&OP?
A: Sales
B: Supply Chain
C: Finance
D: Other

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Who Owns the “S” in S&OP?
Purists: SALES
Realists: SUPPLY CHAIN
Risk – Averse: FINANCE
…Humans!
Peer
Katie
Vas
Janella

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Humans Talking to Humans
Customers
Janella
Peer
?

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Janella
Pre-ESOP
Trying It With Spreadsheets
Demand Planning, SCM/APS Systems
ERP, Financial, & Transactional Systems
Consolidation,
Review,
Overrides
Data
Collection, Reconciliation
Consensus
Process
ESOP
Sales
Manual
Complex
Security Risk
Not Scalable
Does this Give Executives
an Agile & Predictable
Decision-Making Process?
Peer

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How Long Does it Take?
18+ days
27%
9%
18%
12-17 days
6-11 days
3-5 days
Time Required for Exec S&OP Preparation %
AMR Research/Gartner
S&OP Benchmarking Report

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Somebody Had to Have Seen it Coming!

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Humans Talking to Humans Gives Management Great Information
Customers
Janella
Peer
Insight When I Need It!

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Steelwedge: The S&OP Platform Single Cross-Functional Platform for Planning & Analytics
APS Systems
ERP, Financial, & Transactional Systems SAP, Oracle, etc.
Industry
Data
Product / Sub-Family
Customer
Revenue
Product / Family
Territory / Region
Revenue
Product / Family Promotions
Revenue
Product / Family
Region
Units & Revenue
Product
Stock Locations
Units and Inventory
Family / Series
Territory / Region
Revenue, Margin & Cash
Family / Series / BU
Geo
Product
Production Site
Units and Capacity
Geo
Geo
Planning Views
Stakeholders
Account Managers
Sales Managers
Marketing
Demand Planners
Supply Planners
Production Planners
Finance
Executives
Customers
Suppliers
Cross-functional Planning Environment
Systems Landscape

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What You Need to Be Successful
•Make gathering the information quick and easy
•Unify demand streams for single view (big deals/new, run-rate, 3rd party)
•Gather & mine sales reps views, but don’t add more work for them!
•Facilitate the collaborative vetting process for sales management
•Leverage experience of management team for credible numbers
•Capture qualitative information
•Drive sales planning improvement
•Track/monitor, measure, so you can improve process

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Make it Easy – Pull Pipeline Information Directly from CRM
Key Pipeline Information in Salesforce.com
Key Information in Salesforce.com

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Give Sales Management Complete View for Vetting
New Opportunities and Run-Rate
Drill to Details
Quantitative and Qualitative Information

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Track Everything!
Who is More Accurate?
Give Leadership the Right Tools to Improve the Business
Is there Bias?

Steelwedge Case Study: Microsemi
Improving Forecast Accuracy at Microsemi
Challenges
•Operations was challenged in building the right supply due to manual, ad hoc planning & forecasting tools
•Planners couldn’t run their own reports, had no historical information, & didn’t have data at the right granularity
•Poor planning visibility led to excess inventory
Solutions
•Enabled monthly & exception-based forecasting and capacity planning
•Ensured all product data, including sales pipeline, is centralized & easily accessible
•Adjusted forecast easily on hundreds of part numbers with rationing feature
Results
•Increased forecasting accuracy
•Reduced forecasting time by half
•Increased overall fiscal planning accuracy by using Steelwedge to validate numbers
•Improved forecasting for inventory and safety stock
“We love Steelwedge. It has streamlined our forecasting process, but it goes beyond that. It’s great to have so many systems pulled into one place, and it’s changed our lives. This is a metamorphosis for our company. We’ve taken control of our S&OP process.”
Laura Finkelstein
Vice President of Product Management
Microsemi
Company
Microsemi (Formerly Symmetricom)
Headquarters
Aliso Viejo, CA USA
Industry
High Tech
Products and Services
Semiconductor and system solutions for communications, defense & security, aerospace and industrial markets
Employees
3,000+
Revenue
US$984 million
Web Site
www.microsemi.com
37% reduction in inventory
20% improvement in customer order fulfillment
Success by the Numbers:
20% reduction in manufacturing lead times

Steelwedge Case Study: Extreme Networks
Driving Consistent Growth at Extreme Networks
Challenges
•Outdated & inaccurate planning data
•Delayed orders
•Long product life cycles
•Excess inventory
Solutions
•Enabled executive-sponsored collaboration among S&OP departments
•Normalized data in Steelwedge
•Determined product sales in near real-time & adjusted accordingly
Results
•Facilitated timely & accurate information through automation
•Enabled cross-functional alignment through collaborative planning
•Streamlined, end-to-end process: profits up, supply chain cost down
•Doubled inventory turns year over year
•Created demand-driven, customer-focused, responsive supply chain with visibility, data, & analytics
•Forecast error (MAPE): averaging 31%
•Revenue impact less than 1% of revenue
“A global, collaborative and integrated S&OP process, along with the internal and external alignment of demand and supply, have resulted in revenue growth and increased profitability for Extreme Networks.”
Jack Lyon
Vice President, Supply Chain
Extreme Networks
Company
Extreme Networks
Headquarters
San Jose, CA USA
Industry
High Tech
Provides high performance, open networking innovations for enterprises, hosting companies and Internet Exchange Points
Customers
More than 6,000 in more than 50 countries
Revenue
US$600 million
Web Site
www.extremenetworks.com
2x inventory turns (Year over Year)
97%+ customer fulfillment (ATP)
20% increase in new customers

Steelwedge Case Study: Contech
Increasing Demand Planning Visibility at Contech
Challenges
•Unpredictable pricing and access to raw materials like steel and aluminum
•Lack of centralized team approach and consistency throughout the organization (ex: multiple demand plans and fragmented systems)
•Lack of ability to respond to marketplace changes with agility
Solutions
•United the plethora of distributed system data into one cloud-based system for easy integration and access
•Created a centralized view of the demand plan
•Facilitated the management of forecast, statistical forecast, historical data, and future quotes that inform a single demand plan, and collected and rationalized all of this information in Steelwedge
Results
•Improved ability to project inventory & impact on financial model
•Improved visibility & reporting with process-driven communication & collaboration
•Leveraged “what-if” modeling to explore a myriad of business scenarios and improve decision-making
“There’s no doubt we’ve got payback. And it isn’t just about discrete financial metrics. There are numerous opportunities we wouldn’t have been able to go after. We wouldn’t have been fast enough, integrated enough, agile enough to capitalize. Today we power more strategic initiatives and grab more market share from our
competitors.”
Randy Ramsey
Director of Supply Chain
Contech
Company
Contech
Headquarters
West Chester, OH USA
Industry
Industrial
Site solution products and
services for the civil engineering industry
Employees
1,000+
Revenue
Private
Web Site
www.conteches.com
40% decrease in working capital
10% increase in on-time customer service
18 month forecast visibility

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Poll 2: Do Casual Planners Add Value?
A: Yes
B: No

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Who Owns the “S” in S&OP?
•You Do!
•You have good information out there…
•…But you’ve got to make it easy to get the data
•You need to quickly connect information from the frontlines with decisions in the boardroom
•Steelwedge Initiatives:
•Sales Pipeline Bridge
•Sales Planning
•Social Supply Chain

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Q&A

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Who Owns the “S” in S&OP?

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Who Owns the “S” in S&OP?