866.P4D.INFO | Plan4Demand.com | Info@plan4demand.com Getting to One Number is considered to be the ''Promised Land'' and a critical goal of an effective S&OP process. But what does it really mean? And what are the realities and pitfalls of a One Number system? How do we work towards a plan that makes sense, and still accommodates the needs of other areas of the business, and users of the number? A business of any size has the need to communicate projections both internally and externally in a number of different ways. Has your view of One Number gotten in the way of a good Sales & Operations Planning process? Check out this webinar on-demand at http://plan4demand.com/Video-Getting-to-One-Number-SOP-Myth-or-Reality

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S&OP LEADERSHIP EXCHANGE:
GETTING TO “ONE NUMBER”, S&OP MYTH OR REALITY
The Web Event will begin
momentarily with your host:
Andrew McCall
April 18th, 2012 plan4demand

2.  Goals for the session
 Overview - What do we mean by “one number” and why is it such a struggle?
 The Myth – What do people think of when they hear “one number” and why doesn’t
that make sense?
 What should it mean? Realistic “one number” planning?
 S&OP – Step by Step, where does the noise in this discussion come from?
 Case Study: Effective “One Number” Planning
 The Bottom Line
 Q&A/Closing

3.  Clearly Defining a “One Number Plan” and what that means from an S&OP
perspective
 Outline some of the most common misunderstandings and pitfall’s of a “One
Number” system
 Identifying common “noise” that is produced by process step within the S&OP
process
 Discuss some specific actions that can help you start to get this difficult process
managed in your organization

4. • Demand Plan
• Supply Plan
• Production Plan
• Rough Cut Capacity Plan
• Finite Plan & Schedule
• S&OP Forecast • Distribution Plan
• Annual Operating Plan Tactical • Transportation Plan
(Budget) • Labor Plan
• Standard Cost • Materials Plan
• Brand Plan
• Strategic Logistics Plan
Operational
Strategic
• Strat Plan
• CapEx Plan
• Portfolio Plan/Product
Roadmap
• IT Roadmap

5.  A “best in class” S&OP process produces a single set of numbers across Sales,
Marketing, Supply Chain, Operations/Manufacturing, Finance and the Executive
team.
 The S&OP forecast needs to drive budget revisions during the course of the year to
reflect the reality of changing business conditions.
 The Plan is the Plan – we can’t change any aspects of it and maintain it’s integrity
as a communication tool for goal attainment
 If we’re going to have a one number system, finance can not use any level of hedge
when communicating performance.
 YTD Actual + BOY Projection must equal AOP or we must communicate a change to
plan.

6.  We need to distill a single, agreed
upon operating plan from all of
these numbers, planning activities,
actuals and data sources
 The development of this Plan should
make it very easy to achieve the
objectives of S&OP:
 What are our Goals?
 How do we measure our progress or
gaps to those goals?
 How do we leverage this information to
make decisions
 Sales, Finance, Brand Management
and Operations are still going to
have a need for other numbers to
communicate with – but they don’t
drive the plan!

7. • Launch Projections &
• Plan/Changes to Plan?
Assumptions
• Gaps
• Volume
• Risks & Opportunities
• Cannibalization
• Financial Projections
• Brand Volume Plans
• Pricing Strategies
• Capacity Availability • Sales Quota
• Demonstrated Performance • Revenue Targets
• Operational Standards
• Adopting the S&OP Plan • Demand Forecast
• Inventory Planning &
• Review & Action Surrounding: • Customer Volume
Working Capital Targets
• Gaps Projections
• Supplier Performance R&O
• • Brand Forecast
• Communicating the Plan • Distribution Drives
Inputs? Multiple Numbers? Noise?

8.  Develop core Principles
 Transparency
 Communication
 Decision Making Thresholds & Guidelines
 Categorization
 Assumption Inputs
 Gap Types & Quantification
 R&O
 Single Number Operations Plan
 Hedge – Communication Vehicle, not buried into plan
 Slot Categories into the reporting process
 Stretch Goals – Realistic view of attainment, does this create risk, or opportunity
 Demonstrated performance – must drive assumptions, NOT Budget
 Beware the “self fulfilling prophecy” – i.e. Working Capital cuts to match hedge scenario
handcuffs operations from supporting Gap closers

9.  Annual Operating Plan Details:
 170 Million Units
 Generating a Gross Profit of $405MM
 Period 5 S&OP Details:
 Actuals + Forecasted Units for the balance of year = 164 million (6MM unfavorable)
 Actuals + GP Forecast of $395MM ($10MM unfavorable)
 Quarterly Board Meeting the following week!!
 What do we tell them? We can’t tell them we’re changing plan that was adopted in the Q1
Board Meeting
 How do we communicate Gap, Risks & Opportunities?

10.  What do we tell them?
 Educate on New S&OP Process – No longer just “plugging in plan” to complete the horizon –
find and plug amounts to make AOP still seem feasible.
 Earlier delivery of “Reality Based Forecast” allows for Gap closing activities and investment
to be discussed and reviewed.
 If we sugar coat it, the view of next year starts to take hold, and we’re stuck with a “top
down” plan that may be too aggressive.
 Outline AOP data compared with S&OP Forecast
 Defines Gap
 Outlines R&O
 Communicates Action Plans
 How do we communicate Gap, Risks & Opportunities?
 Gaps outlined as:
 Risk to Plan – Areas where planned performance is not trending to meet the plan
 Risk to Forecast – Areas where the projections have risk (+ or -)
 Risks are quantified so they can be clearly communicated
 Opportunities are developed and quantified as strategies to close the gap
 Overall communication outlines the issues, and what the company is doing to meet these
challenges.
 The AOP remains unchanged, finance decides hedge/communication strategy externally by
vetting and approving the R&O.

11.  This is complicated! – Every organization has specific, tailored needs in this space, and
an off the shelf, generic approach to this creates hurdles.
 The impacts here run through every area of the organization – from Sales & Marketing,
thru Supply Chain & Operations, into Finance, the Executive Suite, the Boardroom and
Wall Street.
 Getting “reality” built into this process here helps drive the critical piece of change
management so many S&OP/IBP processes miss – cementing this as the CORE of how
we plan, and not just another input to disparate planning processes.
 Getting this right not only creates a better S&OP process, but streamlines the Annual
Operating Plan/Budget development and long range planning cycles like Strategic
Planning, Product Roadmap Development & Strategic Portfolio Planning.
 Given the weight of this, must be owned at the executive level.

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