Sales & Operations Alignment - Presentation @ Sales & Ops Bus Conf - Chicago - Biel 04 19 11

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Sales & Operations Planning & Analysis 2011
Sales & Operations Alignment

Tuesday, April 19, 2011
Hotel “W” City Center
Chicago, IL

Jim Biel
Management Consultant

E-Mail: bielconsulting@gmail.com
Phone: 847.687.5379

http://www.linkedin.com/in/jimbiel

Jim Biel, Ph: 847.687.5379, E-Mail: bielconsulting@gmail.com, http://www.linkedin.com/in/jimbiel (April 19, 2011)

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Who I Am – Jim Biel
• 20 Years Multi-Functional Experience, Concentrated in CPG Industry (Sara
Lee, Unilever, Chiquita, Pepsi) – Retail & B-to-B
• Experience in Business Forecasting, Sales Operations & Planning, S&OP,
Sales Systems, ERP, CRM, Demand Planning, Business Information
Management, Supply Chain, Trade Promotion Management, IT, HR,
Training & Development, and Finance (Corporate & Public Accounting, CPA)
• Core understanding of multiple supply chains – frozen, fresh, cold, dry,
liquid
• Independent Management Consulting for large and small entities
• Client Services position with a SaaS (software as a service) provider of
trade promotion software (Adesso Solutions)
• Practiced public accounting for 4+ years – McGladrey; Corporate Finance
FP&A Roles
• Adept at integrating relevant business concepts and processes with
enterprise-wide systems, a strong business process understanding and
acumen including S&OP (boot strap and retrofit S&OP implementations)

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Polling the Room
• Function
• Industry
• Interest
• Experience with S&OP
• Desired Outcome with S&OP
• Your Burning Question About
S&OP Alignment


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Presentation Flow
• Presentation of Concepts
• Interactive As We Go – Brief Discussion / QA – Concept
by Concept – Share What We All Know
• Fuller QA at End
• Welcome / Encourage Contact After Presentation – E-
Mail, Phone, LinkedIn (Take a Business Card)
• Will Be Available After to Talk 1-on-1
• Lunch
• Presentation Available – E-Mail Me and Posted to My
LinkedIn Profile


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Overview of Discussion Topics
• Results Through Integration & Performance
Management
• Cross Functional Alignment Through Effective
Communication
• Accountability Systems For Internal
Stakeholders
• Alignment Between Corporate Strategy and
Operational Execution
• Methodological Approach Measuring, Managing,
and Executing Strategies


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Closing Remarks
(Now & Later, Too)
• Key Learnings From My Experience
– The Concept is Easy
– The Initial Buy-In is Fairly Easy
– The Change Mgt Required Can Be Hard
• New Process
• New Technologies / Systems
• New Accountabilities / Roles
• Traditional Functional Ownership Dies Hard – Silos
• Transparency Hard For Some to Swallow
– Consistency & Month-to-Month Execution is Hard
– Leader Needs to Keep Functional Leads Feet to the Fire

– May Need a Process Coach


7

“Connecting the Knobs”
(Why Integration is Important)

• “Before we had Executive S&OP in the
Company, I Spent A Lot of Time Turning
Knobs That Weren’t Connected To
Anything”
– VP & GM Quote From Tom Wallace’s Book,
Sales & Operations Planning, The Executive’s Guide
Page 24


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Alignment/Integration Defined
• One Integrated Process (Process)
• People/Functional Alignment (People)
• One Common Set of Metrics (Performance)
• One System of Record (Platform)
• All Demand Streams (Demand Supply)
• Integrate All Available Data (Internal & External)
• One Forecast (Used by All Functions * )
• An Integrated Business Management Model
• Buy-In, Accountability, & Trust
• Transparency
* With Some Caveats


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One Forecast Caveat
(Linkage – S&OP to Other Plans)
Strategic Use S&OP
Strategic Demand Supply
Financial Target / As a Gut
Plan Plan Plan Check
Intent

Use S&OP
Business Demand Supply Annual As Key
Financial
Plan Plan Plan Plan Input / Core,
Plus Risks/Ops

Use S&OP
Latest Demand Supply Interim As Key
Financial
Est / Frcst Plan Plan Forecasts Input / Core,
Plus Risks/Ops

Future Future Execution
Demand Supply Forecast / Details,
S&OP Financial Execution Active Risk / Ops
Plan Plan
/ Forecast Discussion

S&OP Outputs Validate, Supports Other Planning Processes

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Results Through Integration & Performance Management
• Desired Results
– Positive P&L Impact
• Increased Revenue
• Reduction / Stabilization of Costs
• Supply Chain Conversion Costs
• Procurement Costs & Efficiencies
– Working Capital Management
• Inventory: Finished, Raw Materials (Cash is King)
– Productivity / Value with Process
• Planning / Forecasting Processes
• New Product Launches (Cycle Time, Success)
– Decision Making Improvements
• Speed
• Quality

• Integration
– Various Functions: Leadership - Demand - Supply - Finance
– Integrated, Consistent, Efficient Forecasting & Management Process

• Performance Management
– P& L Targets
– Working Capital Targets (Forecast Accuracy Drives Inventory Levels)
– Service Level Targets
– Productivity Improvements
– Decision Making Improvements


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Connection – Integration, Performance
Management (Metrics), Results

INTEGRATION PERFORMANCE METRICS
Revenue, Cost Targets
Leadership
(Strategic Direction)
Forecast Accuracy
Working Capital Targets
New Product Launch Success
Cycle Time / Quality - Processes
Demand Feeds Service Level Targets
Supply; Balancing
(Ops Execution, Future Forecast)

DESIRED RESULTS
Finance
($ Scorekeeper, Forward Looking Positive P&L Outcomes
Economic Advisor) Positive Working Capital Outcomes
Productivity Improvements
Decision Making Improvements
Leadership Customer Service Levels
(S&OP Process Owner)


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Cross Functional Alignment / Effective
Communication
Functional Role Business Role S&OP Role Communication
General Manager Strategic Direction Owns the Overall Owns Monthly S&OP
Process – The Process Meeting; Consulted
Owner Daily/Weekly as
Needed (Exception)
Demand Translates Strategy into Owns the Demand Daily, Weekly
> Sales Demand Generation; Forecast; Accountable Interaction with Supply
> Marketing Dem Planning Reports for Excess Inventory & Finance; Owns
to a Demand Leader; Generated by a Monthly Demand
Unconstrained Demand Forecast Miss Component of S&OP

Supply Demand Fulfillment, Owns the Fulfillment of Daily, Weekly
> Finished Least Cost the Demand Forecast Interaction with
> Raw at Least Cost Demand & Finance;
(Balancing with Owns Monthly Supply
Demand Planning) Component of S&OP
Finance Economic Oversight / Counsel, Input, Risk Provides P&L
Counsel Assessment, Pro- Proformas & Risk /
Formas of Future Opportunity
Forecasts Assessment


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Communication – The S&OP Flow
Demand Finance GM
Generates Controls Monthly
Proformas, S&OP
Cost, Risk /
Ops Monthly; + Results
As Needed In + Metrics Review
Interim + Var to Bus Pl
+ Future Frcst
Utilize Demand
Supply Outputs as Basis
+ Assumptions
For Forecasts, + Bulk of Meeting:
Daily Annual Plans, Gaps, Opps in
Strategic Plans,
Weekly Add Risks / Opps / Future Frcst
Monthly Other Lifts /
Discount Factors
Balancing As Needed

+ Create Business Rules (Between Demand/Supply)
+ Forecast Time Fence: Rolling 12-24-36 Months
+ Functional Leads & Leader Participate in Monthly S&OP Review

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Communication – The S&OP Communication Flow

Role Daily Weekly Monthly
GM Rarely Rarely Owns the
Meeting

Demand Active w/ Supply Active w/ Supply Owns Demand
Planning Planning; Sales; Planning; Sales; Component
Marketing; Marketing;
Customers Customers
Supply Planning Active w/ Active w/ Owns Supply
Demand Demand Component
Planning Planning
Finance Consulted As Consulted As Owns Financial
Needed Needed Component


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Accountability Systems For Internal Stakeholders
• Metrics – Common
– 5 Basic Metrics:
• Forecast Accuracy (Demand Owner)
• Perfect Orders (Cust Serv, Supply)
• Revenue (Units & Mix)
• Profitability (Mix, Margins, Costs)
• Inventory (Demand Owner + Supply Owner)
– Simple Scorecard
– Improvement From a Baseline

• Active Involvement By All Functions –
– Accountability & Roles / Responsibilities
• Daily
• Weekly
• Monthly (Decisions Made + Follow-Up Assigned)

• Transparency Through Dynamic
Communication Flow

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Alignment Between Corporate Strategy and
Operational Execution
Corporate Strategy Business Plan S&OP

Revenue Targets Revenue Targets Revenue Targets
Margins Margins Margins
Working Capital Working Capital Working Capital
New Products New Products New Products
New Markets New Markets New Markets
New Customers New Customers New Customers
New Channels New Channels New Channels
Exit Strategies Exit Strategies Exit Strategies
Capital Investment Capital Investment Capital Investment

Strategic Intent 3-5 Yrs Annual Plan / Frcsts Rolling 36 Mo Review

Amount of Detail (Increases through various processes)

> Working Backwards from S&OP, Provides Validation of Plan & Strategy
> S&OP Focuses on Gap / Opportunity Assessment vs. Plan


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Methodological Approach Measuring, Managing, Executing Strategies

Frequency Activity Typical Finance GM
Interactions
Daily Demand Dem Pl with When needed, If Needed, very
Planning: System & exception rare
+ Dem Planners Sources; basis
+ Sales Dem Pl w/
+ Marketing Supply –
+ Customers Balancing
+ Synd Data Supply Metrics
Weekly Demand Same as When needed, If Needed, very
Planning: Above exception rare
+ Same as basis
Above
Monthly + Demand Pre- Demand to P&L Proforma S&OP Meeting:
Meeting Supply; Supply with Gaps / Metrics

+ Supply Pre- Back to Opps; Risks Best Frcst
Demand; Assumptions
Meeting New Products
Finance P&L w/
+ Capacitization Risks / Opps Gaps / Opps
Strategic Issues


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S&OP Time Fences

Demand Demand Demand - Strategy
Dem Pl – SKUs Dem Pl – Prod Fam Dem Pl – Prod Fam
All Demand Streams All Demand Streams All Demand Streams
Sales Marketing Marketing
Customers Customers Customers
Promotions Promotions Promotions
New Products New Products New Products

Supply Supply Supply - Strategy
Fulfillment Fulfillment Fulfillment & Sourcing
Cust Serv Finished Gds, Raw Ingred Contracts
Finished Goods Supply Contracts Plant/Cap Network/Invest
Supply Contracts

Short-Term Mid-Term Long-Term
(1-3 Months) (4-12 Months) (13-36 Months)


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Tool Box Needed to Execute

Systems of Record & Collaboration Tools
- ERP System
- Spreadsheets
- Collaboration Tools
- Purpose Built S&OP System Capability (i.e. SteelWedge)
- Metrics Scorecard Capability

Need a well thought-out and efficient S&OP Reporting Tool
to support Meetings and interactions
> Numbers
> Metrics Reporting
> Assumptions

Make your analysts “analysts” – not data and report generators


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Alignment/Integration Defined
• One Integrated Process (Process)
• People/Functional Alignment (People)
• One Common Set of Metrics (Performance)
• One System of Record (Platform)
• All Demand Streams (Demand Supply)
• Integrate All Available Data (Internal & External)
• One Forecast (Used by All Functions * )
• An Integrated Business Management Model
• Buy-In, Accountability, & Trust
• Transparency
* With Some Caveats


21

Closing Remarks
• Key Learnings From My Experience
– The Concept is Easy
– The Initial Buy-In is Fairly Easy
– The Change Mgt Required Can Be Hard
• New Process
• New Technologies / Systems
• New Accountabilities / Roles
• Traditional Functional Ownership Dies Hard – Silos
• Transparency Hard For Some to Swallow
– Consistency & Month-to-Month Execution is Hard
– Leader Needs to Keep Functional Leads Feet to the Fire

– May Need a Process Coach


22

Resources
• A Book: Sales & Operations Planning, The
Executive’s Guide, Thomas Wallace & Robert
A. Stahl
• “Sales & Operations Planning:
Transformation From Tradition” White Paper,
AMR Research, May, 2009
• “The Transformation to Demand-Driven
Industry Leader” White Paper,
Oracle/Demantra, September, 2006


23

General QA & Closing

• Please ask now
• Ask After Session
• Or
– Contact Me:
• Cell: 847.687.5379
• E-Mail: bielconsulting@gmail.com
• Via LinkedIn: http://www.linkedin.com/in/jimbiel


Sales & Operations Alignment - Presentation @ Sales & Ops Bus Conf - Chicago - Biel 04 19 11

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