Continuous S&OP - Breaking the Mold - Kinaxis presentation

Copyright © 2014 Kinaxis All Rights Reserved.
Continuous S&OP – Breaking the Mold
Trevor Miles | e: tmiles@kinaxis.com | m: +1.647.248.6269 | t: @milesahead

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Where did this all start?
Sep, 1989

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What have we been working toward?
The 5 step ES&OP Process - Tom Wallace, Executive S&OP: The Executive's Guide
Issues
-Sequential
-One Directional
-High Level
-Manual
-Slow
-Unit based
-Ignores margin

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A lot has changed in 25 years Unprecedented time of global expansion

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A lot has changed in 25 years PC, ERP, APS, internet, …
Oliver Wight: Transitioning from S&OP to IBP
DOS VisiCalc
Windows 95 SAP APO Google GSM Mobile
Excel
SAP
iPad
dotCom

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Jun 2007
Mar 2011
Aug 2006
Mar 2006
Feb 2004
May 2003
Sep 2010
Oct 2012
A lot has changed in a little over 10 years Cloud, Social, Mobile, Internet-of-Things, …

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A lot has changed in 5 years Internet-of-Things, 3D Printing, …
http://www.holyrood.com/2012/12/briefing-11/

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Disruptive Technologies for Supply Chain SCM World, The Chief Supply Chain Officer Report 2014, September 2014

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But our mental model is stuck in 1990s ideas
The traditional “plan then execute” model is the product both of historical thinking about supply chain processes and the state of available supporting technology.
Next Generation Supply Chain Management - The Integration of Planning and Execution, CSCO Insights Thought Leadership Series, Supply Chain Digest, 2009

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Traditional S&OP Description
Step 1 Data Gathering
Step 2 Demand Planning
Step 3 Supply Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP Meeting
Actuals Demand, Supply, Inventory, & Backlog + Statistical Forecasts and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints 2nd-pass spreadsheets
Decisions. Recommendations, Scenarios, & Agenda for Exec Meeting
Decisions & Updated Game Plan

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Step 1
Data
Gathering
Step 2
Demand
Planning
Step 3
Supply
Planning
Step 4
Pre-S&OP
Meeting
Step 5
Exec-S&OP
Meeting
Actuals
Demand, Supply,
Inventory, & Backlog +
Statistical Forecasts
and Worksheets
Management Forecast
1st-pass spreadsheets
Resource Requirements Plan
Capacity Constraints
2nd-pass spreadsheets
Decisions.
Recommendations,
Scenarios, & Agenda
for Exec Meeting
Decisions &
Updated
Game Plan
No wonder companies
still think in terms of
months and quarters
Exec:
I want to increase demand
In Asia by 5% to compensate
for revenue drop in Europe
Demand Manager/Planner:
Given the last 12 months history
and our existing Marketing plans
which countries make most sense?
Is this spread across all product families?
What about NPI?
Supply Manager/Planner:
Does the usual factory have capacity?
If not, where else can we get supply?
What will be the additional mfg & delivery cost?
Which materials do we need to increase?
Can the suppliers meet our new demand?
If not, do we have alternative suppliers?
Inventory Manager/Planner:
How much RM, WIP, and FG do we need to carry?
Where are we going to place it?
Do we have the warehouse capacity?
What does this mean in terms of min order qtys?
How close does FG need to be to customers?
S&OP Team:
Do we have the right demand/supply balance?
Will this meet the new revenue targets?
Do we need additional Marketing campaigns?
What-if the NPI does not take off as we assume?
Executive S&OP Team:
Can we live with the projected revenue shortfall?
Have all the risks been considered?
Will Europe drop even more if we shift Marketing emphasis to Asia?
What-if we accelerate R&D by 6 months?

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Continuous & Collaborative S&OP
Step 2
Demand
Planning
Step 3
Supply
Planning
Step 4
Pre-S&OP
Meeting
Step 5
Exec-S&OP
Meeting
Actuals
Demand, Supply,
Inventory, & Backlog +
Statistical Forecasts
and Worksheets
Management Forecast
1st-pass spreadsheets
Resource Requirements Plan
Capacity Constraints
2nd-pass spreadsheets
Decisions.
Recommendations,
Scenarios, & Agenda
for Exec Meeting
Huge improvements in
- Visibility to issues
- Resolution time
- Alignment across functions

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What does “good” look like?

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StrataBridge, Evolution of Sales & Operations Planning, Andy Coldrick, Dick Ling & Chris Turner
Risk Adjusted Long Term Plan
One number plan wrong approach

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Outside-In approach critical
Source: Gartner, Elevate Your S&OP Process From Traditional to Demand-Driven, Todd Applebaum and Jan Kohler, Jul 2, 2012

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Outside-In approach critical
Supply Network
Innovation Network
Distribution Network
Source: Gartner, Elevate Your S&OP Process From Traditional to Demand-Driven, Todd Applebaum and Jan Kohler, Jul 2, 2012
Finance

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Continuous S&OP – Breaking the mold
AND, not OR
Concurrent, not just sequential
Event-driven, not just calendar-driven
Effective, and efficient

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Continuous demand, supply, and market input
Continuous S&OP – Breaking the Mold
Operational Planning & Execution
Financial Performance
Finance Consensus
Finance Scenarios
Statistical Forecast
Demand Consensus
Demand Scenarios
Sales & Marketing
New Product Gates
New Product Consensus
New Product Scenarios
Engineering/R&D
Supply Performance
Supply Consensus
Supply Scenarios
Operations
Finance
Continuous S&OP
•Generate plan
•Sense when plan will not be met
•Identify future risk
•Mid-cycle adjustments
•Know sooner, act faster
Key Capabilities
•Range planning
•Decision orchestration
•Business trade-off analysis
•Scenario planning
•Assumption capture
•Concurrent planning
–Time
–Function
–Hierarchy
Monitor Performance Continuously
Future Risk
Executive S&OP Meeting

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What does ‘good’ look like? Qualitative Improvements

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What does ‘good’ look like? Quantitative Improvements

Continuous S&OP - Breaking the Mold - Kinaxis presentation

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