Transcript Executive S&OP

APICS / iBF
Best of the Best S&OP Conference
Executive S&OP
How to Implement Successfully
Gaylord Texan Resort
& Convention Center
December 11-12, 2008
Bob Stahl
Bob Stahl
R.A. Stahl Company
www.tfwallace.com
Rick Hall
Director of Operations UPG of
Thomas & Betts
[email protected]
QuickTime™ and a
TI FF (U nc ompress ed) dec ompress or
are needed t o see t his pic ture.
www.tfwallace.com
The Evolution . . .
24
Months
Time
Most Detail
Aggregate Only
Exac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space
S&OP /Super
Rough&
Cut
MS
Detailed Forecasting
Master
Scheduling
• Lost
in the woods- Detail
PTF
• Engage Top
Management?
• Added Little Value outside
the Planning Time Fence
Plant Scheduling/Pull
MS
Mix
Bob Stahl
Volume
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An Imperative . . .
PTF
Suicide
Quadrant
Detail
Aggregate
Only
Quadrant
S&OP
Horizon
Bob Stahl
www.tfwallace.com
Four Fundamentals
Volume
Demand
Supply
MIX
Bob Stahl
www.tfwallace.com
The Real Issue . . .
Understanding Executive S&OP is simple.
The hard part is . . .
Organizational Behavioral Change
Changing the way everyone does their jobs.
Keys: - Full cross functional buy-in
- Counterexperiential/intuitive
- Comfort vs Change
- Path of low risk
Bob Stahl
www.tfwallace.com
Successful
Implementation . . .
A - People
B - Data
C - Software
Bob Stahl
www.tfwallace.com
C - Software . . .
• Data “warehouse”
– ERP Operating System, Forecasting Software, etc. (transaction
level data)
• Data Cubes . . .
• Excel (or equivalent)
– Organizer
– Presenter (tables & graphs)
• More complex software –
later/maybe
Bob Stahl
www.tfwallace.com
Rick Hall on software . . .
•
•
•
•
Change forecasting from detailed to families
Extract data from BPCS; organize in Excel
Develop appropriate MIX assumptions
“Control Tools” to build confidence in these
assumptions (Excel based)
• Be willing to put “the gator” on the table
• No financial investment for software.
This is not a software implementation; it is a
knowledge application implementation!
Bob Stahl
www.tfwallace.com
B - Data . . .
• Getting out of “Suicide Quadrant”
– Forecasting in Families
• Simplifying Data Assumptions
– for Rough Cut Resource Planning
– for financial conversion (units to $$$)
• Single process – tied together
– one source for data
– one agreed upon output
Bob Stahl
www.tfwallace.com
Rick Hall on data . . .
Getting MORE with LESS
• MORE clear picture of the business condition
LESS crunching of massive amounts of ultimately
useless data
• MORE understanding of where we want the
business to be
LESS confusion about where we are and where
we are going
• MORE participation and agreement in how we will
get the business there
LESS conflict surrounding business initiatives
• MORE accountability for the results
LESS waste of human and financial resources
Bob Stahl
www.tfwallace.com
Rick Hall -One Key to success . . .
Simplifying
Assumptions
Bob Stahl
www.tfwallace.com
Validating Assumptions
RRP Run Rate Conversion
Units to Hours Control Chart
0.56
Hours per Unit
0.54
0.52
Assumption
Sensitivity
0.5
0.48
0.46
0.44
0.42
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2006
UCL
Bob Stahl
Jul Aug Sep Oct Nov Dec Jan Feb
2007
LCL
Hours per Unit
2008
Linear (Hours per Unit)
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Supply Assumptions . . .
% of A that is IC 01
Instructions:
1) Enter subgroup (sample) size.
3
2) Enter subgroup observations.
4
3) You may need to adjust the chart size to have the observations align with the data points
Note: If you clear all the cells, you will get an error - you may ignore it. The worksheet will perform properly with data in it.
Note: You may unprotect this worksheet should you wish to modify it: select Tools,
then Protection, then Unprotect Sheet
1) Enter Subgroup Size (1-10)
AVERAGES
X=
3
Constants:
32.25
A2
UCL=
1.023
D3
0
D4
2.574
43.8
(X + A2R)
LCL=
20.7413
(X - A2R)
50.00
40.00
30.00
20.00
10.00
0.00
RANGE
R=
11.25
UCL = 28.9575
(D4R)
LCL =
0
(D3R)
(0 for Sample < 6)
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2) Observations
Subgroup (sample)
Period
1
2
3
Mar-07
Apr-07
May-07
31
30
26
Jun-07
Jul-07
Aug-07
40
20
38
Sep-07
Oct-07
Nov-07
35
37
43
Dec-07
Jan-08
Feb-08
23
29
35
Sum
87.00
98.00
115.00
87.00
X
R
29.00
5.00
32.67
20.00
38.33
8.00
29.00
12.00
Bob Stahl
www.tfwallace.com
Financial
Assumptions . . .
Observations
Average Selling Price Family H
+1
-1
+2
-2
1.864624 1.291173 2.151349 1.004447
$2.60
1.864624
1.291173 2.151349 1.004447
1.864624 1.291173 2.151349 1.004447
$2.10
1.864624
1.291173 2.151349 1.004447
1.864624 1.291173 2.151349 1.004447
1.864624
1.291173
2.151349
1.004447
$1.60
$1.58 $1.58
$1.58 $1.58
$1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58 $1.58$1.58
1.864624 1.291173 2.151349 1.004447
1.864624
1.291173 2.151349 1.004447
$1.10
1.864624 1.291173 2.151349 1.004447
1.864624 1.291173 2.151349 1.004447
$0.60
1.864624 1.291173 2.151349 1.004447
1.864624 1.291173 2.151349 1.004447
$0.10
1.864624
1.291173 2.151349 1.004447
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12
1.864624 1.291173 2.151349 1.004447
1.864624 1.291173 2.151349 1.004447
Period
1.864624 1.291173 2.151349 1.004447
Av e rage Se lling Price Family H Range Chart
1.2
Range
1
0.8
0.6
0.4
0.2
0
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
May07
Jun07
Jul-07
Aug07
Sep07
Oct07
Nov07
Dec07
Jan08
Feb08
Mar08
Pe riod
Bob Stahl
www.tfwallace.com
Graphical Report
Resource Requirements Plan - Dept #8
Hours Per Month
250
200
150
100
50
2007
2008
Mar
Feb
Jan
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
Dec
Nov
Oct
0
2009
Normal Capacity
Normal Capacity +25%
Medium Widget Required Capacity Large Widget Required Capacity
Bob Stahl
www.tfwallace.com
Simplifying Assumptions
allow Homac to . . .
• Get out of the suicide quadrant
• Keep noise level MIX issues from
clouding VOLUME space picture
• Maintain confidence in the process
because the assumptions are
monitored for validity
• Build believable future state
projections
Bob Stahl
www.tfwallace.com
Done Properly . . .
Simpler
(Not Easier)
Better
Bob Stahl
www.tfwallace.com
A - People . . .
• Top Management “centric”
– The Leader of the business (CEO, President, GM, MD, etc.) must not
only provide
•
•
•
•
Support
Funding
Commitment
Leadership
– They must also be “hands-on” each and every month
(Top Management must not only support it, they must be willing, ready, & able to do it!)
• It’s not doing what you do better, it’s doing something
different to be better!
• Counter-experiencial & Counter-intuitive equals
Discomfort & Risk
Bob Stahl
www.tfwallace.com
Engaging Top Management
• In Change, there is no Comfort
(In Comfort, there is no Change)
Those who succeed with
Executive S&OP
are willing the endure the discomfort
that is required!
Bob Stahl
www.tfwallace.com
Three Levels
of Commitment . . .
• Uninformed (before Go/No-go #1)
Boss: “Okay, let’s do an Executive Briefing.”
• Semi-informed (after Briefing: Go/No-go #1)
Boss: “Okay, let’s do a Live Pilot”
• Fully informed (after Pilot: Go/No-go #2)
Boss: “Okay, let’s go to full cutover.”
Bob Stahl
www.tfwallace.com
Homac
Getting started . . .
• President was convinced this was worth
looking at by Demand, Supply, and
Finance executives.
• The Executive Briefing supplied all the
necessary facts. The fact that it was a
people based implementation was a
strong selling point. After all, our people
are our strength!
• After some Co-Chair possibilities a staff
level chair person was chosen (support
from the top) for Design Team Leader
Bob Stahl
www.tfwallace.com
Homac
Design Team Selections. . .
• Chose the best people disregarding
perceived workload constraints
• To a person, the team members were
enthusiastic to take on the task of
developing and implementing this new tool
• Initial progress was slow but progressed
nicely as hurdles were overcome
• Live pilot demo was very convincing with all
design team members sharing in the
presentation process
• Implementation went forward on time and
fully supported
Bob Stahl
www.tfwallace.com
Homac’s added plus . . .
• ES&OP output provided clear supportable
data for marketing our company
• ES&OP process at our company is being
modeled for all of the Utility Products
Group within Thomas & Betts
• ES&OP process is being used in tough
market conditions to drive business
performance
• We are looking for new simplifying
assumptions to help us broaden the
proactive benefits of our ES&OP process
(space requirements)
Bob Stahl
www.tfwallace.com
Implementation Path
Business
Improvement
Executive
Briefing
Go/No-Go #1
Live Pilot
Demonstration
Go/No-Go #2
Low Risk
Low Cost
High Impact
Phase I
Preparation
1
Bob Stahl
Phase II
Expansion
Kickoff
Session
2
3
Phase III
Financial
Integration
4
5
Months
6
7
8
9
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Implementation Alternatives
“Build it and they will come”
Design it first, get the mechanics working, and
then attempt to sell it to top management.
=
Low probability for success
“Hold the high ground”
Involve top management at the very outset of the
implementation, and throughout.
=
High probability for success
Bob Stahl
www.tfwallace.com
Success Requires
Design Team’s Job:
1. Defined set of practices (What, How, & Who)
2. Accurate, timely, & believed data
3. Valid, simplifying assumptions (Demand/Supply/Financial)
(Getting out of ‘Suicide Quadrant’)
Leadership’s Job:
1. High discipline clear accountability (process & results)
2. Constant improvement
3. Changed performance measures
4. Culture/Behavior change (Gator on table)
Bob Stahl
www.tfwallace.com
Thanks for Listening
[email protected]
508-226-0477
www.tfwallace.com
Bob Stahl
www.tfwallace.com