Transcript El Paso / Juarez Chapter Sales & Operations Planning: Top Management’s Handle on the Business October 9, 2013 El Paso, TX Ramada Hotel Bob Stahl Bob Stahl 508-226-0477 [email protected] www.RAStahlCompany.com www.RAStahlCompany.com Agenda •

El Paso / Juarez Chapter
Sales & Operations Planning:
Top Management’s Handle on the Business
October 9, 2013
El Paso, TX
Ramada Hotel
Bob Stahl
Bob Stahl
508-226-0477
[email protected]
www.RAStahlCompany.com
www.RAStahlCompany.com
Agenda
• What is authentic Executive S&OP
– “It ain’t your father’s Oldsmobile”
• What makes it work
– Leadership’s (Top Management) Role
What makes it fail (No notes allowed)
•
• How to implement effectively at:
– low risk
– low cost
– high impact
– quick results
Bob Stahl
www.RAStahlCompany.com
Bob Stahl’s Background . . .
• 40+ years in manufacturing companies
• Started as Schedules Coordinator
• With help of Oliver Wight, certified Class A success (1979)
• Became an associate of Oliver Wight – 1981 (passed in 1983)
• Have worked with some of the best companies in the world
• Today = eS&OP coach, educator, author
• Have written six books with Tom Wallace –
– three have been used for APICS Certification
• S&OP editor and columnist –
– for the IIF’s Journal of Forecasting - Foresight
• Head up consulting services for TFWallace & Company
• “Retired” = choices
Bob Stahl
www.RAStahlCompany.com
Sales & Operations Planning
Executive S&OP (eS&OP)
ProActive
Volume
Behavior
Supply
Demand
Very different,
separate, &
Re
Active
distinct
practices
Behavior
but integrated!
Bob Stahl
•How Much?
•Rates
•The Big Picture
•Families
•Strategy/Policy/Risk
•Monthly / 18 - 36 Mos
•Executive Resp.
Balance
Mix
•Which Ones?
•Timing/Sequence
•The Details
•Products/SKU’s/Orders
•Tactics/Execution
•Weekly/Daily 1-3 Mos
•Middle Mgt. Resp.
www.RAStahlCompany.com
Forecasting
(Worst of Two Worlds)
PTF
III
Building to
Customer
Demand
I
Suicide
Quadrant
Detail
II
Aggregate
Only
Quadrant
Exec.
S&OP
Horizon
Bob Stahl
www.RAStahlCompany.com
Executive S&OP is . . .
APICS Dictionary, 13th Edition, October 2010
•
•
•
•
The executive portion of the overall sales and operations
planning set of processes.
It is a decision-making activity involving the leader of
the business (president, general manager, COO, managing
director), his or her staff, and a number of middle managers
and specialists.
Its mission is to:
1. balance demand and supply at the aggregate level,
2. align operational planning with financial planning,
3. link strategic planning with day-to-day sales and
operational activities.
4. Is a forum for disciplined discussion about setting
Policy, strategy, risk, budget changes
It is a multi-step process involving demand planning, supply
planning, and middle and top management meetings for
decision-making and authorization
Executive S&OP – does the
proper prior planning to
allow the routine things to
be done routinely!!
Top Management’s Handle on the Business
Bob Stahl
www.RAStahlCompany.com
Using Market-Facing Families &
Simplifying Data Assumptions
Markets
Segments
Channels
Customers
Best Solution:
Traditional
Solutions:
1. Market-Facing Families
Sales &
Marketing
(Demand)
Bob Stahl
//
1.Full
Granularity
or
2. Data
MIX Assumptions
2.Fcs’tw/
in Resource
Supply Families
Planning
Resource
Department
Equipment
Supplier
Operations
(Supply)
www.RAStahlCompany.com
ERP
Enterprise Resource Planning
Strategic Planning
Bob Stahl
Volume
Executive S&OP
Sales
Plan
Operations
Plan
Mix
Master Scheduling
Capacity Planning
Demand
Forecasting & Demand Management
Business Planning
Supply
Detailed Planning &
Execution Systems:
MRP, Plant Scheduling,
Supplier Scheduling, etc.
www.RAStahlCompany.com
Where Does eS&OP Fit?
Strategic Planning
Where
Executives
Live
Turning
Disconnected
Knobs?
Business Planning
Executive S&OP
Disconnect!!!
Where
Mid-Mgt.
Lives
Bob Stahl
Detailed Planning,
Scheduling & Execution
www.RAStahlCompany.com
“Strategic Planning . . .
Bob Stahl
Strategy
Executive
S&OP
Executive S&OP
Annual Business Plan
Robert Hayes
HBR-Nov/Dec 1985
Strategic Planning - forward in reverse
forward in reverse”
Doing
The
Right
Things
Linking Strategic Planning to
Day-To-Day
Operations
Tactics
Master Schedule
Doing
The
Things
Right
Execution
www.RAStahlCompany.com
Two Parts of Exec. S&OP
The mechanics:
•Data Dump (Warehouse)
•Information (Org Data)
•Knowledge
•Understanding

Display of Info

Defined Process for
Decision-Making
Bob Stahl
www.RAStahlCompany.com
Holistic Display
The Acme Widget Company
Christmas Widget Sales & Operations Plan
550
Inventory Plan
Actual Inventory
Actual Operations
New Forecast
New Operations Plan
500
450
1000's Units
400
350
300
250
200
150
100
50
0
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
2007-2008 Horizon
Bob Stahl
www.RAStahlCompany.com
Executive Roles
Finance
(Dollars)
Sales/Marketing
(Units or $ by Family)
Executive S&OP
President
A process to raise and reconcile
conflict, agree upon, & communicate
THE company game plan
Operations
(Units/hours/
Material)
Bob Stahl
Product Dev.
(New Product Issues)
www.RAStahlCompany.com
eS&OP Success . . .
• not only allows disagreement, to work it
promotes and requires disagreement
• Learning how to disagree without being
disagreeable is paramount to success
• Gaining collaborative consensus from this
disagreement makes for best decisions
• Without a comfortable process to resolve
disagreement/conflict, organizations will
avoid it – “put the moose under the table”
Bob Stahl
www.RAStahlCompany.com
Top Management’s Role . . .
(among other things)
• Create an environment (culture) that allows the Ugly
Moose to be put on the table --
Bob Stahl
www.RAStahlCompany.com
The Ugly Moose . . .
•
•
•
•
Big ugly animal
All companies have them (under the table)
Difficult & Contentious
Good companies know how to disagree
without being disagreeable
• Put the ‘beast’ on the table
• Thrive on conflict, not chaos
• Moose is a symbol of agreement to do so
Getting the Moose on the Table
Bob Stahl
www.RAStahlCompany.com
Top Management’s Role . . .
(among other things)
• Create an environment (culture) that allows
the Ugly Moose to be put on the table -- so
that . . .
• They can completely and effectively resolve
disagreements & conflict, setting proper:
– Policy
– Strategy
– Risk Assessment
– Performance Measurements
Before it’s in the MIX Space!
Bob Stahl
www.RAStahlCompany.com
Conflict Resolution * . . .
• Disagreement has two parts:
– Substantive issue
– Emotion behind that issue
• Disagreement becomes conflict when
emotion is not completely addressed
• Lasting conflict resolution must deal with
both elements of disagreement
• Doing that effectively can be learned:
– With a motive to do so &
– A framework on which to work
Bob Stahl
“Getting to Resolution”
Stewart Levine
www.RAStahlCompany.com
Two Parts of Exec. S&OP
The mechanics:
•Data Dump (Warehouse)
•Information (Org Data)
•Knowledge
•Understanding

Display of Info

Defined Process for
Decision-Making
Bob Stahl
www.RAStahlCompany.com
The Executive S&OP Process
Step #5
Heavy
Lifting
Executive
Meeting
Decisions &
Game Plan
Step #4
Pre-S&OP involving
It is a multi-step process
Conflict Resolution,
Meeting
Recommendations &
Agenda for Exec. Mtg.
demand planning,
supply
planning,
Step #3
Supply top management
and middle and
Capacity constraints
Planning
2nd-pass spreadsheets
meetings
for
decision-making
and
Step #2
Demand authorization
Management Forecast
Planning
1st-pass spreadsheets
Step #1
Data
Gathering
End of Month
Bob Stahl
Sales Actuals,
Statistical
Forecasts &
Production Actuals
Creates a
Disciplined
Rhythm
www.RAStahlCompany.com
Top Management
Executive S&OP
and
President
Done Properly . . .
VP
Sales/Mktg
VP
Operations
VP
Finance
VP
R&D
It takes Top Management between
1 & 2 Hours per Month
Need to be Hands-On with the Executive S&OP Process
Stewardship & Leadership
(Manager/Trustee & Guide/Command)
Bob Stahl
www.RAStahlCompany.com
Making eS&OP Successful . . .
• The hard stuff (tools,
techniques, processes) is
easy
• The soft stuff (relationships,
behavior, culture) is hard
Bob Stahl
www.RAStahlCompany.com
Market Research . . .
Success with eS&OP is:
60% = Behavior/culture change
30% = Process improvement
10% = Technology
*Lora Ceceri
Altimiter/AMR
Boston, Sept 2010
Bob Stahl
www.RAStahlCompany.com
Overcoming the Catch
22 of Implementation
• If you don’t get top management involved
from the start, you won’t address the cultural
or behavioral changes that are required.
• If you do get top management involved form
the start, they realize that success does not
come from doing what you do better, but
from doing things differently to be better.
That translates to personal and/or
organizational discomfort and risk for
those in charge – resulting in reluctance to
implement.
Bob Stahl
www.RAStahlCompany.com
Discomfort = RISK
• 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.RAStahlCompany.com
How to do that . . .
Mitigate RISK
• Uninformed (before Go/No-go #1)
Boss: “Okay, let’s do an Executive Briefing.”
• Semi-informed (after Briefing: Go/No-go #1)
Staff: “Okay, let’s do a Live Pilot Demonstration”
• Fully informed (after Pilot: Go/No-go #2)
Staff: “Okay, let’s go to full cutover.”
Bob Stahl
www.RAStahlCompany.com
Implementation Path
Business
Improvement
Live Pilot
Demonstration
Go/No-Go #2
Low Cost
Low Risk
High Impact
Quick Results
Phase I
Pilot Demo
1
Executive
Briefing
Go/No-Go #1
Bob Stahl
Phase II
Expansion
Kickoff
Session
2
3
Phase III
Financial
Integration
4
5
Months
6
7
8
9
www.RAStahlCompany.com
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
(because you can’t address the cultural issues without Top Management)
“Hold the high ground”
Involve top management at the very outset of the
implementation, and throughout.
= High probability for success
Bob Stahl
www.RAStahlCompany.com
Parallel Paths
A
B
X
Z
Run the Business today
Projects to support ‘A’
Business Excellence
Executive S&OP
Leadership Responsibility:
1. Assuring resources for all
2. Use Pilot for learning, not benefits
3. Gain focus - application of principles
Bob Stahl
www.RAStahlCompany.com
Implementation
Pitfalls
• Middle Mgt. only
• It’s a Supply Chain thing
• Top Mgt. but not
President (SBU Ldr)
• No Education (‘Build It’)
• Supply based Families
• Too much granularity
• No consensus on ‘end
game’
• No discipline
• Inadequate
Pre-S&OP
Bob Stahl
• Conflict Aversion
• Executive S&OP
Meetings:
– Show & Tell
– Unfocused
– Short Term
– Too Much Detail (MS)
– Meeting Too Long
– Finger Pointing
• Ongoing Data
Problems
• Lack of Progress
www.RAStahlCompany.com
The Real Issue . . .
Understanding Executive S&OP is simple.
The hard part is . . .
Behavioral Change
changing the way everyone does their jobs.
Keys: - Full cross functional buy-in
- Counterexperiential/intuitive
- Comfort vs Change
- Path
risk Imperative
Authentic S&OP
mustof
below
a Strategic
Bob Stahl
www.RAStahlCompany.com
Done Properly . . .
Simpler
Better
(Not Easier)
Bob Stahl
www.RAStahlCompany.com
A CEO’S Perspective on eS&OP
• “We spent a lot of time gathering and
validating data, which was time well-spent.
But that challenge was nothing compared to
the people side of things.”
• “The most difficult part was driving . . .
constructive conflict in the demand
alignment meetings.”
An Interview* with Phil Dolci, President and CEO Jarden Branded Consumables
*In Foresight: The International Journal of Applied Forecasting, Winter 2012
(www.forecasters.org/foresight)
Bob Stahl
www.RAStahlCompany.com
Continued
“The measureable benefits are easy...
– Service levels are up and inventory is
down.
– For example, the two largest businesses
in my portfolio today each have service
levels above 99.5% with inventory that
is 20% less than 3 years ago.”
Bob Stahl
www.RAStahlCompany.com
Continued
• “I could argue, however, that the
intangible benefits are just as valuable.
We have much better teamwork because
of the engagement and constructive
conflicts that are natural components of
S&OP. This approach has extended to
almost every process and function within
the business . . .”
• “Moreover, I feel much more in touch with
the business without micro-managing it.”
Bob Stahl
www.RAStahlCompany.com
Aligning Human Energy
Accomplishment
Bob Stahl
Accomplishment
www.RAStahlCompany.com
Thanks for Listening
&
Good Luck!
[email protected]
www.RAStahlCompany.com
508-226-0477
Bob Stahl
www.RAStahlCompany.com