Post on 15-Dec-2015
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myths, Misunderstandings and Myths, Misunderstandings and Misinformation about S&OP Misinformation about S&OP
Myths, Misunderstandings and Myths, Misunderstandings and Misinformation about S&OP Misinformation about S&OP
A Presentation
by
Tom Wallacefor
IBF
Phoenix – February 22, 2010
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
The Four FundamentalsThe Four FundamentalsThe Four FundamentalsThe Four Fundamentals
Demand Supply
Volume
Mix
Sales & OperationsPlanningX
How Much?RatesThe Big PictureProduct FamiliesStrategy/Policy/RiskMonthly/18 months+Top Management
Which Ones?Timing/SequenceThe DetailsProducts, SKUs, OrdersTactics/ExecutionWkly/Daily, 2 days – 6 mos Middle Management
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Sales & Operations PlanningSales & Operations PlanningSales & Operations PlanningSales & Operations Planning
Demand Supply
Volume
Mix
Executive S&OP
Master SchedulingSupplier and Plant Scheduling
Distribution Scheduling
Demand Planning/Forecasting
Supply (Capacity) Planning
Operational S&OP
?????
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #1:Myth #1:“S&OP’s a supply chain thing”“S&OP’s a supply chain thing”
Myth #1:Myth #1:“S&OP’s a supply chain thing”“S&OP’s a supply chain thing”
Reality: Executive S&OP is a supply chain thing
and a marketing thing
and a sales thing
and a finance thing
and a manufacturing thing
and a new product development thing
and a general management thing
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Soft BenefitsSoft BenefitsSoft BenefitsSoft Benefits
• Enhanced Teamwork• Improved Communications - Institutionalized • Better Decisions with Less Effort and Time• Better $$$ Plans with Less Effort and Time• Tighter Linkage with Strategy• Greater Accountability• Greater Control • Window into the Future
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #2: “S&OP’s all about balancing Myth #2: “S&OP’s all about balancing demand and supply”demand and supply”
Myth #2: “S&OP’s all about balancing Myth #2: “S&OP’s all about balancing demand and supply”demand and supply”
Reality: Exec S&OP balances demand & supply
and integrates financial and operational planning
and links strategy to ongoing operations
and impacts marketing strategy
and enhances risk management
and streamlines annual planning
and on and on . . .
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Strategic or Tactical?Strategic or Tactical?Strategic or Tactical?Strategic or Tactical?
Strategy
Tactics
ExecutiveS&OP
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #3: “S&OP takes too much of Myth #3: “S&OP takes too much of Top Management’s time” Top Management’s time”
Myth #3: “S&OP takes too much of Myth #3: “S&OP takes too much of Top Management’s time” Top Management’s time”
Reality: Monthly Time Requirementfor the Leader of the Business = 1.5
* Executive staff time could be more than this.
hours*
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Step #5ExecutiveMeeting
Decisions &Game Plan
Step #4Pre-
MeetingDecisions,
Recommendations &Agenda for Exec Meeting
Step #1Data
Gathering
End of Month
Sales Actuals, Statistical Forecasts
&Supply Actuals
Step #2DemandPlanning Management Forecast
1st-pass spreadsheets
Step #3Supply
Planning Capacity constraints2nd-pass spreadsheets
Heavy
Lifting
The Executive S&OP Process
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
ExecMeeting
Pre-Meeting
DataGathering
DemandPlanning
Supply Planning
New Product Development In
volvement
Finance Department In
volvement
Role of Finance and Role of Finance and New Product DevelopmentNew Product Development
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #4: “We’ll Never Get S&OP to Work; Myth #4: “We’ll Never Get S&OP to Work; We Don’t Have Enough Teamwork” We Don’t Have Enough Teamwork”
Myth #4: “We’ll Never Get S&OP to Work; Myth #4: “We’ll Never Get S&OP to Work; We Don’t Have Enough Teamwork” We Don’t Have Enough Teamwork”
Reality: Teamwork Is A Result, Not A Prerequisite
Q. What If You’ve Implemented S&OP and your teamwork hasn’t improved?
A. You Didn’t Do It Right
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Soft BenefitsSoft BenefitsSoft BenefitsSoft Benefits
• Enhanced Teamwork• Improved Communications - Institutionalized • Better Decisions with Less Effort and Time• Better $$$ Plans with Less Effort and Time• Tighter Linkage with Strategy• Greater Accountability• Greater Control • Window into the Future
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #6: “S&OP Is Too Rigid; Our Business Myth #6: “S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OP” Changes Too Rapidly For S&OP”
Myth #6: “S&OP Is Too Rigid; Our Business Myth #6: “S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OP” Changes Too Rapidly For S&OP”
Reality: Executive S&OP is all about change
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Tools & TechniquesTools & TechniquesTools & TechniquesTools & Techniques
IncreaseReliability
EnhanceCoordination
Reduce Waste& Time
Total Quality, Six Sigma, Poka-Yoke, ISO
+ others
Lean Mfg., Just-In-Time, Quick Changeover (SMED),
Flow + others
Sales & Operations Planning, ERP, Kanban, VMI,
+ others
XX
X
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Complexity, Change and Complexity, Change and CoordinationCoordination
Complexity, Change and Complexity, Change and CoordinationCoordination
COMPLEXITY AND THE RATE OF CHANGE
NEED FOR EFFECTIVE COORDINATION PROCESSES
Executive S&OP is the Prim
ary Coordination Process
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth # 7: “We Can’t Use S&OP Myth # 7: “We Can’t Use S&OP Because We’re Totally Outsourced” Because We’re Totally Outsourced”
Myth # 7: “We Can’t Use S&OP Myth # 7: “We Can’t Use S&OP Because We’re Totally Outsourced” Because We’re Totally Outsourced”
Reality: Executive S&OP Doesn’t Care Who Owns The Factory
Heavily Outsourced Companies May NeedExecutive S&OP More Than Others
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #8: “Our Company Is Too Big Myth #8: “Our Company Is Too Big for S&OP” for S&OP”
Myth #8: “Our Company Is Too Big Myth #8: “Our Company Is Too Big for S&OP” for S&OP”
Reality: Executive S&OP operates independently of company size
Procter & Gamble ~ $80 BillionMicrosoft ~ $59 “Dow Chemical ~ $57 “ Cast Fab Technologies ~ $40 Million
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #9: “Our Forecasts Are Not Myth #9: “Our Forecasts Are Not Accurate Enough For S&OP” Accurate Enough For S&OP”
Myth #9: “Our Forecasts Are Not Myth #9: “Our Forecasts Are Not Accurate Enough For S&OP” Accurate Enough For S&OP”
Reality: Executive S&OP Does Not Require “Accurate” Forecasts
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
ForecastingForecastingForecastingForecasting
1. Reasoned
2. Reasonable
3. Reviewed
Frequently
4. Represent the
Total Demand
THE FOUR R’s:Current CustomersNew Customers
CompetitionEconomic Outlook
New ProductsPricing Strategy
PromotionsBid Activity
Management DirectivesIntra-Company Demand
History (Data)Other
ProcessProcess
Inputs Process Output
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #10: “S&OP Is Simple; All You Myth #10: “S&OP Is Simple; All You Need Is A Few Spreadsheets” Need Is A Few Spreadsheets”
Myth #10: “S&OP Is Simple; All You Myth #10: “S&OP Is Simple; All You Need Is A Few Spreadsheets” Need Is A Few Spreadsheets”
Reality: Implementing Executive S&OP Is All About Change Management
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
The PrioritiesThe PrioritiesThe PrioritiesThe Priorities
C: Software, Tools
B: Process & Data
A: People, Mindset
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #11: “We Can’t Afford To Buy Myth #11: “We Can’t Afford To Buy More Software To Do S&OP ” More Software To Do S&OP ”
Myth #11: “We Can’t Afford To Buy Myth #11: “We Can’t Afford To Buy More Software To Do S&OP ” More Software To Do S&OP ”
Reality: You Do Not Need New Software to Make Executive S&OP Work
Most of the successful users of the process use Excel (or similar)
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
So, What To Do About Software?So, What To Do About Software?So, What To Do About Software?So, What To Do About Software?
Options:
1. Use spreadsheet software
2. Use S&OP specific software
3. Hybrid: start with spreadsheet
switch to specific later
When in doubt, pick 3.
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Reality: People Can and Do Change
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Who Are THEY?
• Top Management?
• Sales?
• Marketing?
• Finance?
• All of the above?
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Myth #12: “We Can’t Do S&OP. Myth #12: “We Can’t Do S&OP. THEYTHEY Will Never Participate” Will Never Participate”
Why not? Are they bad people?
No, it’s because they don’t understand it.
They don’t understand it, because they haven’t been taught.
“It’s all about change management”Kathy BuddDow Chemical
EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM
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