Post on 10-Jan-2016
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Bob Stahl www.tfwallace.com www.RAStahlCompany.com
Hilton Garden InnWaltham, Mass.March 23, 2011
Hilton Garden InnWaltham, Mass.March 23, 2011
Bob Stahl 508-226-0477
www.RAStahlCompany.comwww.tfwallace.com
Bob Stahl 508-226-0477
www.RAStahlCompany.comwww.tfwallace.com
S&OPS&OP - Myths, - Myths, Misunderstandings & Misunderstandings &
MisinformationMisinformation
TOPGRADING SOLUTIONSMRI NETWORK
Bob Stahl www.tfwallace.com www.RAStahlCompany.com2
With apologies to With apologies to Charles Dickens . . .Charles Dickens . . .
With apologies to With apologies to Charles Dickens . . .Charles Dickens . . .
Worst of Times . . . These are perhaps the worst economic conditions in a generation or two . . . and it may get worse before it gets better. (What’s 9%??)
Best of Times . . . For those who choose to use them, we have terrific tools in our hands today to deal with the massive uncertainty!
Myths, Misunderstandings and MisinformationMyths, Misunderstandings and Misinformation Sources: Congressional Budget Office; Department of Labor, Bureau of Labor Statistics; Department of Commerce, Bureau of Economic Analysis.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
Gravitational Force Needed . . .Gravitational Force Needed . . .Gravitational Force Needed . . .Gravitational Force Needed . . .
Customers
Employees(Suppliers, Community, Country, Planet)
Owners
ExecutiveS&OP
ExecutiveS&OP
Desired Force = CentripetalNatural Force = Centrifugal
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
Muting Trade-Offs . . . Muting Trade-Offs . . . Muting Trade-Offs . . . Muting Trade-Offs . . .
• When a company is trading off one constituency against another, it’s on a slippery slope
• Being able to serve all constituencies has a lot to do with timing:1. In the short term, the customer is king2. Proper prior planning is necessary to serve
all constituencies well (Doesn't’t happen by accident)
3. Executive S&OP is the tool to set conditions for success with regard to Supply Chain performance
Bob Stahl www.tfwallace.com www.RAStahlCompany.com7
S&OP Morphing TerminologyS&OP Morphing Terminology(causing confusion)(causing confusion)
S&OP Morphing TerminologyS&OP Morphing Terminology(causing confusion)(causing confusion)
• At first -- S&OP meant an executive led process for balancing demand & supply at the volume level
• Then -- S&OP meant any process that dealt with balancing demand & supply at both the volume & mix levels, blurring the distinction
• Today -- S&OP is no longer exclusively a term that describes any specific process, but rather a set of words that mean anything you want it to mean
Bob Stahl www.tfwallace.com www.RAStahlCompany.com8
Volume
Mix
•How Much?•Rates•The Big Picture•Families•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Resp.
•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Mos•Middle Mgt. Resp.
Demand Supply
Balance
Very different, separate, & distinct
practicesbut integrated!
Very different, separate, & distinct
practicesbut integrated!
The Four Fundamentals
ProActive Behavior
ReActive Behavior
Bob Stahl www.tfwallace.com www.RAStahlCompany.com9
Sales & Operations Planning
Demand Supply
Volume
Mix
Executive S&OPExecutive S&OP
DemandPlanning
SupplyPlanning
Master SchedulingDemand Pull
Bob Stahl www.tfwallace.com www.RAStahlCompany.com10
Myth #1:Myth #1:““S&OPS&OP’’s a supply chain things a supply chain thing””
Myth #1:Myth #1:““S&OPS&OP’’s a supply chain things a supply chain thing””
Reality: Executive S&OP is a Supply Chain thing. and a Sales & Marketing thingand a Finance thingand a Manufacturing thingand a Procurement thingand an Outsourcing thingand a New Product thingand a General Management thing
Sept 2007 -- HBR -- “Are You the Weakest Link in Your Company’s Supply Chain?”
It is a company-wide, collaborative decision-making process, reaching up to
the top levels in the business.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com11
Process Driven Process Driven versusversus Personality Driven Personality Driven
Process Driven Process Driven versusversus Personality Driven Personality Driven
Sales &Marketing
Sales &Marketing OperationsOperations Product
Design
ProductDesign FinanceFinance
Logistics&
Warehouse
Logistics&
Warehouse
President/General Manager
Executive S&OP
Managing the White Space
Bob Stahl www.tfwallace.com www.RAStahlCompany.com12
SoftSoft BenefitsBenefits“The Predicator”“The Predicator”
SoftSoft BenefitsBenefits“The Predicator”“The Predicator”
• Enhanced Teamwork• Improved Communications - Defined & Disciplined• Better Decisions with Less Effort and Time• Better $$$ Plans with Less Effort and Time• Tighter Linkage with Strategy• Greater Accountability• Greater Control • Update to the Annual Business Plan• Window into the Future• Master of own destiny
Top Management’s Handle on the Business
Align Human Energy and the Power is
Boundless
Bob Stahl www.tfwallace.com www.RAStahlCompany.com13
Myth #2: Myth #2: ““S&OPS&OP’’s all about s all about balancing demand and supplybalancing demand and supply””
Myth #2: Myth #2: ““S&OPS&OP’’s all about s all about balancing demand and supplybalancing demand and supply””
Reality: S&OP does help to balance demand and supply
and integrates financial and operational planning
and links strategic planning to ongoing operations
and shortens the annual planning process
and enhances risk management
and can impact strategic plans
Bob Stahl www.tfwallace.com www.RAStahlCompany.com14
““Strategic Planning . . . Strategic Planning . . . forward in reverseforward in reverse””
““Strategic Planning . . . Strategic Planning . . . forward in reverseforward in reverse””
Rob
ert
Hay
esH
BR
-Nov
/Dec
198
5St
rate
gic
Pla
nni
ng -
for
war
d in
rev
erse
Exec
utiv
e S&
OP
Strategy
Tactics
Execution
ExecutiveS&OP
Ann
ual B
usin
ess
Plan
Master Schedule
DoingTheRightThings
DoingTheThingsRight
Bob Stahl www.tfwallace.com www.RAStahlCompany.com15
Myth #3: Myth #3: ““S&OP takes too much of S&OP takes too much of Top ManagementTop Management’’s times time””
Myth #3: Myth #3: ““S&OP takes too much of S&OP takes too much of Top ManagementTop Management’’s times time””
Reality:
Monthly Time Requirement
for the Leader of the Business ~ 1.5
* Executive staff time could be more than this.
hours*
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
The Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP ProcessThe Executive S&OP Process
Step #1Month End
Data
End of Month
Decisions &Game Plan
Step #5ExecutiveMeeting
Conflict Resolution, Recommendations &
Agenda for Exec. Mtg.
Sales Actuals, Statistical
Forecasts &Production Actuals
Step #2DemandPlanning
Step #4Pre-S&OPMeeting
Capacity constraints2nd-pass spreadsheets
Management Forecast1st-pass spreadsheets
Step #3Supply
Planning
HeavyLifting
Financia
l Involvement
Financia
l Involvement
New Product
Involvement
New Product
Involvement
Creates a Disciplined
Rhythm
Creates a Disciplined
Rhythm
Bob Stahl www.tfwallace.com www.RAStahlCompany.com17
Myth #3A: Myth #3A: ““S&OP is too much detail S&OP is too much detail for Top Management to be involvedfor Top Management to be involved”” Myth #3A: Myth #3A: ““S&OP is too much detail S&OP is too much detail for Top Management to be involvedfor Top Management to be involved””
Reality:
That’s a misunderstanding of what Executive S&OP should be.
If you’re trying to set policy & strategywhile living in the “suicide quadrant,” you’ll not succeed.“
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
Planning PerspectivePlanning PerspectivePlanning PerspectivePlanning Perspective
PTF
Horizon
De
tail
ISuicide
Quadrant
IIAggregate
OnlyQuadrant
ExecutiveS&OP
IIIBuilding toCustomerDemand
FullGranularDetail
FullGranularDetail
Bob Stahl www.tfwallace.com www.RAStahlCompany.com19
Problems PerspectiveProblems PerspectiveProblems PerspectiveProblems Perspective
Mix ProblemsScream for AttentionVolume Problems
Barely Whisper
Creates the illusion that all problems are MIX problems -- therefore need a forecast for full granular detail for full horizon.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com20
Myth #4: Myth #4: ““WeWe’’ll Never Get S&OP to Work; ll Never Get S&OP to Work; We DonWe Don’’t Have Enough Teamworkt Have Enough Teamwork””
Myth #4: Myth #4: ““WeWe’’ll Never Get S&OP to Work; ll Never Get S&OP to Work; We DonWe Don’’t Have Enough Teamworkt Have Enough Teamwork””
Reality:
Teamwork is not a Prerequisite.It’s a Result!
Bob Stahl www.tfwallace.com www.RAStahlCompany.com21
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
Bob Stahl www.tfwallace.com www.RAStahlCompany.com22
Myth #4: Myth #4: ContinuedContinuedMyth #4: Myth #4: ContinuedContinued
Q. What if you’ve implemented Executive S&OP but teamwork hasn’t improved?
A. You flat didn’t do it right
Gaining teamwork must be one of the objectives of implementing Executive S&OP from the get-go.
Harbinger = Teamwork starts in and within the Design Team.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com23
Myth #5: Myth #5: ““S&OP Is Too Rigid; Our Business S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OPChanges Too Rapidly For S&OP””
Myth #5: Myth #5: ““S&OP Is Too Rigid; Our Business S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OPChanges Too Rapidly For S&OP””
Reality:
Executive S&OP is all about change.
It’s a coordination tool
Bob Stahl www.tfwallace.com www.RAStahlCompany.com24
Tools & TechniquesTools & TechniquesTools & TechniquesTools & Techniques
IncreaseReliability
EnhanceCoordination
Reduce Waste& Time
Six Sigma, Total Quality, Poka-Yoke, ISO+ others
Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others
Sales & Operations Planning, ERP, Kanban, VMI,+ others
XX
X
Bob Stahl www.tfwallace.com www.RAStahlCompany.com25
Complexity, Change and Complexity, Change and CoordinationCoordination
Complexity, Change and Complexity, Change and CoordinationCoordination
Complexity and the Rate of Change
Need for E
ffective Coordination Processes
Executive S&OP is the Primary Coordination Process
Bob Stahl www.tfwallace.com www.RAStahlCompany.com26
Coordination is all about:Coordination is all about:Alignment of Alignment of Human EnergyHuman Energy
Coordination is all about:Coordination is all about:Alignment of Alignment of Human EnergyHuman Energy
Accomplishment Accomplishment
Bob Stahl www.tfwallace.com www.RAStahlCompany.com27
Myth # 6: Myth # 6: ““We CanWe Can’’t Use S&OP t Use S&OP Because WeBecause We’’re Totally Outsourcedre Totally Outsourced””
Myth # 6: Myth # 6: ““We CanWe Can’’t Use S&OP t Use S&OP Because WeBecause We’’re Totally Outsourcedre Totally Outsourced””
Reality:
Executive S&OP Doesn’t Care Who Owns The Factory.
. . . nor do Customers care who owns the resources of production! “Outsourcing” is a vital contributor!
Heavily Outsourced Companies May NeedExecutive S&OP More Than Others.
(i.e., Just Bats)
Bob Stahl www.tfwallace.com www.RAStahlCompany.com28
Myth #7: Myth #7: ““Our Company Is Too Our Company Is Too Big (Too Small) for S&OPBig (Too Small) for S&OP””
Myth #7: Myth #7: ““Our Company Is Too Our Company Is Too Big (Too Small) for S&OPBig (Too Small) for S&OP””
Reality:
Executive S&OP operates . . . independently of company size
Procter & Gamble ~ $ 80 BillionMicrosoft ~ $ 60 BillionDow Chemical ~ $ 55 BillionHomac ~ $ 00.0040 BillionJust Bats ~ $ 00.0030 Billion
Bob Stahl www.tfwallace.com www.RAStahlCompany.com29
Myth #8: Myth #8: ““Our Forecasts Are Not Our Forecasts Are Not Accurate Enough For S&OPAccurate Enough For S&OP””
Myth #8: Myth #8: ““Our Forecasts Are Not Our Forecasts Are Not Accurate Enough For S&OPAccurate Enough For S&OP””
Reality:
Executive S&OP Does Not Require “Accurate” Forecasts
But by working on the process, it often helps to improve the forecasts
Bob Stahl www.tfwallace.com www.RAStahlCompany.com30
ForecastingForecastingForecastingForecasting
1. Reasoned
2. Reasonable
3. Credible
4. Transparent5. Reviewed Frequently
Forecasts that are:Current CustomersNew CustomersCompetitionEconomic OutlookMarket TrendsNew ProductsPricing StrategyPromotionsBid ActivityManagement DirectivesIntra-Company DemandHistory (Data)Other
Inputs -- Process -- Output
Bob Stahl www.tfwallace.com www.RAStahlCompany.com31
Reconciliation Process(The “DAM” Meeting)
Reconciliation Process(The “DAM” Meeting)
ConsensusForecast
ConsensusForecast
Compare to Annual Business PlanApplying “Puts & Takes” (Actions)Compare to Annual Business PlanApplying “Puts & Takes” (Actions)
CompanyForecastCompanyForecast
Forecasting . . .Forecasting . . . A Three-Legged StoolA Three-Legged StoolForecasting . . .Forecasting . . . A Three-Legged StoolA Three-Legged Stool
Bob Stahl www.tfwallace.com www.RAStahlCompany.com32
Myth #9: Myth #9: ““S&OP Is Simple; All You S&OP Is Simple; All You Need Is A Few SpreadsheetsNeed Is A Few Spreadsheets””
Myth #9: Myth #9: ““S&OP Is Simple; All You S&OP Is Simple; All You Need Is A Few SpreadsheetsNeed Is A Few Spreadsheets””
Reality:
The logic of Executive S&OP is SIMPLE
Implementing Executive S&OP Is All About Change Management
. . . And that is not simple!
Bob Stahl www.tfwallace.com www.RAStahlCompany.com33
Research finding . . . Research finding . . . Lora Ceceri, Altimeter -- Boston, September 2010Lora Ceceri, Altimeter -- Boston, September 2010
Research finding . . . Research finding . . . Lora Ceceri, Altimeter -- Boston, September 2010Lora Ceceri, Altimeter -- Boston, September 2010
The effective use of S&OP
is:
•60% Change management
•30% Process improvement
•10% Technology
Bob Stahl www.tfwallace.com www.RAStahlCompany.com34
Myth #10: Myth #10: ““We CanWe Can’’t Do S&OP. t Do S&OP. THEY Will Never ParticipateTHEY Will Never Participate””
Myth #10: Myth #10: ““We CanWe Can’’t Do S&OP. t Do S&OP. THEY Will Never ParticipateTHEY Will Never Participate””
Reality: Never Say Never
People Can and Do Change –But . . . It doesn’t happen by accident!
Bob Stahl www.tfwallace.com www.RAStahlCompany.com35
Myth #10: Myth #10: Continued Continued Myth #10: Myth #10: Continued Continued
Who Are THEY? • Top Management?• Sales/Marketing• Manufacturing?• Finance?• New Product
Development?• Outsourcing? • All of the above?
Bob Stahl www.tfwallace.com www.RAStahlCompany.com36
Myth #10: Myth #10: Continued Continued Myth #10: Myth #10: Continued Continued
• Why not? Are they bad people?• They don’t understand it.• They don’t understand it, because
they haven’t been taught.• It’s “counter-experiential.”
That’s why education and “buy-in” from the get-go is important!
It’s all about changing mind-sets!
Bob Stahl www.tfwallace.com www.RAStahlCompany.com37
Executive S&OP is . . .Executive S&OP is . . .APICS Dictionary, 13th Edition, October 2010APICS Dictionary, 13th Edition, October 2010
Executive S&OP is . . .Executive S&OP is . . .APICS Dictionary, 13th Edition, October 2010APICS 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. • It is a multi-step process involving demand planning,
supply planning, and middle and top management meetings for decision-making and authorization.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com38
With apologies to With apologies to Charles Dickens . . .Charles Dickens . . .
With apologies to With apologies to Charles Dickens . . .Charles Dickens . . .
Worst of Times . . . These are perhaps the worst economic conditions in a generation or two . . . and it may get worse.
Best of Times . . . For those who choose to use them, we have terrific tools in our hands today to deal with the massive uncertainty!
Myths, Misunderstandings and MisinformationMyths, Misunderstandings and Misinformation
Bob Stahl www.tfwallace.com www.RAStahlCompany.com39
Done Properly . . . Done Properly . . . Done Properly . . . Done Properly . . .
Simpler(Not Easier)
Better(in 90 Days!!!)
Implementation approach fits these times:
Low Cost• No capital investment; no software; just time
Low Risk• Parallel Pilot Approach
Quick Results• 90-Days for Complete Pilot Demo
High Impact• Aligns Human Energy
Implementation approach fits these times:
Low Cost• No capital investment; no software; just time
Low Risk• Parallel Pilot Approach
Quick Results• 90-Days for Complete Pilot Demo
High Impact• Aligns Human Energy
Bob Stahl www.tfwallace.com www.RAStahlCompany.com40
The Books . . . The Books . . .
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
In the Making . . .In the Making . . .In the Making . . .In the Making . . .
Planned Publication:3rd Quarter 2011
Bob Stahl www.tfwallace.com www.RAStahlCompany.com
Making ChangeMaking ChangeMaking ChangeMaking Change
“In human affairs, the willed future always prevails over the
logical future.”
“Change happens one step at a time, by thinking globally, but acting
locally.” Rene Dubos -1982A Celebration of LifeAn essay
The only time that the “logical future”
has a chance is if we deny its possibility.
Bob Stahl www.tfwallace.com www.RAStahlCompany.com43
Thanks for ListeningThanks for ListeningThanks for ListeningThanks for Listening
Bob Stahl508-226-0477
RStahlSr@aol.comwww.RAStahlCompany.com
www.tfwallace.com