Bob Stahl April 15, 2009 95 Gathering Place Wallingford, CT April 15, 2009 95 Gathering Place...
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Transcript of Bob Stahl April 15, 2009 95 Gathering Place Wallingford, CT April 15, 2009 95 Gathering Place...
Bob Stahl www.tfwallace.com
April 15, 200995 Gathering PlaceWallingford, CT
April 15, 200995 Gathering PlaceWallingford, CT
Bob Stahlwww.tfwallace.comBob Stahl
www.tfwallace.com
Sales & Operations Sales & Operations Planning:Planning:
Top Management’s Handle on the BusinessTop Management’s Handle on the Business
Sales & Operations Sales & Operations Planning:Planning:
Top Management’s Handle on the BusinessTop Management’s Handle on the Business
AAPICSPICSNew Haven ChapterNew Haven Chapter
Top Management NightTop Management Night
AAPICSPICSNew Haven ChapterNew Haven Chapter
Top Management NightTop Management Night
Bob Stahl www.tfwallace.com
May 7, 2009May 7, 2009Bob Stahl
www.tfwallace.comBob Stahl
www.tfwallace.com
Unlocking the Planning Power ofUnlocking the Planning Power of
Sales & Operations Sales & Operations PlanningPlanning
in a Downturnin a Downturn
Unlocking the Planning Power ofUnlocking the Planning Power of
Sales & Operations Sales & Operations PlanningPlanning
in a Downturnin a Downturn
MIT CTLMIT CTLSupply Chain Strategy IOMA/ISM WebinarSupply Chain Strategy IOMA/ISM Webinar
MIT CTLMIT CTLSupply Chain Strategy IOMA/ISM WebinarSupply Chain Strategy IOMA/ISM Webinar
Bob Stahl www.tfwallace.com
With apologies to With apologies to Charles Charles
Dickens . . .Dickens . . .
With apologies to With apologies to Charles Charles
Dickens . . .Dickens . . .•Worst of Times . . .
These are perhaps the worst economic conditions in a generation or two!
•Best of Times . . . For those who choose to use them, we have terrific tools in our hands today to deal with the uncertainty!
Bob Stahl www.tfwallace.com
Four Fundamentals . . .Four Fundamentals . . .Four Fundamentals . . .Four Fundamentals . . .
Demand Supply
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.
Bob Stahl www.tfwallace.com
Not your father’s Oldsmobile . Not your father’s Oldsmobile . . . . . Not your father’s Oldsmobile . Not your father’s Oldsmobile . . . . .
Demand Supply
Volume
Mix
Executive S&OPExecutive S&OPExecutive S&OPExecutive S&OP
DemandPlanning
SupplyPlanning
Master SchedulingDemand Pull
Bob Stahl www.tfwallace.com
What is Executive S&OP?What is Executive S&OP?What is Executive S&OP?What is Executive S&OP?
Decision-Making Processto
Balance Demand & Supply(at the volume level)
to
Establish Relevant Strategy, Establish Relevant Strategy, Policy, and assess & accept RiskPolicy, and assess & accept Risk
and to
Integrate Financial & Operating PlansTop Management’s Handle on the Business
Bob Stahl www.tfwallace.com
Step #5ExecutiveMeeting
Decisions &Game Plan
Step #4Pre-S&OPMeeting
Conflict Resolution, Recommendations &
Agenda for Exec. Mtg.
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
Liftin
g
The Executive S&OP ProcessThe Executive S&OP Process
Bob Stahl www.tfwallace.com
A little history . . A little history . . . . A little history . . A little history . . . .
Plant Scheduling/PullPlant Scheduling/Pull
MSMS
Exec. S&OP / Rough CutExec. S&OP / Rough Cut
PTF
24MonthsTime
Most Detail Aggregate OnlyExac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space
VolumeMix
Detailed Forecasting &Detailed Forecasting &
Master SchedulingMaster Scheduling• Lost in the woods- Detail• Engage Top Management?• Added Little Value outside
the Planning Time Fence
MarketingSales
Super MSSuper MS
Bob Stahl www.tfwallace.com
Executive S&OP Executive S&OP better than better than
ever . . .ever . . .
Executive S&OP Executive S&OP better than better than
ever . . .ever . . .What has made it better (agenda):• Market-facing (vs Mfg. Process) Families • Simplifying Data Assumptions about MIX:
– Getting out of the Suicide Quadrant
• Both of which make the Sales & Marketing job of Demand Planning (forecasting) Simpler & Better
• Enables Top Management to do their part:– Strategy, Policy, Risk, Performance
• An Implementation Path of Low Cost, Low Risk, High Impact
Bob Stahl www.tfwallace.com
Examples are from . . . ‘The
Books’
Examples are from . . . ‘The
Books’
QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
Bob Stahl www.tfwallace.com
Market-facing Families . . .Market-facing Families . . .Market-facing Families . . .Market-facing Families . . .
Proper definition of families must promote best forecasting.
ProductFire RetardantChemicals
Market- Automotive- Furniture- Electronics- Construction- XXX
Customer-Ford-Penna House-Sony-Acme Lumber- XXX
Markets can be tied to extrinsic leading indicators; Products and Customers typically can not!
Bob Stahl www.tfwallace.com
Two types of forecasting . Two types of forecasting . . .. .Two types of forecasting . Two types of forecasting . . .. .
Mfg. Company
Markets
Distribution Center
Shipments
POS
Sales: 1-3 MosMaster Scheduling
Demand Pull
Marketing: 1-18 Mos
Executive S&OP
Mix
Volume
CustomerCentric
MarketCentric
Customers
Bob Stahl www.tfwallace.com
Dealing with MIX . . Dealing with MIX . . ..Dealing with MIX . . Dealing with MIX . . ..• Volume ratio of a family to
a critical resource
• Mix ratio for run rate (average, or weighted average)
• Etc.
Bob Stahl www.tfwallace.com
Simplifying Data Simplifying Data Assumptions . . .Assumptions . . .Simplifying Data Simplifying Data Assumptions . . .Assumptions . . .
RRP Run Rate ConversionUnits to Hours Control Chart
0.42
0.44
0.46
0.48
0.5
0.52
0.54
0.56
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
2006 2007 2008
Hours per Unit
UCL LCL Hours per Unit Linear (Hours per Unit)
AssumptionSensitivity
Bob Stahl www.tfwallace.com
An Example . . .An Example . . .An Example . . .An Example . . .Resource Requirements Plan - Dept #8
0
50
100
150
200
250
Oct Nov Dec Jan Feb Mar Apr May Jun JulAug Sep Oct Nov Dec Jan Feb Mar
2007 2008 2009
Hours Per Month
Normal Capacity Normal Capacity +25%Medium Widget Required Capacity Large Widget Required Capacity
Bob Stahl www.tfwallace.com
Tri-Lingual . . . Tri-Lingual . . . Tri-Lingual . . . Tri-Lingual . . .
•Marketing Units
•Operations Units/Hours
• Financial Currency
Bob Stahl www.tfwallace.com
2007 Fiscal Year Status
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Revenue in 1000's Dollars
Cumulative YTDCum Original PlanLatest Call2008 S&OP Plan
Original Plan 25,400$ Latest Call 25,540$ 2008 S&OP 27,959$
2007 Fiscal Year
Bob Stahl www.tfwallace.com
Sales & Marketing and Sales & Marketing and Forecasting . Forecasting .
. .. .
Sales & Marketing and Sales & Marketing and Forecasting . Forecasting .
. .. .
– Complain & Whine– Beat on Sales/Marketing people– Drive them away from the table– Use complex algorithms & formulae– Buy new forecasting software– Give up
Rather than– Change approach, methods, & processes
What do we do about inaccurate forecasts?
Bob Stahl www.tfwallace.com
Getting out of the Getting out of the Suicide Suicide
Quadrant . . .Quadrant . . .
Getting out of the Getting out of the Suicide Suicide
Quadrant . . .Quadrant . . .PTF
Horizon
Deta
il
ISuicideQuadrant
IIAggregate
OnlyQuadrant
Exec.S&OP
IIIBuilding toCustomerDemand
Bob Stahl www.tfwallace.com
Sales & Marketing’s Sales & Marketing’s Job Job
Enablers . . . Enablers . . .
Sales & Marketing’s Sales & Marketing’s Job Job
Enablers . . . Enablers . . . • No full granularity for the entire
planning horizon - 18 to 24 Months (Getting out of the Suicide Quadrant)
• Family definitions that enable them to correlate to extrinsic factors that are “leading indicators” (Using “simplifying data assumptions” to deal with MIX)
• No complex software cost or learning curve
Willingly & Enthusiastically Join the Party!
Bob Stahl www.tfwallace.com
Top Management’s Role . . . Top Management’s Role . . . Top Management’s Role . . . Top Management’s Role . . .
• Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that . . .
• They can respond to it with effective:– Policy– Strategy– Risk
– Performance Measurements
Before it’s too late!
Bob Stahl www.tfwallace.com
An Ugly Moose . . .An Ugly Moose . . .An Ugly Moose . . .An Ugly Moose . . .Energy Market
Distribution Transformer
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
01/06 04/06 07/06 10/06 01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09
Pounds
Distribution Transformer - History Distribution Transformer - Stat FcstDistribution Transformer - Plan08 Linear (Distribution Transformer - History)
Bob Stahl www.tfwallace.com
Putting the Putting the Moose on the Moose on the
table . . . table . . .
Putting the Putting the Moose on the Moose on the
table . . . table . . . Two Choices:1. See an ‘ugly picture’ and
deal with it . . .
2. Hide an ‘ugly picture’ and do nothing about it until it’s too late . . .
Bob Stahl www.tfwallace.com
Addressing Conflict . Addressing Conflict . . .. . Addressing Conflict . Addressing Conflict . . .. .
Executive S&OPA process to raise & reconcile conflict,
agree upon, & communicate ONEcompany game plan
Executive S&OPA process to raise & reconcile conflict,
agree upon, & communicate ONEcompany game plan
Sales/Marketing(Units or $ by Family)
Operations(Units/hours/
Material)
Finance(Dollars)
Product Dev.(New Product Issues)
President
Bob Stahl www.tfwallace.com
Top Mgt. Top Mgt. andand Executive S&OP Executive S&OPTop Mgt. Top Mgt. andand Executive S&OP Executive S&OP
Top Management = The Leader of the Business(General Mgr, Pres., COO)
+VP Sales &/or MarketingVP OperationsVP FinanceVP Development. . . others
Need to be Hands-On with the ES&OP Process:
Stewardship & Leadership(Manager/Trustee & Guide/Command)
Done Properly . . .
It takes Top Management between
1 & 2 Hours per Month
Done Properly . . .
It takes Top Management between
1 & 2 Hours per Month
Bob Stahl www.tfwallace.com
Serving Constituencies . Serving Constituencies . . .. .Serving Constituencies . Serving Constituencies . . .. .
Customers
EmployeesSuppliers, Community, Country, Planet
Owners
ExecutiveS&OP
ExecutiveS&OP
Desired Force = CentripetalNatural Force = Centrifugal
Bob Stahl www.tfwallace.com
A Couple of Truisms . . A Couple of Truisms . . ..A Couple of Truisms . . A Couple of Truisms . . ..• 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 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
Engaging Top Engaging Top Management . . .Management . . .Engaging Top Engaging Top Management . . .Management . . .
In Change, there is no Comfort(In Comfort, there is no Change)
Those who succeed withExecutive S&OP
are willing to deal with the discomfort that is required!
Counter-Intuitive & Counter-Experiential
Not doing what you do better. Doing something different to be better!Ris
kRis
k
Bob Stahl www.tfwallace.com
• 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 Demo”
• Fully informed (after Pilot: Go/No-go #2)
Staff: “Okay, let’s go to full cutover.”
Low
RiskLow
Risk
Three Levels Three Levels of Commitment . . of Commitment . .
. .
Three Levels Three Levels of Commitment . . of Commitment . .
. .
Bob Stahl www.tfwallace.com
Implementation Implementation Path . . . Path . . . Implementation Implementation Path . . . Path . . .
1 2 3 4 5 6 7 8 9
Months
Business
Improvement
Phase IPhase ILive Pilot
Phase IIPhase IIExpansion
Live PilotDemonstrationGo/No-Go #2
Phase IIIPhase IIIFinancial Integratio
n
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Low RiskLow Cost
High Impact
Low RiskLow Cost
High Impact
Bob Stahl www.tfwallace.com
We are gettingWe are getting
Sophisticated . . .Sophisticated . . .
We are gettingWe are getting
Sophisticated . . .Sophisticated . . .The
Ultimate Sophistication
is
Simplicity!
Bob Stahl www.tfwallace.com
Done Done Properly . . . Properly . . . Done Done Properly . . . Properly . . .
Simpler(Not Easier)
Better(in 90 Days!!!)
Bob Stahl www.tfwallace.com
Good Luck & Good Luck & Thanks for Thanks for Listening Listening
Good Luck & Good Luck & Thanks for Thanks for Listening Listening
508-226-0477
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Send me an e-mail.