1 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Single Line of Sight: Plan, Perform, Profit

Is Your Global Planning Like Whack-a-Mole? May 29, 2013

2 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

S&OP – Here To Stay?

Born: 1979, Abbott Labs

North Chicago

Died: Not Yet. On the contrary . . .

3 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

The Adoption Curve

There is a 15-25 year lag between the

development of a new process and its

widespread adoption.

Executive S&OP Today

Examples: ERP/MRP, TQM/6SIGMA, JIT/LEAN

Inflection Point A

Inflection Point B

4 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

What Has It Done?

Balance Demand and Supply

Integrate Financial and Operational Planning

One Set of Numbers

Earnings Calls

Simulations

Global

Retail, Banking, Software, etc

Enhance Execution of Strategic Plans

5 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

STRATEGY

TACTICS

S&OP

Q - Is S&OP Strategic or Tactical? A - Yes

6 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Where Is It Going?

Balance Demand and Supply

Integrate Financial and Operational Planning

One Set of Numbers

Earnings Calls

Simulations

Global

Retail, Banking, Software, etc

Enhance Execution of Strategic Plans

Revitalize the Industrial Base of an Entire Country

7 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Whatever Happened to “Japan Inc.”?

Answer: it has stagnated

• No longer a monopoly on expertise with the Toyota Production System (TPS)/Lean

• Rest of the world is catching up

• Silos masked by TPS

• Lacking S&OP – the primary coordination tool

• “Keep the herd moving roughly west”

8 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Energy Alignment

Accomplishment Accomplishment

S&OP: Weak or Non-Existent S&OP: Operating Well

9 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

How S&OP Helps With Energy Alignment

• Superior Teamwork

• Enhanced Communications

• One Set of Numbers Internally

• Enhanced Agility: Near Term/Tactical

• Enhanced Agility: Medium & Long Term/Strategic

10 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Words From Wallace

“Knowledgeable Japanese executives, academics, and consultants with

whom I spoke believe that the solution to the Japanese stagnation problem

lies in S&OP.

“They see S&OP as the catalyst to their “re-invention”: able to eliminate

silos and to enable far superior execution of strategic plans.

“Many of them view S&OP as the key – to renewed prosperity in Japan

11 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

12 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Earnings Calls > Procter & Gamble

• Annual Sales ~ $80 billion

• Countries with Operations: 80

• Number of Employees: 138,000

• Number of Brands: 300 within 3 major

businesses:

• Beauty & Grooming

• Health & Well-Being

• Household Care

13 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Procter & Gamble – Earnings Calls

P&G’s Global S&OP Process operates on two axes:

The 3 Businesses (Beauty & Grooming, Health & Well-Being,

Household Care)

The 5 Regions around the world

Requirement: Their S&OP numbers must match

14 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Business Unit and Region Integration

14

BU

A

BU

B

BU

C

BU

D

Reg1

Reg2

Reg3 X X X X

X X X X

X X X X

15 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Business Unit and Region Integration 15

Alignment between the Businesses and the Regions:

- Is essential

- Is worked closely by S&OP people

- Is made to happen prior to generation of earnings calls to Wall Street

The leader of the Businesses and the leader of the Regions must be in sync

before giving the numbers to the CEO and CFO

16 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

S&OP’s Role at P&G

“S&OP is one of the – some would say THE –primary

planning tools within the company.”

Dick Clark

Global Supply Network Ops

1953 - 2011

17 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

BASF – Global Production Optimization

• The world’s largest chemical company –

“The Chemical Company”

• HQ in Ludwigshafen, Germany

• Annual Sales ~ $72 Billion

• Over 100,000 employees

• More than 60 SBUs

• 100 large manufacturing sites + many smaller

19 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Regional

Demand

Plans

Global

Consolidation

Global

Supply

Plan

Global

S&OP

Meeting

Regional

Supply

Plans

Regional

Sales & Ops

Plans

The Global S&OP Process at BASF

Optimization

20 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

• Shift from local volume orientation to global value

orientation.

• Increased visibility across the supply chain (Inventories,

Sales, etc..).

• Global transparency of supply chain costs and focus on

total delivered cost.

• Improved communications and teamwork across regions

and functions.

• Increased profitability through simulation and

optimization

Benefits Achieved

21 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

The Bottom Line

BASF has experienced substantial growth over the

last decade, bypassing major competitors to become

number one in the chemical industry.

“While BASF does many things well, S&OP has

contributed significantly to helping us achieve our

present #1 position in the industry.”

Alan Milliken

Business Process Education Mgr

21

22 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Using Executive S&OP to Help Create an Entirely New Business

CISCO SYSTEMS

San Jose, California

Commercial and Consumer Electronics

Annual Sales: $40 billion

23 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

TelePresence:

Video Conferencing on Steroids

24 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Cisco Systems

For Cisco, this initiative meant:

• New Suppliers

• New Contract Manufacturers

• New Product/New Technology

• New Customers and Market

• A Brand New Business Unit

25 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

How They Did It

TelePresence S&OP process established with TP Business Unit and Central S&OP Staff. They set:

Strategy against key operational objectives

High-low scenarios for first six months

Year 1 and Year 2 growth plans

Inventory Buffering Strategies

Upside Flexibility Targets

Component Sourcing Strategies

Capacity Expansion Plans including International Contract Manufacturers

26 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

• Product launched on time and on budget

• No major lead time increases during launch

• Order fulfillment lead time: < 5 days

• On-time shipments > 98%

• Cisco now No. 1 in this multi-billion $ market

Results

27 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

“ . . . there’s no way we could have generated the

98%+ on-time shipping performance and the

rapid response between order and shipment

without S&OP.”

Brad Tallman

Senior Director

Global Planning

28 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Complexity, Change and Coordination

Impact of:

Lean Manufacturing

Lengthy Supply Chains

Doing Business Globally

29 © 2013 Steelwedge Software, Inc. Confidential. Tom Wallace

www.tfwallace.com

Complexity, Change and Coordination – Part 2

Increased Complexity:

• Doing Business Globally

• Lengthy, Fragile and Non-Agile Supply Chains

• Responsiveness/Agility

• Customer Service Levels

• Big Data

• Other

Conclusion:

For most companies, the days of

“Blood, Sweat and Excel” are over