Transforming Sales & Operations Planning into a ......Transforming Sales & Operations Planning into...
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Promotion Optimization Institute Spring 2013 Summit
Transforming Sales & Operations Planning into aCompetitive Advantage
John Buckley
Director of Integrated Business Planning
Kraft Foods – Beverage Business Unit
Promotion Optimization Institute Spring 2013 Summit
Transforming Sales & Operations Planning into a CompetitiveAdvantage
A robust and mature sales & operations planning (S&OP) process is essential forcreating and sustaining competitive advantage. However, what was once aperiodic exercise in simply balancing supply and demand has now transformedinto a highly collaborative real-time exercise in reconciling varying perspectiveson inter- and intra-enterprise demand to dramatically improve both demand andsupply side forecasting and fulfillment. In this session, learn how Kraft isconsidering recent technology innovations to address the challenges ofconsensus demand building and financial integration.
How was this session “advertised”
Kraft Foods Group, Inc.
Who is this guy in front of you…
Kraft Foods Group, Inc.
Kraft at a Glance
• Our products are found In 98% of U.S. households, 99% in Canada• 10 brands with more than $500MM in 2011 annual sales• Another 17 brands over $100MM• $19B net revenue• More than 25,000 people
Source: Kraft Foods Group, Nielsen
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Kraft Foods Group, Inc.
Kraft’s Beverage Business Unit
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Kraft Foods Group, Inc.
What are we going to discuss today?
1 Challenges facing the consumer products industry
2 S&OP evolution
3 How Kraft views IBP
4 Questions and discussion
Kraft Foods Group, Inc.
S&OP has been and still is a process that can help organizationsovercome these challenges and be successful
S&OPStrenuous and Often Painful
Kraft Foods Group, Inc.
S&OP has been and still is a process that can help organizationsovercome these challenges and be successful
S&OPStrenuous and Often Painful
Sales and Operations Planning
Kraft Foods Group, Inc.
S&OP “in the beginning”
Demand Supply
Early
80’s
Kraft Foods Group, Inc.
Consumers today aresavvy, fickle, demanding– and “always on”
Now more than ever,consumers want to beassociated with brandsthat are relevant andcompelling
Trends spread atlightning speed basedon positive or negativeconsumer sentiment
Consumers can buyfrom anyone, anytimeanywhere, and theywant what they wantwhen they want it
Consumers are changing…making companiesrethink their S&OP processes
Kraft Foods Group, Inc.
Demand and supply volatility is causing companies toinvestigate if their S&OP process is working
Channel complexity –Explosion of channels andstore formats, includingdirect-to-consumer andhybrid models (e.g. buyonline, fulfill in store)
Global sourcing – Sourcingfrom a complex globalnetwork of suppliers, alongwith associated lead time,visibility, compliance andregulatory challenges Price and margin management –
No longer “one size fits all” pricingand offers
The connected consumer –always on, and connected withone another, using a new pathto purchase
Commodity availability / pricevolatility – Availability andpricing of manufacturing inputsis much more variable andvolatile
Kraft Foods Group, Inc.
S&OP is evolving to… At Kraft we call it IBP
Kraft Foods Group, Inc.
What is Kraft expecting to get from their IBPefforts?
Improved forecastingaccuracy
Reduced inventory
ImprovedCash Flow
Less stock-outs atretailers shelves
Improved customerservice metrics
HigherMarket Share
Better visibility intoKPIs that are driving
our business
Improved Collaboration –internally and externally
IncreasedRevenues
Faster and improveddecision making with
“BIG DATA”
Improved Annual andLong-term Planning
Processes
OrganizationalStrength
Consistent and Reliableachievement of organizational goals,
targets and commitments!!
Kraft Foods Group, Inc.
Ultimately, we want to have the ability tomake faster and more effective business decisions
ForecastDemandForecastDemandForecastDemand
Create multipledemand
scenarios
Understand impacton inventory
levels instantly
Explore what-ifsto confidently
commit
Make decisionswith a full view ofthe impact acrossyour organization
CheckInventory
CheckInventory
AdjustCapacityAdjust
CapacityAdjust
Capacity
MeasureFinancialImpact
MeasureFinancialImpact
MeasureFinancialImpact
Kraft Foods Group, Inc.
Best Practice for demand
• Collaborate with suppliers and customers and don’t forget internalteams
• Forecast modeling in “like groups” – segmenting and categorizingdemand forecasting units. Using the best algorithm for the rightproduct grouping
• Incorporate demand signals: point of sale data, syndicated data,wholesaler / distributor data, weather data, consensus data, ERPdata…now we are talking “BIG DATA”
• Being able to quickly aggregate and disaggregate demand to see howchanges impacted other views
• Get to a “one number” , “one plan” throughout the organization
• Integrate IBP demand consensus back into the business
• Single source for data repository and reporting
Kraft Foods Group, Inc.
Best practice for measuringfinancial impact
• Convert volume into revenue, margin, profitability instantly
• Decision matrix to help facilitate lower level decisions
• Multiple period view – operational to tactical to strategic
• Integrated annual operating plan and long range planning withIBP
• Make decisions confidently understanding impact to allalternatives
• Measure assumptions accuracy, not the number
• Turn analysis into insight to drive the business
Kraft Foods Group, Inc.
Kraft needed to look at their processes in adifferent way
The way we think… Rethink ourprocesses…
And our use oftechnology…
The way we behave…
Kraft Foods Group, Inc.
Today’s technology is allowing Kraft to rethink howwe meet our requirements
Highly scalable and flexible technology deployment withlow-cost, low-risk deployment options
Real-time access to broad categories of highly granularinternal and external data for cross-functional analytics,modeling and forecasting
Embedded analytics for real-time process and decisionsupport tightly integrated with corresponding,complementary business processes
Highly connected environment supported by commonlyavailable social collaboration tools available across businessstakeholder functions
Totally integrated solution; exchanging and passing details inand out of solutions creating an aligned and transparentorganization.
SAP Sales and Operations PlanningSAP Sales and Operations Planning
Demand
Demand
Supply
Supply
Partnership
Partnership
ExecutiveRevie
w
ExecutiveRevie
w
Financial
Planning
Financial
Planning
Supply
Chain
Planning
Supply
Chain
Planning
ERP
ERP
CRM
CRM
Files
Files
Other
Other
Product MasterCustomer Master
Actuals, Price, Cost
Demand Plan QtyKey Resources , Routing, BOM
Annual Operating PlanMonthly Finance Plan
OpportunitiesTargets
AttributesPlans
Constrained Demand Plan Qty Constrained Plan Rev/ProfitConstrained Demand Plan Qty
Reporting
Reporting
AttributesPlans
Constrained Plan Qty/Rev/ProfitSales Forecast
Market Size, Commodity pricingPOS data, IMS dataTrade Promotions ,Customer ForecastSupplier Commit
Kraft Foods Group, Inc.
Kraft is on it’s journey
Successfully implement and sustain a commonIntegrated Business Planning Process across Kraft as the
“way of managing our business”.
Enabled by common processes
Supported by common systems solutions
Kraft Foods Group, Inc.
Questions
John BuckleyDirector, Integrated Business PlanningKraft Foods - Beverage Business [email protected]
Transforming Sales & Operations Planninginto a Competitive Advantage