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
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