bridging tactical s&op and operational execution
TRANSCRIPT
Bridging tactical S&OP and operational execution
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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Contents
Introduction
Our approach to S&OE implementation
> Fundamentals
> Process design
> Enabling tools
> Process deployment
Our company & qualifications
03
05
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05
08
09
07
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Is your Sales and Operations Planning (S&OP) process mature and thorough enough to generate a solid tactical plan? Or, are short-term issues and operational details forcing you dedicate precious time and energy to fighting “fires” and resolving problems caused by deviations between the S&OP plan and what should be executed?
The concept of “Sales and Operations Execution” or “S&OE” is not new; it was introduced
several years ago by Gartner, the global research and advisory firm. It came about since
many companies that have implemented an S&OP process for planning and decision-
making at a tactical level still struggle to make those plans meaningful and drive
operational planning within a shorter horizon (i.e., the horizon that falls between tactical/
operational planning and execution). The struggle stems from neither S&OP nor
operational planning being designed to process relevant information, manage issues, or
take required actions in this in-between horizon.
The purpose of S&OE is to eliminate this disconnect. S&OE complements the existing
planning process structure and brings discipline to information exchange and decision-
making to bridge S&OP and operations. Similarly to how S&OP is implemented, putting
S&OE into action requires you to run an initiative for additions and changes to planning
processes, the data model, meeting cadence, and IT systems. A good amount of change
management also is necessary to adopt S&OE, while simultaneously adjusting your S&OP
process to abandon decisions and tasks that should no longer fall under it.
By introducing S&OE, you will remove the chains from S&OP and allow the process to
concentrate on its primary task—providing a tactical plan of quality that bridges tactical
and operational levels with a process specifically designed for that purpose.
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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S&OPS&OEOperationalplanning and
execution
Figure 1. The relationship between S&OP, S&OE, and Operational Planning & Execution
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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Our approach to S&OE implementation
As with S&OP process design, you should begin designing your
S&OE process with the fundamentals needed to create an end-to-
end workflow before proceeding into the details of each sub-
process, data model, or logic of data processing.
Within Chainalytics’ approach, Fundamentals are the core building blocks tying the end-to
-end S&OE process together and connecting it to surrounding processes—mainly S&OP
and operational planning and execution (as depicted in Figure 1).
Design of the core S&OE Fundamentals defines answers to the following questions:
What are the decisions required from S&OE? S&OE is the process used to distribute the
latest monthly S&OP plan down to a weekly plan to identify and act on deviations between the
latest S&OP plan and operational details. These decisions help define the business logics
needed to make the S&OP plan actionable by bringing it down to more granular level and,
more importantly, defining business rules for criteria and thresholds for spotting significant plan
vs. actual deviations and the resulting actions you should take.
What are the S&OE inputs and outputs? Outputs (i.e. plans and decisions from S&OE) can
be actions and alerts to be looked into and executed on by human organization as well as data
that is fed into other processes and related IT systems. Each output requires a definition to
make it actionable by its receiver. Input definitions including input sources are created based
on requirements by outputs.
What is the S&OE horizon? Being a tactical planning process, the decisions made within
S&OP are implemented during the tactical planning horizon. Where the S&OP horizon begins,
that is where the S&OE horizon ends (as shown in Figure 2). The exact timing of your S&OE
horizon should be determined by your business needs. It can begin immediately or, using
many manufacturing businesses as an example, the end of the frozen production period.
S&OE fundamentals
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How should the data hierarchies be set? For S&OP, a design already exists for planning
hierarchies that enables users to access the right level of detail of planning data for their
purpose. Typically it is the various levels of customer, company organization, and product data
that are organized into the hierarchical structure. In S&OP design, these levels and their
content were defined to serve the needs of tactical planning. Since S&OE provides a more
detailed planning result, the definitions of planning hierarchies from S&OP design need to be
revisited and complemented to ensure the needed level of granularity as shown below in
Figure 3.
Operational
planning and
execution S&OE S&OP
Horizon Days Up to 3-4 months Up to 12-18 months
Time Bucket Day/shift Week Month
Figure 2. Typical planning horizons and time buckets
Figure 3. Example planning hierarchies
Year
Quarter
Month
Week
Day
S&OP S&OE
Company
Channel
Region
Sub-Region
Country
Customer
All Products
Business Unit
Product Area
Product Family
Product Group
Product Code
Material Code
Operational Planning & Execution
Time Customer/Geography Product
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Having defined the S&OE fundamentals, the next step is to create the design for the
S&OE process. Given the planning horizon, S&OE reads the S&OP plan in monthly
buckets, mixes it with operational data and comes up with the best possible S&OE plan
when considering the resource reservations set by S&OP.
S&OE process design helps answer the following questions:
How do we design the weekly process to maintain S&OE plan? To cover the S&OE
horizon at a weekly level, there is a need for a reoccurring, weekly S&OE process to review,
decide and perform actions that convert the tactical plan into the model serving as the basis for
decision on the S&OE plan. The S&OE process workflow defines the steps to providing visibility
at the right level, assembling the right people, and utilizing the appropriate IT systems for data
processing and decision-making. The S&OE Calendar is defined for timely execution of process
tasks.
Which deviations should trigger event-based process? To complement the weekly S&OE
process, event-based triggering actions should be identified in order to react to such deviations
that cannot wait for the next S&OE cycle but require immediate actions once discovered. For
example, an unexpected close delivery date of a large sales order can trigger the transfer of
material stock from one factory to the delivery facility within the supply network or setup of
additional shifts at the production line. These actions take time to complete and thus must be
initiated without delay. An event-based S&OE process requires definitions for criteria and
thresholds which determine when the process should be triggered as “event-based.”
Who needs to participate in S&OE? Process design requires identifying and defining who is
responsible for what, also known as S&OE process roles. While S&OP involves people from
mid-management and those in the VP level for tactical decision-making, S&OE is typically
conducted by the planning teams and operational managers involved in sales and supply
functions. These individuals are mandated to make quick and informed decisions. Only when
issues of a greater significance arise is escalation made to higher management.
How do we transform plans from S&OP to S&OE? S&OE requires more granularity in data
hierarchies than S&OP. Additional hierarchy levels create a need for additional data logics to
map the S&OP plan to the transactional data coming from operations to understand if supply
chain operations are achieving the levels planned for by S&OP, and if not, how significant the
deviations are and where they occur.
S&OE process design
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Implementation of S&OE to accompany S&OP will create new requirements for IT tools.
However, selection of a tool to run S&OE operationally is not a top priority of the to-do
list as long as you have not completed the validation of the S&OE Fundamentals and
Process Design, resulting in clearly stated requirements for IT.
What tools do I need to support the S&OE process design? The S&OE design and
development phases call for agility and flexibility from IT. From the very beginning, there is a
need for a tool to conduct data modeling, and Excel often works well for this purpose.
However, to organize data imported from operational, S&OP and potentially other
complementary sources, the need for a proper data management, data processing and
visualization systems may emerge. Such systems, i.e. a modeling system, may have already
been implemented for S&OP. A modeling system should enable agility for iterative
development of an S&OE model. Recommended IT tools include database software, workflow
tools for automated data processing and business intelligence software for analytics and
visualization.
Do I need an application specifically designed for S&OE? Together with the growth in
deployment scale and level of S&OE maturity needs for collaboration and integration across
business functions emerge. There are S&OP software suites in the market that are based on a
single data model and have the functionality for S&OP and operational planning integration. If
your organization uses such software, it would be logical to assess its capabilities to support
your S&OE process. In case your S&OP software does not have what your S&OE process
requires, you may also explore the possibilities by making use of the modeling system through
an extension of its functionality to support operational S&OE process.
S&OE enabling tools
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Project and change management
Deploy S&OEAssess current end-to-end planning
Designfundamentals
Design S&OE process
Develop solution
Interview stakeholders
Define changesto S&OP
Develop supporting IT tools
Deploy pilot
Review performance
Conduct data analysis
Define S&OE fundamentals
Educate people Deploy globally
Define detailed processes
Define data requirements
Define roles and responsibilities
A high-level overview of Chainalytics’ S&OE deployment methodology is depicted in
Figure 4 above. Specific considerations include:
How do we set the scene for an S&OE implementation project—i.e., what should be put
into a project charter? A project charter consisting of project definition, objectives, in-scope
and out-of-scope items, stakeholders, timeline, budget etc. typically reflects the current state of
the S&OP in a company. In the event today’s S&OP process truly exists for the sake of tactical
planning for visibility and decision-making in the S&OP horizon (illustrated in Figure 2), the
mission of an S&OE implementation project will be placing the S&OE process neatly into its slot
between S&OP and operational planning and execution to bridge these two (refer to Figure 1).
Unfortunately, this project scenario is not very common.
In a more likely implementation scenario, the starting point is essentially the ultimate reason for
the existence of S&OE. S&OP has mainly come to focus on near-term horizon, plans and
decisions that are mostly related to current issues instead of operating as the tactical process
originally intended. Furthermore, operational firefighting and ad-hoc activities outweigh the
originally designed objectives and process structure. An S&OE implementation project charter
will consist of scope items and tasks that are needed, not only to integrate S&OE to
surrounding processes, but also redesign the entire integrated planning process from tactical to
operational planning, including injection of execution details back in the process.
Figure 4. Chainalytics S&OE deployment methodology
S&OE process deployment
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Successful deployment of S&OP and S&OE calls for a strong emphasis on change
management. These processes exist to provide uniform structure for fact-based decision-
making and actions taken thereof that require alignment globally across business
functions. It goes without saying that sustainable deployment, as well as an abandonment
of old ways of working, entail a great deal of support and sponsorship after the initial
implementation. This support and supervision needs to be included in project charter.
Chainalytics’ experts have helped companies implement integrated planning processes
for over 20 years. That experience, together with a solid implementation methodology,
covers all phases of getting S&OP and S&OE up and operational. Chainalytics’ experts
can help in all phases of a project, from the initial value and maturity assessment to
process design, solution implementation and continuous support.
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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Chainalytics is a recognized global leader
in supply chain consulting, analytics, and
market intelligence.
Our mission is simple: To help companies
capture the maximum value from their
supply chain. With end-to-end supply
chain expertise, we support supply chain
transformation at every planning horizon –
strategic, tactical, and operational – and
across multiple domains.
Our approach is unique: We combine
decades of experience with leading-edge
analytics and market intelligence to
provide proven methods and the
actionable insight necessary to help
organizations stay at the forefront of
changing trends and practices across all
areas of the supply chain.
Our specialties include supply chain
design, sales and operations planning
(S&OP), logistics operations,
transportation, service supply chains, and
packaging optimization.
With locations in North America, Europe,
and Asia-Pacific, we help companies
around the globe accelerate fact-based
transformations in a borderless fashion.
bright minds better methods best outcomes Maximizing the value of supply chain to the enterprise through fact-based
transformation using the brightest minds and a combination of innovative
and proven methods.
Our company & S&OP qualifications
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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Analytics is at the core of everything
Chainalytics does; it’s in our DNA.
Our services include the categories of
strategy and transformation, process
excellence, and enabling technology,
spanning all major supply chain domains
— from strategic alignment and customer
segmentation to packaging optimization
and reverse logistics.
Three delivery models are available:
(1) consulting, (2) managed analytics, and
(3) market & performance intelligence.
Expertise behind supply chain headlines
Our services
Cost-to-Serve/Product & Customer
Profitability
StrategicAlignment
IntegratedDemand & Supply Planning
Diagnostics & Roadmapping
Supply ChainNetwork
Design
PackagingOptimization
TransportationSourcing & Supplier Management
Logistics Operations
Analytics
Dunkin’ Donuts saves $114 million
thanks to SCM cooperative”
— Supply Chain Digital
Coca-Cola consolidates U.S.
bottlers”
— Atlanta Business Chronicle
Kellogg Co. outlines plans for
financial savings from D.S.D. exit”
— Food Business News
Kimberly-Clark’s journey to
logistics procurement excellence”
— Logistics Viewpoints
Energizer Holdings’ new blister
brings benefits throughout supply
chain”
— Packaging World
Sales & Operations Execution: Bridging tactical S&OP and operational execution
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Chainalytics is uniquely qualified to support your organization in your S&OP and S&OE
journeys. Our team combines the right blend of required experience, seniority, and
technical skills, and our global network of experts provide a deep bench of local/region
specific knowledge as well as subject matter expertise.
In addition to top talent, our company is distinct in the following ways:
Real-life planning experience
Chainalytics has strong supply chain
planning experience with a thorough
understanding of planning concepts
and processes. It gives us both an
“inside out” and “outside in”
perspective.
1 4 Proven methodologies
Our proprietary segmentation
approach and deep expertise in
advanced analytics and
benchmarking ensures the right level
of planning detail is applied to the
right segments of demand.
2 5 Deep manufacturing experience
Our company has world-class
industry knowledge and experience
assisting CPG, Food & Beverage, and
other manufacturing clients with end-
to-end supply chain transformations.
Blended capabilities
Our overall expertise blends the best
of process excellence, data-driven
analytics, and systems
implementation to drive
improvement and value.
3 6 Speed to value
Our team can leverage proven
experience, frameworks,
methodologies, and standards to
help clients make the right decisions
in a shorter amount of time.
Global presence
Highly-qualified, dedicated teams
and wide range of experts with global
coverage including offshore data
analytics and solution support in
India.
Our unique qualifications
Atlanta | Denver | Minneapolis +1 (770) 433-1566 [email protected]
NORTH AMERICA
Amsterdam | Helsinki | Milan +31 (0) 20 658 6010 [email protected]
EUROPE
Bangalore | Singapore | Sydney +91 80 41254309 [email protected]
ASIA-PACIFIC
www.chainalytics.com
Chainalytics accelerates fact-based transformation spanning the entire planning horizon for supply chain
leaders around the globe, including 18 of Gartner’s Top 25 supply chains. Our peer-to-peer collaboration
and market intelligence platforms enable our clients to achieve industry-specific insights quickly. Our
mission is simple: To help companies reveal the maximum value from their supply chains. With locations in
North America, Europe, and Asia-Pacific, Chainalytics serves companies globally in a borderless fashion.
About Chainalytics Bright minds. Better methods. Best outcomes.