executive s&op
DESCRIPTION
Executive S&OPWhat is it?How to implement it successfully?TRANSCRIPT
Bob Stahl www.tfwallace.com
Four Points SheratonLeominster, MAApril 11, 2008
Four Points SheratonLeominster, MAApril 11, 2008
Bob StahlR.A. Stahl Companywww.tfwallace.com
Bob StahlR.A. Stahl Companywww.tfwallace.com
NSMGNSMG Northeast Supply Management GroupNortheast Supply Management Group
NSMGNSMG Northeast Supply Management GroupNortheast Supply Management Group
Executive S&OPExecutive S&OPWhat is it?What is it?
How to implement it successfully?How to implement it successfully?
Executive S&OPExecutive S&OPWhat is it?What is it?
How to implement it successfully?How to implement it successfully?
Bob Stahl www.tfwallace.com
The MissionThe Mission
High Quality Low Cost (Low Inventory) Customer Service
Quick ResponseReliabilityWide Variety
MeetingWorld Class Standards
In
Getting to AND . . . Diminishing ORGetting to AND . . . Diminishing OR
Bob Stahl www.tfwallace.com
The Four FundamentalsThe Four FundamentalsThe Four FundamentalsThe 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•Tactics/Execution•Weekly/Daily 1-3 Mos•Middle Mgt. Resp.
Demand Supply
Demand
SupplyDemand
Supply
Bob Stahl www.tfwallace.com
The The Evolution . . . Evolution . . . The The Evolution . . . Evolution . . .
Plant Scheduling/PullPlant Scheduling/Pull
MSMS
S&OP / Rough CutS&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
Super MSSuper MS
Bob Stahl www.tfwallace.com
Sales & Operations PlanningSales & Operations PlanningSales & Operations PlanningSales & Operations Planning
Demand Supply
Volume
Mix
Executive 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?
Sales & Operations Planningis a
Executive Decision-Making Processto
Balance Demand & Supply(at the volume level)
isThe forum for setting Relevant Strategy & Policy
and Integrates Financial & Operating Plans
(update/validate the Annual Business Plan)
Top Management’s Handle on the Business
Bob Stahl www.tfwallace.com
An Essential Point . . An Essential Point . . ..An Essential Point . . An Essential Point . . ..
Executive S&OP is essential for the other pieces of
Sales & Operations Planning
to work at their best.
Whether they be traditional or Lean techniques
Bob Stahl www.tfwallace.com
Survival . . . Survival . . . Survival . . . Survival . . . PTF
Horizon
Detai
lSuicideQuadrant
Aggregate Only
Quadrant
ES&OP
Bob Stahl www.tfwallace.com
Four FundamentalsFour FundamentalsFour FundamentalsFour Fundamentals
DemandDemand SupplySupply
MIXMIX
VolumeVolume
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 Process
Bob Stahl www.tfwallace.com
ES&OP’s Place . . . ES&OP’s Place . . . ES&OP’s Place . . . ES&OP’s Place . . .
Strategic PlanningStrategic Planning
Detailed Planning, Scheduling & ExecutionDetailed Planning,
Scheduling & Execution
Business PlanningBusiness Planning
Disconnect!!!Executive Sales & Operations PlanningExecutive Sales & Operations Planning
TurningDisconnected
Knobs?
Bob Stahl www.tfwallace.com
Executive S&OP . . Executive S&OP . . . . Executive S&OP . . Executive S&OP . . . .
Executive S&OPA process to reconcile, agree
upon, & communicate thecompany game plan
Executive S&OPA process to reconcile, agree
upon, & communicate thecompany 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
Process versus Personality Process versus Personality Driven OrganizationDriven OrganizationProcess versus Personality Process versus Personality Driven OrganizationDriven Organization
Sales &MarketingSales &Marketing
Manufact-uring
Manufact-uring
ProductDesignProductDesign FinanceFinance
Logistics&
Distribution
Logistics&
Distribution
President/General Manager
Supply Chain ManagementExecutive S&OPExecutive S&OP
Managing the White Space
Bob Stahl www.tfwallace.com
The Leader of the Business Unit (General Manager, President, CEO, COO) Needs to be Hands-On with Executive S&OP:
1. Stewardship2. Leadership
• Break ties• Set high standards• Motivate
Monthly Time Commitment: 1.5 Hrs.
The Role of Top ManagementThe Role of Top ManagementThe Role of Top ManagementThe Role of Top Management
Bob Stahl www.tfwallace.com
The Real Issue . . The Real Issue . . . . The Real Issue . . The Real Issue . . . .
Understanding Executive S&OP is simple.The hard part is . . .
Organizational Behavioral ChangeChanging the way everyone does their jobs.
Keys: - Full cross functional buy-in
- Counter-experiential/intuitive
- Comfort vs Change- Path of low risk
Bob Stahl www.tfwallace.com
Successful Successful Implementation . . .Implementation . . . Successful Successful Implementation . . .Implementation . . .
A - PeopleB - Data
C - Software
Bob Stahl www.tfwallace.com
C - Software . . C - Software . . ..C - Software . . C - Software . . ..•Data “warehouse”
– ERP Operating System, Forecasting Software, etc. (transaction level data)
•Data Cubes . . . •Excel (or equivalent)
– Organizer– Presenter (tables & graphs)
•More complex software - later
Bob Stahl www.tfwallace.com
B - Data . . . B - Data . . . B - Data . . . B - Data . . .
• Getting out of “Suicide Quadrant”– Forecasting in Families (Family Feud??)
• Simplifying Assumptions– for Rough Cut Resource Planning– for financial conversion (units to $$$)
• Single process -– tied together– one source for data
Bob Stahl www.tfwallace.com
Graphical ReportGraphical ReportGraphical ReportGraphical ReportResource 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
Validating AssumptionsValidating AssumptionsValidating AssumptionsValidating 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
A - People . . . A - People . . . A - People . . . A - People . . . • Top Management “centric”
– The Leader of the business (CEO, President, GM, MD, etc.) must not only provide• Support• Funding• Commitment• Leadership
– They must also be “hands-on” each and every month(Top Management must not only support it, they must willing, ready, & able to do it!)
• It’s not doing what you do better, it’s doing something different to be better!
• Counter-experiencial & Counter-intuitive equals Discomfort & Risk
Bob Stahl www.tfwallace.com
Engaging Top ManagementEngaging Top ManagementEngaging Top ManagementEngaging Top Management
•In Change, there is no Comfort(In Comfort, there is no Change)
Those who succeed withExecutive S&OP
are willing the endure the discomfort that is required!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)
Boss: “Okay, let’s do a Live Pilot”
• Fully informed (after Pilot: Go/No-go #2)
Boss: “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 PathImplementation PathImplementation PathImplementation Path
1 2 3 4 5 6 7 8 9
Months
Business
Improvement
Phase IPhase IPreparation
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Bob Stahl www.tfwallace.com
Getting Started SessionGetting Started SessionGetting Started SessionGetting Started Session
Day #1Day #1 Day #2Day #2
Exec. StaffChampion
Design TeamSupporters
ChampionDesign TeamSupporters
Design Team
Education Planning
Objective: •Gain (regain) consensus in concept•Overcome Objections•Demonstrate leadership understanding •Which avoids the ‘they syndrome’•Display an ‘commitment’•
Objective: •Write detailed plan- 90 day results•Address resource issues•Prepare Exec. Presentation to get
‘specific commitment’• Create teamwork, blur boundaries
Objective: •Gain an understanding of detail•How it applies to company •To avoid the Sharp-Stick Syndrome•Raise and address conflicts•
Bob Stahl www.tfwallace.com
Implementation PathImplementation PathImplementation PathImplementation Path
1 2 3 4 5 6 7 8 9
Months
Business
Improvement
Phase IPhase IPreparation
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Bob Stahl www.tfwallace.com
Pilot Workload . Pilot Workload . . . . . Pilot Workload . Pilot Workload . . . . .
Month #1•Assignment of Responsibility
•Kickoff Education & Planning
•Development of Project Schedule
•Families & Sub-Families (Pilot Family)
•Data Definitions, Sources & Displays
Month #1•Assignment of Responsibility
•Kickoff Education & Planning
•Development of Project Schedule
•Families & Sub-Families (Pilot Family)
•Data Definitions, Sources & Displays
Month #3•Pilot Demo Preparation
& Execution
Go/No-Go Decision #2
Month #3•Pilot Demo Preparation
& Execution
Go/No-Go Decision #2
Month #2•Demand Planning Processes & Data Feeds
•Supply Planning Processes & Data Feeds
Month #2•Demand Planning Processes & Data Feeds
•Supply Planning Processes & Data FeedsExecutive Briefing& Go/No-Go Decision #1
Executive Briefing& Go/No-Go Decision #1
Phase IPhase IPreparation
Bob Stahl www.tfwallace.com
Implementation PathImplementation PathImplementation PathImplementation Path
1 2 3 4 5 6 7 8 9
Months
Business
Improvement
Phase IPhase IPreparation
Phase IIPhase IIExpansion
Live PilotDemonstrationGo/No-Go #2
Phase IIIPhase IIIFinancial Integratio
n
ExecutiveBriefing
Go/No-Go #1
KickoffSession
Low RiskLow CostLow RiskLow Cost
Bob Stahl www.tfwallace.com
Success RequiresSuccess RequiresSuccess RequiresSuccess RequiresDesign Team’s Job:
1. Defined set of practices (What, How, & Who)
2. Accurate, timely, & believed data
3. Valid, simplifying assumptions (Demand/Supply/Financial)
(Getting out of ‘Suicide Quadrant’)
Leadership’s Job:
• High discipline clear accountability (process & results)
• Constant improvement
• Changed performance measures
• Culture/Behavior change (Moose on table)
Bob Stahl www.tfwallace.com
Decision MakingDecision Making(Sales Plans, Supply Rates, Order Backlogs, & Inventories)(Sales Plans, Supply Rates, Order Backlogs, & Inventories)Decision MakingDecision Making(Sales Plans, Supply Rates, Order Backlogs, & Inventories)(Sales Plans, Supply Rates, Order Backlogs, & Inventories)
TraditionalResponse to
a Problem
+
Later
~
Reactive & ‘Radical’
With ES&OPPart of an
Ongoing Process
+
Sooner
=
Proactive & ‘Fine-Tuned’
The Implementation Task: Make Executive S&OP
the Framework for Decision Making
Bob Stahl www.tfwallace.com
Done Done Properly . . . Properly . . . Done Done Properly . . . Properly . . .
Simpler(Not Easier)
Better
Bob Stahl www.tfwallace.com
Making ChangeMaking ChangeMaking ChangeMaking Change
“Change happens one step at a time, by thinking globally (big), but acting locally (small)”
“In human affairs, the willed future always prevails over the logical
future.”
Rene Dubos‘A Celebration
of Life’An essay
Bob Stahl www.tfwallace.com
‘The Books’‘The Books’
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are needed to see this picture.
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are needed to see this picture.
Bob Stahl www.tfwallace.com
Thanks & Good Luck !Thanks & Good Luck !Thanks & Good Luck !Thanks & Good Luck !
Go to Web site: 1. Copy of presentation2. Copy of Dubos Essay3. Copy of bi-monthly newsletter