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03/11/2010

Copyright © 2010 Infor. All rights reserved. 1

S&OP in Practice

3 November 2010 - VLM Congres

Mark Karthaus

Copyright © 2010 Infor. All rights reserved.

03/11/2010


Agenda

S&OP – everyone does it !y

Maturity levels in S&OP

What are the Analysts saying?

Supporting Tools in Practice

Next generation S&OP solutionNext generation S&OP solutionOpportunities to improve

Conclusion


03/11/2010


S&OP – everyone does it !


03/11/2010


Today’s S&OP Best Practices

DevelopStatistical

Base Forecast

Sales &Marketing

Input

MonitorAnalyse

& Report

ConsensusMeeting

Sales &

DemandConsensus

R i

ScenarioPlanningDemand &Supply

Meeting

Publish &Communicate

OperationsPlanningProcess


ReviewInventory & SLA

Objectives DevelopConstrainedSupply Plan

SupplyShaping

[Source: AMRResearch Sales & Operations Planning, July 2005]

03/11/2010


Sales & Operations Planning

Enables decision makers to achieve consensus on a single operating plan that profitably matches supply and demand while aligned to the executive business goals

5 Copyright © 2010 Infor. All rights reserved. www.infor.com.

Sales andOperationsPlanning

03/11/2010



Enables decision makers to achieve consensus on a single operating plan that profitably matches supply and demand while aligned to the executive business goals

6 Copyright © 2010 Infor. All rights reserved. www.infor.com.

Sales andOperationsPlanning

03/11/2010


Multiple Processes, Multiple Systems


D d S l Fi


Demand Supply Finance

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Maturity levels in S&OP


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Maturity Curve

Maturity level

Classic S&OPDemand-Supply

Balancing

Advanced S&OPOperational

Planning

IntegratedBusinessPlanning

SKU’sVolumes

Rough Capacity

ERPS d h t

Demand ShapingCapacity Constrained

Scenario AnalysisVolumes/Value

ERPSCP

ERPSCP, PLM,TPM, CRM

Strategic Decision SupportCollaborativeProfitability

Risk/Opportunity Analysis


SpreadsheetSpreadsheet

SCP, PLM,TPM, CRM External Systems

03/11/2010


DevelopStatistical

Base Forecast

Sales &Marketing

MonitorAnalyse

& Report

Today’s S&OP – The Differences

MarketingInput

DemandConsensus




Shaping

ConsensusMeeting


Sales &OperationsPlanningProcess

DEMANDSIDE

SUPPLYSIDE

S&OPBUSINESS Constrained

Forecast is not a number, it’s a probability

Collaboration

Financial &Volumetric Terms

BUSINESSOBJECTIVES Planning

Inventory

Capacity

Network

Cost

Supply Shaping Revenue & Profit


Horizon

Demand Shaping

Supply Shaping Alternatives

Sourcing

Risk Mitigation

Responsiveness

03/11/2010


What are the Analysts saying?


03/11/2010


Gartner: Performance Gap


Source: Gartner Supply Chain Executive Conference – London, 13-14 Sept 2010

03/11/2010


Gartner on S&OP: Stuck in Neutral



03/11/2010


Gartner on Technology: Improve Decision Making



03/11/2010


Infor covers all 10 capabilities Gartner sees!



03/11/2010




03/11/2010



DevelopStatistical

Base Forecast

Sales &Marketing

Input

MonitorAnalyse

& Report

ConsensusMeeting

Sales &O ti

DemandConsensus

Review


g


OperationsPlanningProcess




pp yShaping

[Source: AMRResearch Sales & Operations Planning, July 2005]

03/11/2010


What will I sell? DevelopStatistical

Base Forecast

Demand Consensus

Where will I sell it?

Volume to financial translation

Promotions & events

New product introductions

Product obsolescence

Base ForecastSales &

MarketingInput

DemandConsensus


Collaboration

Scenario Planning


03/11/2010


Case Study - Dentsply

Business ChallengeS ll th h d l h l

Profile Healthcare - dentistry

• Sell through dealer channel

• No visibility of customer demand

• Erratic forecasts based on dealer buyer patterns

• Excessive stock required to maintain service levels

Healthcare dentistry Global, HQ in UK $1.8b

Supply Chain 30 manufacturing sites 200,000 SKU’s Complex supply chain, sell

through dealersthrough dealers

Results• Collaborative demand management to gain

internal and external input to the forecast

• External input includes dealers who provide sales data – Dentsply construct forecast on true demand

“The positive impact collaboration has on product availability not only increase sales, but reduce inventory, across the entire supply chain, making this a true win-win true demand

• Pilot showed safety stock reductions of 90%, closing stock reductions of 70% and 6% increase in service levels

making this a true win-win solution for everyone involved.”

Jan SteenbergDir. Supply Chain Planning, Dentsply

03/11/2010


Stock Analysis

Statistical Safety Stocks


Inventory & Service Level Objectives

Stock Out

Statistical Safety Stocks Inventory Service Levels

Multiple Rules

What-if Analysis

Stock re-balancing: higher service levels


Objectives

Process

Excess Inventory

100 100

Stock re balancing: higher service levelsfor lower investment in inventory

Inventory Index

90

95

100Wholesale & Distribution leaderThe Netherlands

Ch l P d t 90 000


Service

Jan Feb Mar Apr May Jun Jul AugSep Oct Nov Dec

Time

75

80

85

90- Channel Products 90,000- Automatic ordering, little human intervention- Forecast accuracy improvement across range- Higher service levels with less inventory- All Inventory objectives tuned every period end

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Multiple supply capacity constraints

Manufacturing & Supply Planning(constrained & optimised)

constraints

Single or multi-site

Powerful ‘what-if’ modelling

Lowest cost optimisation

Dynamic sourcing & make vs. buy decision support

ScenarioPlanning

buy decision support


DevelopConstrainedSupply Plan

PlanningDemand &

SupplyShaping

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Supply Chain Planning

Internal conflict of interests

Customer Services

DistributionManufacturingProcurement

Many vendors Build inventory

when costsare low

Fewer vendorsto cope withquality

Long run lengths

Low inventory Manage space Full truck loads

High service levels Short run lengths High inventory

Purchasing costs reduction

Manufacturing costs reduction

Distributioncosts reduction

Satisfied customers


03/11/2010


Case Study - Organon

Business Challenge• High delivery reliability is required

• Long internal lead times

• High inventories

ProfileOrganon is an innovation-driven, science-centered global health care company.

Results

• Improved forecast accuracy 20-30%,

• Reduced inventories mfg sites 10-15%,

• While keeping delivery reliability 99.9%

“Next to these improvements our intangible benefits are so much bigger. We now are able to identify where our stocks are and we’re able to meet demand. The solution enables us to see the changes in the

h l i li d th• Reduced inventories sales affiliates 20%,

whole pipeline and the dependencies of all the production sites”.

03/11/2010


Consensus Meeting

OptimisedPlan Results

OptimisedPlan Results

DemandScenarios

DemandScenariosDemand

ScenariosOptimised

Plan Results

ConsensusMeeting

Demand & Supply Shaping

Cost optimised scenario planning

Plan Comparison


Plan Comparison

Plan Execution

Monitor & Report

03/11/2010


Publish & Communicate

Extend supply chain to trading partners

Marketing intelligence from remote Marketing intelligence from remote sales / customer partners

Improve Demand Signal

Share requirements plans with key suppliers

Communicate & share


- Accessories Business

- 85 dealer centresI t l l t ll b ti

Service Parts- Worlds #1 Distributor of Heating & Plumbing products

- Retail outlet (Plumb Center)


- Inventory levels set, collaboration on supply

- Overall inventory investment controlled- Inventory never owned by GM- $1billion in 3-5 years

- Supplier collaboration project rolling out over key suppliers

- Exchange plan visibility & horizon for improved supplier performance

03/11/2010


Next generation S&OP solution

Opportunities to improve


03/11/2010


Imagine your company is a boat…


•Markets require ‘on demand’ approach

•Supply Chains must be adaptive

•Course corrections are the rule

03/11/2010


PDCA cycle

PlanAct

DoCheck


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Issues in Practice

This plan was wrong…how did we get to this plan? Audit trail & annotation

Does the operational plan meet the strategic goals?

What is the underlying issue?

Audit trail & annotation

KPI reporting

Drill Down - Analytics

Which version of the plan did we use?

Who has adjusted these numbers?

y

Scenario Management

Security


Is the French forecast already available?

What are the financial implications of this scenario?

Workflow and Alerting

Data integrity and integration

03/11/2010


Next generation S&OP

Unlimited scenarios available to store and

Business Opportunity Next generation S&OP

No what-if compare plans using slice and dice OLAP technology

Non-integrated Fully integrated with business systems

Poor data integrity and auditability Security and data access controls, auditable for changes/decisionsg

Weak Executive ReportingIntegrated Portals, Analytical tools, Executive Reporting, i.e. Supply Chain Performance Management

No process support Predefined and configurable workflow management with real time event monitoring


Difficult to use Web based consistent user interface. Predefined roles with tasks, alerts, reports and KPIs

Irregular and/or error prone financial view Reproducible and automated translation of supply chain S&OP results to business S&OP

03/11/2010


Conclusion


03/11/2010


Gartner on S&OP: Stuck in Neutral



03/11/2010


For more information, visit

http://nl.infor.com/plantoprofit


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