1. Kirstie Edwards November 2011
UK S&OP + Process
Kirstie Edwards
November 2011

2. UK S&OP+ 5 Levels of S&OP Maturity Level Definitions UK Timelines
Level 5 – Mature S&OP+
Level 4 – S&OP+
Level 3 – Capable S&OP
Level 2 – Foundation S&OP
Level 1 – Disconnected Management Processes
5 S&OP+ Process Steps
Process definition & Period cycle
Step by Step
Purpose & UK Inputs & Outputs
Benefits of S&OP+
Why transition from S&OP
Impact of Forecast Accuracy

3. Level 1 – Disconnected Management Processes
S&OP+ Maturity Levels
LEVEL 1
Definition: LEVEL 1
Management meetings are traditional in construction, with primary focus firmly on the past to analyse what has already happened.
-There is an annual budgeting process with little focus on forward projections and strategy, but deliver a detailed short term view by line.
-Functions tend to work in silos with few aligned objectives and measures across divisions.
-Functional behaviours are defensive, rather than collaborative
Level 1 – Disconnected Management Processes
UK Timeline
Day 1.
S&OP processes do not exist
February 2010

4. S&OP+ Maturity Levels LEVEL 2 Definition: LEVEL 2 UK Timeline May 2010
-Process elements are defined with correct accountability across divisions and KPIs
-Correct S&OP structure is in place, with reporting relationships and objectives set.
-Focus is Demand / Supply tactical balancing
-Divisional behaviours are challenged, but not yet performing as aligned team
-Integrated Supply Chain KPIs are initiated
Level 2 – Foundation S&OP
Level 1 – Disconnected Management Processes
UK Timeline
Eg. Demand forecasting volumes with poor accuracy
May 2010
Day 1.
S&OP processes do not exist
February 2010

5. S&OP+ Maturity Levels LEVEL 3 Definition: LEVEL 3 UK Timeline
-The periodic cycle and processes are established and driving integrated Operational and Financial Planning
-A suite of KPIs covering Customer centricity; Supply chain management; Demand Forecasting and -Financial performance is used as a leading indicator, and showing operational effectiveness of 95%+ capability
-Issues are identified and this is the decision making process
-Annual budgeting is removed and S&OP numbers drive forward planning
-High Performing Team behaviours are demonstrated throughout the process
Level 3 – Capable S&OP
Level 2 – Foundation S&OP
Level 1 – Disconnected Management Processes
IBP model built. NSV Pd forecasts & 2011 plan. Supply aligned to Demand
July 2010
UK Timeline
Eg. Demand forecasting volumes with poor accuracy
May 2010
Day 1.
S&OP processes do not exist
February 2010

6. S&OP+ Maturity Levels LEVEL 4 Definition: LEVEL 4 UK Timeline
-Rolling business management forecasting process including Gap analysis vs. strategy and focus on competitive priorities
-Integrated reconciliation is established and providing underlying understanding of business to drive improvement priorities and gap closing actions
-Used to deploy and drive value proposition
-Aligned to Program Summit to be catalyst for markets success in achieving financial shaping targets
Level 4 – S&OP+
Level 3 – Capable S&OP
Level 2 – Foundation S&OP
Level 1 – Disconnected Management Processes
Portfolio reviews & Financial reconciliation embedded into UK S&OP.
January 2011
IBP model built. NSV Pd forecasts & 2011 plan. Supply aligned to Demand
July 2010
UK Timeline
Eg. Demand forecasting volumes with poor accuracy
May 2010
Day 1.
S&OP processes do not exist
February 2010

7. S&OP+ Maturity Levels LEVEL 5 Definition: LEVEL 5 UK Timeline May 2011
-Continuous reconciliation, managing gaps and alternative scenario planning
-Drives responsive optimisation of the business in pursuit of strategy
‘Gaps’ managed & driving activities aligned to strategies. S&OP+ Part of UK culture
May 2011
Level 5 – Mature S&OP+
Level 4 – S&OP+
Level 3 – Capable S&OP
Level 2 – Foundation S&OP
Level 1 – Disconnected Management Processes
Portfolio reviews & Financial reconciliation embedded into UK S&OP.
January 2011
IBP model built. NSV Pd forecasts & 2011 plan. Supply aligned to Demand
July 2010
UK Timeline
Eg. Demand forecasting volumes with poor accuracy
May 2010
Day 1.
S&OP processes do not exist
February 2010

8. The Inputs and Outputs are delivered through
S&OP+ Input & Output
Policies
Financial Shape
Strategy
Demand Forecast
Capacity
Sales & Operations Planning
Sales Plan
Operations Plan
Financial Forecast
Sales periodically
Channel / Product
Demand management
NPD, promotions, specials
Customer Service Levels
Production periodically
& Supplier planning
Labour plans
Including irregular hours & OT
Inventory level management
Year End Estimate & Plan
GAP analysis
Program Summit – Financial Shaping
In essence S&OP is a process to align our Plans and Activities to each other (cross-functionally) and to our business strategies.
This is a simplified version of the Inputs and Outputs
Inputs eg Forecast Volumes, Sales strategies > Supply capacity and capabilities
Through S&OP as the central point
to = Operational Plans by team.
& translate into Financial Forecasting and the opportunities that gives us for eg GAP analysis & corrective action.
The Inputs and Outputs are delivered through
5 Steps in a Periodic Process 8

9. The 5 Steps of S&OP+ What are they ? Steps 1,2,3 = Foundation S&OP
Steps 4,5 = Mature S&OP+
What are they ?
The 5 S&OP+ process steps is completed in the UK each period (Steps 1to3 foundation S&OP and Steps 4to5 mature S&OP+).
The process is governed by the S&OP manager, and steps occur at set times during the period cycle. The following section provides further detail of these process steps as currently delivered in the UK, laid out in a 4 week period cycle.

10. The 5 Steps of S&OP+ Purpose STEP 1 – DEMAND REVIEWS
Manage performance of Markets/Brands/Channels/Accounts (value and volume). Develop long term unconstrained demand plan based on Marketing and Sales assumptions. Review deep dives on specific topics.
Outputs from the Demand review include:
Agreed long term unconstrained demand plan
Provide clarity around Sales Performance; Review & forecast Sales Trends
Agreed resources to fulfil demand plan
Risks & opportunities, identified gaps, defined action plans
Escalations/replies to other reviews
Measure forecast accuracy & leverage for improved Sales Performance.
Samples: KPIs and Performance results. Gap Analysis and Forecast Assumptions
We analyse S&OP forecast accuracy, performance and assumptions of volumes and NSV by channel, holding Channel managers accountable for the delivery of forecast and Business Plans.
For Single Serve we measure forecast accuracy of volume and value by Partner
Impact of variances to forecast on the rest of the business is clear and ownership taken in Demand.
We review the latest assumptions driving the forecast for this year and next year
We compare the current YEE to official Plan
We compare the current YEE to the rolling forecast for next year. As part of Program Summit, in 2012 the S&OP forecast YEE will be measured vs LY and Next Yr. (see example slide 14)
Gaps are indentified and actioned
P9 & 10 Kafevend Volume phasing only
C400 YTD actual sales 4075
C400 YTD forecast accuracy avg (3 pd fixed measure) = 99%
C400 YTD impact on inventory = 43 brewers
Current inventory levels = 600 brewers (6 wks stock)

11. The 5 Steps of S&OP+ STEP 1 – DEMAND REVIEWS Examples
By channel understand assumptions behind volumes and measure performance for overall business impact. Eg New Business machine placements vs Repeat account placements.
Monitor CSV volumes for CAB input
Klix NSV actuals, vs Plan and latest S&OP forecast. Review phasing and identify ‘gaps’
Review Single Serve Partners performance vs S&OP forecast: Period; YTD and Full Year S&OP YEE
Drinks Volumes
Machine Volumes
NSV
Review projected ASPs and Drinks Per Week for Year end vs last yr (growth/decline)
Reviewed projected assumptions for next years ASPs and DPW vs latest YEE (growth/decline)

12. The 5 Steps of S&OP+ Purpose STEP 2 – SUPPLY REVIEWS
Develop an achievable Supply Plan as a formal response to unconstrained demand plan from DMR. Manage supply chain performance, capability, flexibility, resources, supply financials & alternative supply scenarios. Review deep dives on specific topics.
Outputs from Supply review include:
Agreed supply plan
Agreed resources to fulfil supply plan
Recommended supply alternatives to meet demand plan
Recommendations/decisions on CAB spend
Risks & opportunities, identified gaps, defined action plans
Escalations/replies to other reviews
Samples: KPIs and Performance results. Planning capacity; production; resource; purchasing; inventory
We review the latest Demand forecasts and account impacts with Supply leadership teams.
We analyse projected inventory levels vs target using latest Demand forecasts and build rates.
We agree production build rates to manage factory efficiency, minimising the number of line rate changes whilst balancing the needs of S&F.
We align forecast demands to capacity planning eg S&OP was enabler for shift operation change from 4 to 3 in January 2011, saving $0.5m pa
We review the Demand forecast accuracy levels by SKU to manage raws purchasing and Commercial prime cost impacts.
Expecting Period 13 FG inventory to close on target at 125 machines
2012 inventory forecast currently reflecting flat build rate of 101 machines per week
Without factory line changes, inventory will peak in summer, and rely on Period 13 factory close to meet year end target.
No recommended changes to target inventory for 2012

13. The 5 Steps of S&OP+ Purpose STEP 3 – ACTIVITY REVIEWS
Manage current portfolio - portfolio health/lifecycle management at SKU/brand/category level in line with business strategy & agreed targets. Manage future portfolio (innovation funnel)in line with business strategy/OGSM (with 3 year rolling horizon, balanced to resources, prioritized, delivered on time and in full via robust stage gate process and efficient project management)
Output from Portfolio Reviews include:
Decisions/recommendations on current portfolio rationalisation
Decisions/recommendations on future portfolio/innovation funnel
Activities prioritisation, Stagegate decisions
Risks & opportunities, identified gaps, defined action plans
Escalations/replies to other reviews
Activity benefits (volume & value) for integration to S&OP forecasting
Samples: Activity and Portfolio projects impacting UK earnings – Consolidated reporting for UKLT
S&OP manager in alignment with Global Activity Managers & Local management teams (Demand & Supply) gathers all relevant data on projects will impact UK volumes and/or earning.
Eg New Launches, Promos, De-listing, change in customer trends, Pricing
Includes latest status; anticipated delivery dates and projected benefits of volume and NSV.
We also gather insights on forthcoming projects not yet resourced.
Outputs are reviewed by the UKLT to manage and prioritise resources
Project benefits are aligned with Global S&F & built into the S&OP forecasting model.
Volumes impacts are shared from S&OP with Supply for production, down to SKU level
There are currently 45 projects impacting UK earnings and volumes in 2011
11 have been completed and 5 stopped.
A further 29 projects are active, of which 3 are at High Risk of not delivering the reported benefits

14. UK Leadership Team Periodic Activity Review – Executive Summary
The 5 Steps of S&OP+
STEP 3 – ACTIVITY REVIEWS Examples
UK Leadership Team Periodic Activity Review – Executive Summary
Published periodically from S&OP to the UKLT
Covers all projects and activities Global and/or Local
Summarises any changes to status or benefits since last publication
Clearly shows all projects and highlights which ones are currently not included in S&OP forecast (eg in early feasibility phase) and therefore potential market upside to latest forecast
P11 includes leadership team review of the Gap Closing activities driven from the P10 S&OP review (section 2)

15. The 5 Steps of S&OP+ Purpose STEP 4 – FINANCIAL RECONCILIATION
Prepare the Leadership Business Review agenda. Financialise the process outputs. Integrate and reconcile outputs, define gaps, prepare options/scenarios to close gaps, recommend decisions to the LBR.
Output from the Financial Reconciliation include:
Business Summary - Balanced Score Card, decisions made, escalations & decisions required, risks & opportunities, Additional supporting material
Options/scenarios and recommended decisions to close gaps
Samples: Fully Integrated Planning enables translation of S&OP volumes in NSV and tracking of forecasts
The Financial reconciliation is driven through the Integrated Planning model developed currently in the UK.
There is no separate activity to translate volumes into NSV, as this is built into the forecasting model. This enables the demand channel managers to be empowered for the complete ownership of their channel beyond volume
They take accountability for their channel P&L and understand the financial impact their decisions and performance makes.
The financial reconciliation is the preparation of UKLT S&OP review slide-deck. This includes tracking the key drivers of YEE movements by Brand/Channel/Partner
Since last period the YEE has declined by £420k (Klix -£380, SS -£60)

16. The 5 Steps of S&OP+ STEP 4 – FINANCIAL RECONCILIATION
By channel we measure the NSV variances of S&OP YEE vs Plan.
We can easily review where the causes of these variances are , and where to focus any Gap closing activities:
Machine placements
Base Losses (Churn or Account losses such as Sainsburys)
Machines ASP
Drinks Volumes (DPW if not in machines base)
Drinks ASP
Revenue through ancillaries or other Services
Each period the latest YEE is measured against the rolling forecast for next year, by channel.
This replaces Plan and supports Program Summit
These summary tables are generated in the IBP model for Klix and SS

17. The 5 Steps of S&OP+ Purpose STEP 5 – LEADERSHIP TEAM REVIEW
Review strategy deployment progress (incl. financial shape). Support or challenge key recommendations. Review & calibrate business delivery targets. Push decisions and actions back to the process management forums. Review deep dives on specific topics.
Outputs from Leadership Team review include:
Summary pack to all process management forums, and the whole organization
Key decisions on gaps & opportunities
Demand / supply trade-offs, new product master plan / resource trade-offs, business unit demand sign-off, financial framework actions,
KPIs and Performance results across business. Forecast Assumptions. Risks & Opportunities. Gap Analysis
An S&OP period review takes place with the UKLT on Tuesday week 2.
S&OP publishes a 30+ slide-deck detailing the current performance; risks and opportunities and projected performance for the whole business
Clear actions are assigned to UKLT members and measured on closure of actions.
The slide-deck includes HOT TOPICS: being the burning issues as decided by the S&OP manager
HOT TOPICS only are presented by the S&OP to the UKLT
The supporting slide-deck (not presented) provides further analysis to support the HOT TOPICS. Each category has Customer centric KPI dashboards.

18. YEE NSV growth / Cash Earnings Matrix
The 5 Steps of S&OP+
STEP 5 – LEADERSHIP TEAM REVIEW
“2011 NSV YEE vs 2010 showing 4.7% YoY decline. Was -4.1% last period”
“Klix drinks volumes 29mio cups less than Sainsburys stores a 22mio cup account lost end Q1, accounts for 16mio. A further 13mio cups down”
Latest S&OP forecast showing UK 2.6% NSV growth in 2012
Drinks volumes YoY significantly different Klix decline 10mio cups vs SS growth 5.4mio packs. Machines volumes for Klix is showing growth machines, whilst SS machines growth of 57% includes C200 launch.
YEE NSV growth / Cash Earnings Matrix
Monitor Payplan
Actions assigned to UKLT to deliver strategy
UK stakeholders push back actions to their S&OP+ process review meetings. Actions aligned to market strategy and deliverables.
Cash Earnings YEE 10%

19. Examples of Benefits of S&OP+
WHY TRANSITION FROM
S&OP to S&OP+ ?
Greater financial integration
Inclusion of strategic initiatives and activities
Clear translation between detail forecasting and top-level planning
Improved decision-making
Improved trust within the management team
Increased accountability and business management
Improved scenario financial modelling & risk analysis
“Demand planning is the business’s starting point for the planning and use of company resources in the pursuit of profitability”
Susan L. Storch. Oliver Wight Americas. 2010
Companies with World Class mature S&OP+ have 10% of the stock outs of companies without S&OP
Increasing Forecast Accuracy by just 3% will Increase Profit Margin by 2%
1% improvement in Forecast Accuracy can deliver a 2% improvement in Perfect Order Fulfilment
Quick recap,
We know what S&OP stands for, we know what S&OP is about and the benefits it can bring to us as leaders.
And we listed a huge number of benefits, but sometimes when you do stuff like that it can all feel a bit theoretical.
I want to try and translate that for you into quantifiable results.
Oliver Wight are the worlds largest leader and consultants in S&OP and Integrated Planning. They have done numerous studies on the benefits of S&OP, and this is just a sample.
Comparing companies who have implemented S&OP, the average level of success has been compared to those who have successfully implemented advanced S&OP and are World Class.
World Class S&OP companies see on avg a 30% reduction in their inventory (FGs and Raw materials). Our payplan, and that of our teams has 20% attached to Cash.
Click - The average company, sees the most benefit in CSL. But world class companies see only 10% of Stock Outs than Average S&OP companies. So every 1 stock out for a World Class S&OP co. the Average S&OP company has 10.
Seems impossible to get there? Oliver Wight have done studies to understand the impact of Forecast Accuracy. Demand teams forecast volumes, by product with mix.
Click 19