Presentation is loading. Please wait.

Presentation is loading. Please wait.

Robin Weitkamp SVP, Lubricants and Additives September 2013 Implementing S&OP During Startup Phase Bringing In S&OP with the Bricks and Mortar.

Similar presentations


Presentation on theme: "Robin Weitkamp SVP, Lubricants and Additives September 2013 Implementing S&OP During Startup Phase Bringing In S&OP with the Bricks and Mortar."— Presentation transcript:

1 Robin Weitkamp SVP, Lubricants and Additives September 2013 Implementing S&OP During Startup Phase Bringing In S&OP with the Bricks and Mortar

2 2013 Copyright, Elevance2 How (not) to build a hotel Source: Roberto Ferdman, blog, 12 August 2013 On the Mediterranean coast, in the town known for pioneering cheap package tourism, Spain is building what will be Europes tallest residential building. Benidorms InTempo skyscraper is a gargantuan structure – some 650 feet tall and architecturally ambitious: Two separate towers are conjoined over 550 feeet in the air by an inverted cone which will house a massive garden and pool….. But its also massively flawed: It doesnt have any elevators capable of going all the way to the top.

3 2013 Copyright, Elevance3 How (not) to build a hotel Source: Roberto Ferdman, blog, 12 August 2013 Fixing Intempos structural flaws will mean tampering with its architectural vision, and funneling even more money into the project. The only viable way to correct for the builders design gaffe is to erect external elevator shafts…. Some 45% of the skyscrapers 269 apartments have already been sold, but sales are going slower now, the projects architect, Roberto Perez Guerras, told El Mundo earlier this month….

4 We dont make hotels But we are worried about how to build a business with very few people and in a hurry

5 Elevance Renewable Sciences is transforming chemicals production 5 Elevance uses its proprietary Nobel Prize winning technology… …to convert any unsaturated natural oil… …into drop-in and novel olefins, oleo and specialty chemicals… …to serve large and growing end markets Founded 2007 ….. ~140 Employees today First industrial scale manufacturing operational Shipments of products to customers established

6 High Performance Specialty and Intermediate Chemicals from Natural Oils 2012 Copyright Elevance Renewable Sciences Soy Canola Palm Variety of Natural Oils Widely Available Specialty Chemicals Oleochemicals Olefins Commercial Today Low Capital Requirements Low Operating Costs High Value Product Mix Addresses Critical Shortages Meets Customer Performance Needs

7 Is this a test? June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.7

8 Specialty Chemicals Based on Novel Di-functional Molecules Typical oleochemicals: Monofunctional esters/acids Typical olefins: Monofunctional olefins Chemicals from the Elevance process combine functional attributes of olefins and oleochemicals in a previously unachievable single molecule Di-Functional Molecules R O R O June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.8

9 You get what you get… June 2, 2014Copyright 2013 Elevance Renewable Sciences, Inc.9

10 Products Address Critical Customer Needs Products specifically target customer desired functional attributes Improved cold water performance Alternative feedstock with pricing/supply dynamics Anti-frizz and shine for leave-in hair care Moisturizing benefits & smoother feel for skin care Thermal stability Increased fragrance loading Reduction in formulation costs Improved fuel economy Improved lubricity Enhanced cold flow properties Enhanced corrosion, chemical and heat resistance Light weight replacement for metal alternatives Detergents & Cleaners Personal Care Products Performance Waxes Lubricant Base Oils Lubricant & Fuel Additives Engineered Polymers & Coatings June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.June 2, 2014Copyright 2013, Elevance Renewable Sciences, Inc.10

11 8-12 products… How can we be prepared… starting from scratch? 6-15 markets… 100s of customers… 140 employees… total

12 The ERS S&OP process was designed by a cross-functional team Design Team Process Manager Logistics/Business Operations Finance Manufacturing Design Team Process Manager Logistics/Business Operations Finance Manufacturing Business Operations Business Development Finance The design project kicked off June 2012 and completed with an approved design proposal in November S&OP and organizational design consultants guided the team in the development of the process The on-going process launched in March 2013 Executive Sponsor Team Lead Sponsor – COO CEO CFO EVP Sales & Marketing VP HR Executive Sponsor Team Lead Sponsor – COO CEO CFO EVP Sales & Marketing VP HR Others involved in the design Marketing Platform 1 Platform 2 Platform 3 Manufacturing Finance Operations plus consultant support 2013 Copyright, Elevance12

13 2013 Copyright, Elevance13 Elevance desired a process for managing chaos well before building our hotel… Without a process… Function-to-function handoffs Multiple forecasts/biases Units & dollars dont match Disconnected views Reactive decisionmaking With a process… Coordinated Integrated assumptions and views Integrated financials Consistent and holistic View of future, with agreed boundaries Additional benefits Enhanced teamwork Improved communications Better decisions tied to financial plans with less effort/time Tight linkage with corporate strategy Greater accountability Greater control

14 14 Elevance relied on best practice literature in implementing Executive S&OP Step #1 Data Gathering End of Month Decisions & Game Plan Step #5 Executive Meeting Conflict Resolution, Recommendations & Agenda for Exec. Mtg. Sales Actuals, Statistical Forecasts & Production Actuals Step #2 Demand Planning Step #4 Pre-S&OP Meeting Capacity constraints 2nd-pass spreadsheets Management Forecast 1st-pass spreadsheets Step #3 Supply Planning Managements handle on the business …a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision- making and authorization

15 The ERS S&OP process includes 5 basic steps that will occur monthly and will look 36 months into the future 152013 Copyright, Elevance Why 5 steps? Why Monthly? Why 36 months?

16 …includes 5 basic steps….. Data Closing Supply Planning Executive Meeting Step #1 Step #1 Steps #2/#3 Steps #2/#3 Step #4 Step #4 Step #5 Step #5 Demand Planning Optimization Analysis Gather data from previous month: sales, production, inventory actuals Develop unconstrained demand forecast based on customer, market and historical views. Define unconstrained plant availability from JV and wholly owned assets Determine optimized supply/demand based on inventory, financial constraints and incremental economics. Decide plan, set plant rates, and define logistical requirements. Connect with JV partners, tollers, etc to agree plan. Prep for ELT meeting. Present plan to the leadership team with appropriate inventory and financial information. Bring forward recommendations for decisions outside of established guidelines. Decision Meeting Connection with JV Prep for ELT Meeting 162013 Copyright, Elevance

17 …that will occur monthly… 172013 Copyright, Elevance Why 5 steps? Why Monthly? Why 36 months?

18 …that will occur monthly… 182013 Copyright, Elevance Feedstock inventories (left) and product inventories (below) can vary significantly…. We decided that a monthly timespan was the maximum we could handle

19 The ERS S&OP process includes 5 basic steps that will occur monthly and will look 36 months into the future 192013 Copyright, Elevance Why 5 steps? Why Monthly? Why 36 months?

20 …and will look 36 months into the future 202013 Copyright, Elevance

21 …and will look 36 months into the future 212013 Copyright, Elevance Strong signal in this product that a decision about future capacity is needed Expand? Position to marketplace an upcoming tight product? What about other products? Chemical plants take 2-3 years to construct typically

22 …and will look 36 months into the future 222013 Copyright, Elevance And, remember, we have many of these plots (for each Product) - each having its own plot so a strategic view is CRITICAL

23 Now we know what we want… How can we be prepared… starting from scratch? …but how?

24 The best-in-class model for demand Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View Oooops… we have no ability to correlate market factors to demand for some of our products… they are novel

25 The best-in-class model for demand Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Platforms/ Business teams collect product- by-customer forecasts Customer View Market View Through our development partnerships, working with companies in the space of selling such materials, we have indirect inputs on expected demand No correlations

26 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) Customer View History View Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View No correlations Being new, we have no history so no historical trends…

27 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) Customer View History View Demand tool populated with 3 views Macros run to generate analyses from the input data Demand data published to Demand Team Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View No correlations No history So we have a demand view, but in our early years we must take caution that our demand is very customer-input driven…

28 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) Customer View History View Demand tool populated with 3 views Macros run to generate analyses from the input data Demand data published to Demand Team Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View No correlations No history Demand Agreement Meeting Participation from platform/ business leaders and sales Goal of the meeting its to produce an aligned demand forecast Reconcile any misalignments with appropriate LT connection So our process is full, but with no rearview or side mirrors, reconciling opinions is a key risk

29 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) Customer View History View Demand tool populated with 3 views Macros run to generate analyses from the input data Demand data published to Demand Team Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View No correlations No history Demand Agreement Meeting Participation from platform/ business leaders and sales Goal of the meeting its to produce an aligned demand forecast Reconcile any misalignments with appropriate LT connection Aligned demand view published for optimization

30 However, we are committed to building 3 demand views with time 2012 Copyright, Elevance30 Intent Compile a market-driven view of product demand and/or growth rate profile Seen from the perspective of broad market indices and/or data Demographics, macroeconomics, industry trends, etc. Construct Selection of key broad markets Markets are not applications; markets are extrinsically and consumer driven categories Collection of data independent of ERS customers and sales staff Views of market growth are utilized along with correlations to project demand view for ERS Products i.e., over time, vehicular transportation market data could be correlated to market demand for a type of lubricant, which could then be translated to a demand for an Elevance intermediate Use Automated conversion to 36-month forecast demand view, quantity and growth rate

31 For the future, we map our expected product derivatives… Example: Product -> Addressable Market Map (Product B) 31Elevance Confidential Detergent Adjuvants Oilfield Chem Biocides PAO Base Oils Additives Coatings Adhesives Ester Base Oils DERIVATIVES Surface Cleaners Engr Plastics Sealants Reactive Chemicals Cleansing Skin & Hair Care To begin building a demand profile, we map the products that will be made from our intermediates into key applications of use

32 …to the markets in which they could be used Example: Product -> Addressable Market Map (Product B) 32Elevance Confidential Non-durable Household Durable Household Transportation Industrial Equipment Electronic & Electrical Construction & Materials MARKETS Oil Gas & Fuels Aerospace & Defense Forestry & Paper Chemicals Medical Eqpt & Services Food & Beverage Furnishings …noting that consumption of those products is driven by fundamental, industrial demand drivers

33 Example: Potential markets for adhesives made from Product B Example: Product -> Addressable Market Map (Product B) 33Elevance Confidential Detergent Adjuvants Oilfield Chem Biocides PAO Base Oils Additives Coatings Adhesives Ester Base Oils Non-durable Household Durable Household Transportation Industrial Equipment Electronic & Electrical Construction & Materials DERIVATIVES MARKETS Surface Cleaners Engr Plastics Sealants Reactive Chemicals Cleansing Skin & Hair Care Oil Gas & Fuels Aerospace & Defense Forestry & Paper Chemicals Medical Eqpt & Services Food & Beverage Furnishings So we identify the pairs which could be mapped If we understand forecasts for growth in industrial equipment manufacture, down the road we can correlate that growth expectation to use of our product

34 Caution: This brings great complexity if not managed practically Example: Product -> Addressable Market Map (Product B) 34Elevance Confidential Detergent Adjuvants Oilfield Chem Biocides PAO Base Oils Additives Coatings Adhesives Ester Base Oils Non-durable Household Durable Household Transportation Industrial Equipment Electronic & Electrical Construction & Materials DERIVATIVES MARKETS Surface Cleaners Engr Plastics Sealants Reactive Chemicals Cleansing Skin & Hair Care Oil Gas & Fuels Aerospace & Defense Forestry & Paper Chemicals Medical Eqpt & Services Food & Beverage Furnishings

35 So we focus on effective vs. perfect 2012 Copyright, Elevance35 A A B B C C E E F F G G H H I I ERS Products Markets ERS Platforms Consumer Ingredients & Intermediates Lubricants & Additives Engineered Polymers & Coatings Oil Gas & Fuels Aerospace & Defense Forestry & Paper Chemicals Non-durable Household Transportation Industrial Equipment Electronic & Electrical Construction & Materials Durable Household Medical Eqpt & Services Food & Beverage Furnishings Performance Waxes and Candles Personal Care Products Detergents and Cleaners Antimicrobials Specialty polyamide, polyols & polyesters Epoxies and polyurethanes Coatings and Cross Linkers Lubricant Base Oils Additives for Lubricants & Fuels Advanced Biofuels D D J J 6 2 5 2 1 1 2 Intermediates Eventually, demand planning will flow right to left, based on market data

36 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) Customer View History View Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View No correlations No history By building the relationships And by collection our actual demands

37 The best-in-class model for demand Platforms/ Business teams collect product- by-customer forecasts Customer View Over time, we will have windshield, side mirrors and even a rearview… Finance pulls prior month actuals and runs analysis to create historical view and forecasts (eventually) History View Marketing collects historical and forecast market data, for appropriate markets in order to inform demand forecasts Market View

38 The best-in-class model for demand

39 Fixed: -Plant Capacity -Monthly run days Variable: -Scheduled outages -Existing product inventories -Ramp status (initially) Fixed: -Transesterification unit capacity -ME fractionation Capacity Variable: -Scheduled availability to the JV -Storage availability -Inventory -Olefin Fractionation capacity by month -Inventories Biorefinery InputsJV Partner Inputs Toller InputsLogistics Inputs -Scheduled shipments -Material in-transit -Tank availability/inventory -Ship, barge, rail, storage availability Aligned unconstrained supply view Supply Agreement Meeting: Supply team to agree on unconstrained supply availability for planning horizon Supply is another set of options to make stuff

40 2012 Copyright, Elevance40 Optimization and consensus can be difficult in a co-product business Multiple products are produced simultaneously with limited flexibility on yields Product streams have different market values and logistics/packaging/delivery costs Multiple internal business may have demand for the same product stream at different values Mitigation Steps Inventories of all products must be simultaneously managed Incremental economics must be modeled to determine if projected demand streams so not meet established criteria Supply and demand plans must be adjusted to optimize the operating plan based on established constraints (i.e., maximize profitability, minimize working capital, contractual commitment vs. spot)

41 Logistics and communications must be part of the optimization 41 L.A. NOLA = Elevance Plant = S&OP Nodes ERS NODE ROTT SHAN SING area ERS 2012 Copyright, Elevance

42 Aligning organization roles and rules enable effective OPTIMIZATION Team Responsibilities Cross-Functional and Cross-Business Team with a common purpose to: Optimize supply and demand plans across Elevance based on working capital, cash flow, incremental economics and income constraints Make decisions to set rates and demand. Make recommendations to ELT for strategic plans that are outside of predetermined constraints Calculate rates for all coproducts and projects supply/demand balance over the planning horizon Membership S&OP Process Owner Platform Leaders: (same as Demand Team) Consumer Ingredients Lubricants and Additives Engineered Polymers and Coatings Intermediates Supply Process Manager Global Logistics Manager Financial Planning and Analysis Asia General Manager OPTIMIZATION Team Responsibilities Cross-Functional and Cross-Business Team with a common purpose to: Optimize supply and demand plans across Elevance based on working capital, cash flow, incremental economics and income constraints Make decisions to set rates and demand. Make recommendations to ELT for strategic plans that are outside of predetermined constraints Calculate rates for all coproducts and projects supply/demand balance over the planning horizon Membership S&OP Process Owner Platform Leaders: (same as Demand Team) Consumer Ingredients Lubricants and Additives Engineered Polymers and Coatings Intermediates Supply Process Manager Global Logistics Manager Financial Planning and Analysis Asia General Manager EXECUTIVE Team Responsibilities Review and approve / modify decisions made by the Optimization team regarding optimized Supply and Demand plans. Review recommendations made from Optimization team regarding plans outside of constraints established for S&OP Process and Optimization team. Membership ELT EXECUTIVE Team Responsibilities Review and approve / modify decisions made by the Optimization team regarding optimized Supply and Demand plans. Review recommendations made from Optimization team regarding plans outside of constraints established for S&OP Process and Optimization team. Membership ELT SUPPLY Team Responsibilities Determine monthly capacities – unconstrained supply. Determine logistics constraints and identify solutions / alternatives. Coordinate interface with Wilmar / JV partner to ensure coordinated supply plans. Membership S&OP Process Owner Supply Process Manager VP Manufacturing Plant Scheduler Global Logistics Manager Supply Chain Director FP&A, ad hoc SUPPLY Team Responsibilities Determine monthly capacities – unconstrained supply. Determine logistics constraints and identify solutions / alternatives. Coordinate interface with Wilmar / JV partner to ensure coordinated supply plans. Membership S&OP Process Owner Supply Process Manager VP Manufacturing Plant Scheduler Global Logistics Manager Supply Chain Director FP&A, ad hoc DEMAND Team Responsibilities Consolidate input from 4 business units / platforms into an integrated Elevance Demand Forecast / plan. Generate updated demand forecast on a monthly basis that reflects analysis from market, customer, historical data and trends. Document key assumptions that underlie the demand forecast / plan. Membership S&OP Process Owner Demand Process Manager Platform Leaders: Consumer Ingredients Lubricants and Additives Engineered Polymers and Coatings Intermediates Market Analyst Customer Service, ad hoc FP&A, ad hoc DEMAND Team Responsibilities Consolidate input from 4 business units / platforms into an integrated Elevance Demand Forecast / plan. Generate updated demand forecast on a monthly basis that reflects analysis from market, customer, historical data and trends. Document key assumptions that underlie the demand forecast / plan. Membership S&OP Process Owner Demand Process Manager Platform Leaders: Consumer Ingredients Lubricants and Additives Engineered Polymers and Coatings Intermediates Market Analyst Customer Service, ad hoc FP&A, ad hoc 422013 Copyright, Elevance

43 Thats what we did… What can we share that we learned?

44 Data matters Data Closing Supply Planning Executive Meeting Demand Planning Optimization Analysis Decision Meeting Connection with JV Prep for ELT Meeting 442013 Copyright, Elevance Actuals and externals feed future view of demand Process timing must factor in data rhythm Actuals enable metrics for measuring the process How close were we? What were variances in expectations?

45 Demand and Supply are unrelated…. Data Closing Supply Planning Executive Meeting Demand Planning Optimization Analysis Decision Meeting Connection with JV Prep for ELT Meeting 452013 Copyright, Elevance Demand and supply inputs must be unconstrained – it is independent of production and CANNOT be mixed Demand is a mix of various inputs – customer, market, and historical views are all important This enables a discussion of assumptions vs. how good are the forecasts? This can be made to be VERY COMPLEX; dont fall for it – stick to what is pragmatic and just understand the risk in the data

46 ….until we choose to flange them up Data Closing Supply Planning Executive Meeting Demand Planning Optimization Analysis Decision Meeting Connection with JV Prep for ELT Meeting 462013 Copyright, Elevance This is the guts of the process Scenarios rule the day… i.e., no matter what you expect will happen, you can only plan for what you believe is likely to happen Optimization can be iterative and involve multiple parties / multiple iterations Team must know the objective (the rules) otherwise recommendations will be rebuffed…

47 For optimization, financials and economics are both important, but serve very different purposes (i.e., NEVER MIX!!) 472013 Copyright, Elevance A process tied to financials is key, but an optimization led by incremental economics is crucial

48 The big picture can be consistent with the details, if done up front Data Closing Supply Planning Executive Meeting Demand Planning Optimization Analysis Decision Meeting Connection with JV Prep for ELT Meeting 482013 Copyright, Elevance Provides a window to the future – so useful for flanging near term (current/next month) with long-term view Serves to harmonize assumptions Forces leadership to provide optimization team with clear boundaries… i.e., an operational strategy! If changes to recommendation are required routinely, then the process has abjectly FAILED

49 Executive S&OP was chosen by Elevance to provide us the best chance to build our business (and even have elevators when we finish) …


Download ppt "Robin Weitkamp SVP, Lubricants and Additives September 2013 Implementing S&OP During Startup Phase Bringing In S&OP with the Bricks and Mortar."

Similar presentations


Ads by Google