Presentation on theme: "Bob Stahl www.tfwallace.com www.RAStahlCompany.com Hilton Garden Inn Waltham, Mass. March 23, 2011 Hilton Garden Inn Waltham, Mass. March 23, 2011 Bob."— Presentation transcript:
Bob Stahl Hilton Garden Inn Waltham, Mass. March 23, 2011 Hilton Garden Inn Waltham, Mass. March 23, 2011 Bob Stahl Bob Stahl S&OP - Myths, Misunderstandings & Misinformation TOPGRADING SOLUTIONS MRI NETWORK
Bob Stahl 2 With apologies to Charles Dickens... Worst of Times... These are perhaps the worst economic conditions in a generation or two... and it may get worse before it gets better. (What’s 9%??) Best of Times... For those who choose to use them, we have terrific tools in our hands today to deal with the massive uncertainty! Myths, Misunderstandings and Misinformation Sources: Congressional Budget Office; Department of Labor, Bureau of Labor Statistics; Department of Commerce, Bureau of Economic Analysis.
Bob Stahl 3 Gravitational Force Needed... Customers Employees (Suppliers, Community, Country, Planet) Owners Executive S&OP Executive S&OP Desired Force = CentripetalNatural Force = Centrifugal
Bob Stahl Muting Trade-Offs... When a company is trading off one constituency against another, it’s on a slippery slope Being able to serve all constituencies has a lot to do with timing: 1.In the short term, the customer is king 2.Proper prior planning is necessary to serve all constituencies well (Doesn't’t happen by accident) 3.Executive S&OP is the tool to set conditions for success with regard to Supply Chain performance
Bob Stahl So what else is new? March 9, 1982 Speech to an APICS Audience
Bob Stahl So what else is new? Oliver Wight Houston, Texas March 9, 1982
Bob Stahl 7 S&OP Morphing Terminology (causing confusion) At first -- S&OP meant an executive led process for balancing demand & supply at the volume level Then -- S&OP meant any process that dealt with balancing demand & supply at both the volume & mix levels, blurring the distinction Today -- S&OP is no longer exclusively a term that describes any specific process, but rather a set of words that mean anything you want it to mean
Bob Stahl 8 Volume Mix How Much? Rates The Big Picture Families Strategy/Policy/Risk Monthly / Mos Executive Resp. Which Ones? Timing/Sequence The Details Products/SKU’s/Orders Tactics/Execution Weekly/Daily 1-3 Mos Middle Mgt. Resp. Demand Supply Balance Very different, separate, & distinct practices but integrated! Very different, separate, & distinct practices but integrated! The Four Fundamentals Pro Active Behavior Re Active Behavior
Bob Stahl 10 Myth #1: “ S&OP ’ s a supply chain thing ” Reality: Executive S&OP is a Supply Chain thing. and a Sales & Marketing thing and a Finance thing and a Manufacturing thing and a Procurement thing and an Outsourcing thing and a New Product thing and a General Management thing Sept HBR -- “Are You the Weakest Link in Your Company’s Supply Chain?” It is a company-wide, collaborative decision- making process, reaching up to the top levels in the business.
Bob Stahl 11 Process Driven versus Personality Driven Sales & Marketing Sales & Marketing Operations Product Design Product Design Finance Logistics & Warehouse Logistics & Warehouse President/General Manager Executive S&OP Managing the White Space
Bob Stahl 12 Soft Benefits “The Predicator” Enhanced Teamwork Improved Communications - Defined & Disciplined Better Decisions with Less Effort and Time Better $$$ Plans with Less Effort and Time Tighter Linkage with Strategy Greater Accountability Greater Control Update to the Annual Business Plan Window into the Future Master of own destiny Top Management’s Handle on the Business Align Human Energy and the Power is Boundless
Bob Stahl 13 Myth #2: “ S&OP ’ s all about balancing demand and supply ” Reality: S&OP does help to balance demand and supply and integrates financial and operational planning and links strategic planning to ongoing operations and shortens the annual planning process and enhances risk management and can impact strategic plans
Bob Stahl 14 “ Strategic Planning... forward in reverse ” Robert Hayes HBR-Nov/Dec 1985 Strategic Planning - forward in reverse Executive S&OP Strategy Tactics Execution Executive S&OP Annual Business Plan Master Schedule Doing The Right Things Doing The Things Right
Bob Stahl 15 Myth #3: “S&OP takes too much of Top Management’s time” Reality: Monthly Time Requirement for the Leader of the Business ~ 1.5 * Executive staff time could be more than this. hours*
Bob Stahl 16 The Executive S&OP Process Step #1 Month End Data 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 Heavy Lifting Financial Involvement New Product Involvement Creates a Disciplined Rhythm
Bob Stahl 17 Myth #3A: “S&OP is too much detail for Top Management to be involved” Reality: That’s a misunderstanding of what Executive S&OP should be. If you’re trying to set policy & strategy while living in the “suicide quadrant,” you’ll not succeed.“
Bob Stahl Planning Perspective PTF Horizon Detail I Suicide Quadrant II Aggregate Only Quadrant Executive S&OP III Building to Customer Demand Full Granular Detail Full Granular Detail
Bob Stahl 19 Problems Perspective Mix Problems Scream for Attention Volume Problems Barely Whisper Creates the illusion that all problems are MIX problems -- therefore need a forecast for full granular detail for full horizon.
Bob Stahl 20 Myth #4: “We’ll Never Get S&OP to Work; We Don’t Have Enough Teamwork” Reality: Teamwork is not a Prerequisite. It’s a Result!
Bob Stahl 21 Soft Benefits Enhanced Teamwork Improved Communications - Institutionalized Better Decisions with Less Effort and Time Better $$$ Plans with Less Effort and Time Tighter Linkage with Strategy Greater Accountability Greater Control Window into the Future
Bob Stahl 22 Myth #4: Continued Q. What if you’ve implemented Executive S&OP but teamwork hasn’t improved? A. You flat didn’t do it right Gaining teamwork must be one of the objectives of implementing Executive S&OP from the get-go. Harbinger = Teamwork starts in and within the Design Team.
Bob Stahl 23 Myth #5: “S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OP” Reality: Executive S&OP is all about change. It’s a coordination tool
Bob Stahl 24 Tools & Techniques Increase Reliability Enhance Coordination Reduce Waste & Time Six Sigma, Total Quality, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others XX X
Bob Stahl 25 Complexity, Change and Coordination Complexity and the Rate of Change Need for Effective Coordination Processes Executive S&OP is the Primary Coordination Process
Bob Stahl 26 Coordination is all about: Alignment of Human Energy Accomplishment
Bob Stahl 27 Myth # 6: “We Can’t Use S&OP Because We’re Totally Outsourced” Reality: Executive S&OP Doesn’t Care Who Owns The Factory.... nor do Customers care who owns the resources of production! “Outsourcing” is a vital contributor! Heavily Outsourced Companies May Need Executive S&OP More Than Others. (i.e., Just Bats)
Bob Stahl 28 Myth #7: “Our Company Is Too Big (Too Small) for S&OP” Reality: Executive S&OP operates... independently of company size Procter & Gamble~ $ 80 Billion Microsoft~ $ 60 Billion Dow Chemical~ $ 55 Billion Homac~ $ Billion Just Bats~ $ Billion
Bob Stahl 29 Myth #8: “Our Forecasts Are Not Accurate Enough For S&OP” Reality: Executive S&OP Does Not Require “Accurate” Forecasts But by working on the process, it often helps to improve the forecasts
Bob Stahl 30 Forecasting 1. Reasoned 2. Reasonable 3. Credible 4. Transparent 5. Reviewed Frequently Forecasts that are: Current Customers New Customers Competition Economic Outlook Market Trends New Products Pricing Strategy Promotions Bid Activity Management Directives Intra-Company Demand History (Data) Other Inputs -- Process -- Output
Bob Stahl 31 Customer View Customer View Historical View Historical View Market View Market View Reconciliation Process (The “DAM” Meeting) Reconciliation Process (The “DAM” Meeting) Consensus Forecast Consensus Forecast Compare to Annual Business Plan Applying “Puts & Takes” (Actions) Compare to Annual Business Plan Applying “Puts & Takes” (Actions) Company Forecast Company Forecast Forecasting... A Three-Legged Stool
Bob Stahl 32 Myth #9: “S&OP Is Simple; All You Need Is A Few Spreadsheets” Reality: The logic of Executive S&OP is SIMPLE Implementing Executive S&OP Is All About Change Management... And that is not simple!
Bob Stahl 33 Research finding... Lora Ceceri, Altimeter -- Boston, September 2010 The effective use of S&OP is: 60% Change management 30% Process improvement 10% Technology
Bob Stahl 34 Myth #10: “We Can’t Do S&OP. THEY Will Never Participate” Reality: Never Say Never People Can and Do Change – But... It doesn’t happen by accident!
Bob Stahl 35 Myth #10: Continued Who Are THEY? Top Management? Sales/Marketing Manufacturing? Finance? New Product Development? Outsourcing? All of the above?
Bob Stahl 36 Myth #10: Continued Why not? Are they bad people? They don’t understand it. They don’t understand it, because they haven’t been taught. It’s “counter-experiential.” That’s why education and “buy-in” from the get-go is important! It’s all about changing mind-sets!
Bob Stahl 37 Executive S&OP is... APICS Dictionary, 13th Edition, October 2010 The executive portion of the overall sales and operations planning set of processes. It is a decision-making activity involving the leader of the business (president, general manager, COO, managing director), his or her staff, and a number of middle managers and specialists. Its mission is to 1.balance demand and supply at the aggregate level, 2.align operational planning with financial planning, 3.link strategic planning with day-to-day sales and operational activities. It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization.
Bob Stahl 38 With apologies to Charles Dickens... Worst of Times... These are perhaps the worst economic conditions in a generation or two... and it may get worse. Best of Times... For those who choose to use them, we have terrific tools in our hands today to deal with the massive uncertainty! Myths, Misunderstandings and Misinformation
Bob Stahl 39 Done Properly... Simpler (Not Easier) Better (in 90 Days!!!) Implementation approach fits these times: Low Cost No capital investment; no software; just time Low Risk Parallel Pilot Approach Quick Results 90-Days for Complete Pilot Demo High Impact Aligns Human Energy Implementation approach fits these times: Low Cost No capital investment; no software; just time Low Risk Parallel Pilot Approach Quick Results 90-Days for Complete Pilot Demo High Impact Aligns Human Energy “Ultimate Sophistication Is Simplicity” Oliver Wight “Ultimate Sophistication Is Simplicity” Oliver Wight
Bob Stahl 40 The Books...
Bob Stahl In the Making... Planned Publication: 3 rd Quarter 2011
Bob Stahl Making Change “In human affairs, the willed future always prevails over the logical future.” “Change happens one step at a time, by thinking globally, but acting locally.” Rene Dubos A Celebration of Life An essay The only time that the “logical future” has a chance is if we deny its possibility.