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EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM Myths, Misunderstandings and Misinformation about S&OP A Presentation by Tom Wallace for IBF Phoenix –

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Presentation on theme: "EXECUTIVE S&OP by Tom Wallace WWW.TFWALLACE.COM Myths, Misunderstandings and Misinformation about S&OP A Presentation by Tom Wallace for IBF Phoenix –"— Presentation transcript:

1 EXECUTIVE S&OP by Tom Wallace Myths, Misunderstandings and Misinformation about S&OP A Presentation by Tom Wallace for IBF Phoenix – February 22, 2010

2 EXECUTIVE S&OP by Tom Wallace The Four Fundamentals Demand Supply Volume Mix Sales & Operations Planning X How Much? Rates The Big Picture Product Families Strategy/Policy/Risk Monthly/18 months+ Top Management Which Ones? Timing/Sequence The Details Products, SKUs, Orders Tactics/Execution Wkly/Daily, 2 days – 6 mos Middle Management

3 EXECUTIVE S&OP by Tom Wallace Sales & Operations Planning DemandSupply Volume Mix Executive S&OP Master Scheduling Supplier and Plant Scheduling Distribution Scheduling Demand Planning/ Forecasting Supply (Capacity) Planning Operational S&OP ?????

4 EXECUTIVE S&OP by Tom Wallace Myth #1: “S&OP’s a supply chain thing” Reality: Executive S&OP is a supply chain thing and a marketing thing and a sales thing and a finance thing and a manufacturing thing and a new product development thing and a general management thing

5 EXECUTIVE S&OP by Tom Wallace 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

6 EXECUTIVE S&OP by Tom Wallace Myth #2: “S&OP’s all about balancing demand and supply” Reality: Exec S&OP balances demand & supply and integrates financial and operational planning and links strategy to ongoing operations and impacts marketing strategy and enhances risk management and streamlines annual planning and on and on...

7 EXECUTIVE S&OP by Tom Wallace Strategic or Tactical? Strategy Tactics Executive S&OP

8 EXECUTIVE S&OP by Tom Wallace 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*

9 EXECUTIVE S&OP by Tom Wallace Step #5 Executive Meeting Decisions & Game Plan Step #4 Pre- Meeting Decisions, Recommendations & Agenda for Exec Meeting Step #1 Data Gathering End of Month Sales Actuals, Statistical Forecasts & Supply Actuals Step #2 Demand Planning Management Forecast 1st-pass spreadsheets Step #3 Supply Planning Capacity constraints 2nd-pass spreadsheets Heavy Lifting The Executive S&OP Process

10 EXECUTIVE S&OP by Tom Wallace Exec Meeting Pre- Meeting Data Gathering Demand Planning Supply Planning New Product Development Involvement Finance Department Involvement Role of Finance and New Product Development

11 EXECUTIVE S&OP by Tom Wallace Myth #4: “We’ll Never Get S&OP to Work; We Don’t Have Enough Teamwork” Reality: Teamwork Is A Result, Not A Prerequisite Q. What If You’ve Implemented S&OP and your teamwork hasn’t improved? A. You Didn’t Do It Right

12 EXECUTIVE S&OP by Tom Wallace 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

13 EXECUTIVE S&OP by Tom Wallace Myth #6: “S&OP Is Too Rigid; Our Business Changes Too Rapidly For S&OP” Reality: Executive S&OP is all about change

14 EXECUTIVE S&OP by Tom Wallace Tools & Techniques Increase Reliability Enhance Coordination Reduce Waste & Time Total Quality, Six Sigma, Poka-Yoke, ISO + others Lean Mfg., Just-In-Time, Quick Changeover (SMED), Flow + others Sales & Operations Planning, ERP, Kanban, VMI, + others XX X

15 EXECUTIVE S&OP by Tom Wallace Complexity, Change and Coordination COMPLEXITY AND THE RATE OF CHANGE NEED FOR EFFECTIVE COORDINATION PROCESSES Executive S&OP is the Primary Coordination Process

16 EXECUTIVE S&OP by Tom Wallace Myth # 7: “We Can’t Use S&OP Because We’re Totally Outsourced” Reality: Executive S&OP Doesn’t Care Who Owns The Factory Heavily Outsourced Companies May Need Executive S&OP More Than Others

17 EXECUTIVE S&OP by Tom Wallace Myth #8: “Our Company Is Too Big for S&OP” Reality: Executive S&OP operates independently of company size Procter & Gamble ~ $80 Billion Microsoft ~ $59 “ Dow Chemical ~ $57 “ Cast Fab Technologies ~ $40 Million

18 EXECUTIVE S&OP by Tom Wallace Myth #9: “Our Forecasts Are Not Accurate Enough For S&OP” Reality: Executive S&OP Does Not Require “Accurate” Forecasts

19 EXECUTIVE S&OP by Tom Wallace ForecastingForecasting 1. Reasoned 2. Reasonable 3. Reviewed Frequently 4. Represent the Total Demand THE FOUR R’s: Current Customers New Customers Competition Economic Outlook New Products Pricing Strategy Promotions Bid Activity Management Directives Intra-Company Demand History (Data) Other Process Inputs Process Output

20 EXECUTIVE S&OP by Tom Wallace Myth #10: “S&OP Is Simple; All You Need Is A Few Spreadsheets” Reality: Implementing Executive S&OP Is All About Change Management

21 EXECUTIVE S&OP by Tom Wallace The Priorities C: Software, Tools B: Process & Data A: People, Mindset

22 EXECUTIVE S&OP by Tom Wallace Myth #11: “We Can’t Afford To Buy More Software To Do S&OP ” Reality: You Do Not Need New Software to Make Executive S&OP Work Most of the successful users of the process use Excel (or similar)

23 EXECUTIVE S&OP by Tom Wallace So, What To Do About Software? Options: 1.Use spreadsheet software 2.Use S&OP specific software 3.Hybrid: start with spreadsheet switch to specific later When in doubt, pick 3.

24 EXECUTIVE S&OP by Tom Wallace Myth #12: “We Can’t Do S&OP. THEY Will Never Participate” Reality: People Can and Do Change

25 EXECUTIVE S&OP by Tom Wallace Myth #12: “We Can’t Do S&OP. THEY Will Never Participate” Who Are THEY? Top Management? Sales? Marketing? Finance? All of the above?

26 EXECUTIVE S&OP by Tom Wallace Myth #12: “We Can’t Do S&OP. THEY Will Never Participate” Why not? Are they bad people? No, it’s because they don’t understand it. They don’t understand it, because they haven’t been taught. “It’s all about change management” Kathy Budd Dow Chemical

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28 EXECUTIVE S&OP by Tom Wallace Thanks for Being Here! Go to for:www.tfwallace.com S&OP 101 (free) Implementation Information (free) The S&OP Forum Periodic newsletters (free) White papers (free) S&OP Effectiveness Checklist (free) Blog (this summer - free) Q&A (this summer - free) Books and videos ($$$) To talk:


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