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Bob Stahl October 9, 2013 El Paso, TX Ramada Hotel October 9, 2013 El Paso, TX Ramada Hotel Bob Stahl 508-226-0477

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Presentation on theme: "Bob Stahl October 9, 2013 El Paso, TX Ramada Hotel October 9, 2013 El Paso, TX Ramada Hotel Bob Stahl 508-226-0477"— Presentation transcript:

1 Bob Stahl October 9, 2013 El Paso, TX Ramada Hotel October 9, 2013 El Paso, TX Ramada Hotel Bob Stahl Bob Stahl Sales & Operations Planning : Top Management’s Handle on the Business Sales & Operations Planning : Top Management’s Handle on the Business El Paso / Juarez Chapter

2 Bob Stahl AgendaAgenda What is authentic Executive S&OP –“It ain’t your father’s Oldsmobile” What makes it work –Leadership’s (Top Management) Role What makes it fail (No notes allowed) How to implement effectively at: –low risk –low cost –high impact –quick results

3 Bob Stahl Bob Stahl’s Background years in manufacturing companies Started as Schedules Coordinator With help of Oliver Wight, certified Class A success (1979) Became an associate of Oliver Wight – 1981 (passed in 1983) Have worked with some of the best companies in the world Today = eS&OP coach, educator, author Have written six books with Tom Wallace – –three have been used for APICS Certification S&OP editor and columnist – –for the IIF’s Journal of Forecasting - Foresight Head up consulting services for TFWallace & Company “Retired” = choices

4 Bob Stahl 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! Sales & Operations Planning Pro Active Behavior Re Active Behavior Executive S&OP (eS&OP)

5 Bob Stahl Forecasting (Worst of Two Worlds) PTF Horizon Detail I Suicide Quadrant II Aggregate Only Quadrant Exec. S&OP III Building to Customer Demand

6 Bob Stahl 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. 4.Is a forum for disciplined discussion about setting Policy, strategy, risk, budget changes It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization Top Management’s Handle on the Business Executive S&OP – does the proper prior planning to allow the routine things to be done routinely!!

7 Bob Stahl Using Market-Facing Families & Simplifying Data Assumptions Resource Department Equipment Supplier Operations (Supply) // Sales & Marketing (Demand) Markets Segments Channels Customers Markets Segments Channels Customers Traditional Solutions : 1.Full Granularity orFull Granularity or 2.Fcs’t in Supply FamiliesFcs’t in Supply Families Traditional Solutions : 1.Full Granularity orFull Granularity or 2.Fcs’t in Supply FamiliesFcs’t in Supply Families Best Solution: 1.Market-Facing FamiliesMarket-Facing Families 2.Data MIX Assumptions w/ Resource PlanningData MIX Assumptions w/ Resource Planning Best Solution: 1.Market-Facing FamiliesMarket-Facing Families 2.Data MIX Assumptions w/ Resource PlanningData MIX Assumptions w/ Resource Planning

8 Bob Stahl ERP Enterprise Resource Planning Business Planning Strategic Planning Forecasting & Demand Management Volume Executive S&OP Sales Plan Operations Plan Capacity Planning SupplyDemand Mix Master Scheduling Mix Master Scheduling Detailed Planning & Execution Systems: MRP, Plant Scheduling, Supplier Scheduling, etc. Detailed Planning & Execution Systems: MRP, Plant Scheduling, Supplier Scheduling, etc. Transactional Software

9 Bob Stahl Where Does eS&OP Fit? Strategic Planning Detailed Planning, Scheduling & Execution Detailed Planning, Scheduling & Execution Business Planning Disconnect!!! Executive S&OP Turning Disconnected Knobs? Where Executives Live Where Executives Live Where Mid-Mgt. Lives Where Mid-Mgt. Lives

10 Bob Stahl “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 Linking Strategic Planning to Day-To-Day Operations

11 Bob Stahl Data Dump (Warehouse) Information (Org Data) Knowledge Understanding Two Parts of Exec. S&OP The mechanics: âDisplay of Info âDefined Process for Decision-Making

12 Bob Stahl Holistic Display

13 Bob Stahl Executive Roles Executive S&OP A process to raise and reconcile conflict, agree upon, & communicate THE company game plan Executive S&OP A process to raise and reconcile conflict, agree upon, & communicate THE company game plan Sales/Marketing (Units or $ by Family) Operations (Units/hours/ Material) Finance (Dollars) Product Dev. (New Product Issues) President

14 Bob Stahl eS&OP Success... not only allows disagreement, to work it promotes and requires disagreement Learning how to disagree without being disagreeable is paramount to success Gaining collaborative consensus from this disagreement makes for best decisions Without a comfortable process to resolve disagreement/conflict, organizations will avoid it – “put the moose under the table”

15 Bob Stahl Top Management’s Role... (among other things) Create an environment (culture) that allows the Ugly Moose to be put on the table --

16 Bob Stahl The Ugly Moose... Big ugly animal All companies have them (under the table) Difficult & Contentious Good companies know how to disagree without being disagreeable Put the ‘beast’ on the table Thrive on conflict, not chaos Moose is a symbol of agreement to do so Getting the Moose on the Table

17 Bob Stahl Top Management’s Role... (among other things) Create an environment (culture) that allows the Ugly Moose to be put on the table -- so that... They can completely and effectively resolve disagreements & conflict, setting proper: –Policy –Strategy –Risk Assessment –Performance Measurements Before it’s in the MIX Space!

18 Bob Stahl Conflict Resolution *... Disagreement has two parts: –Substantive issue –Emotion behind that issue Disagreement becomes conflict when emotion is not completely addressed Lasting conflict resolution must deal with both elements of disagreement Doing that effectively can be learned: –With a motive to do so & –A framework on which to work “Getting to Resolution” Stewart Levine

19 Bob Stahl Data Dump (Warehouse) Information (Org Data) Knowledge Understanding Two Parts of Exec. S&OP The mechanics: âDisplay of Info âDefined Process for Decision-Making

20 Bob Stahl 20 The Executive S&OP Process 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 Heavy Lifting Financial Involvement New Product Involvement Creates a Disciplined Rhythm It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization

21 Bob Stahl Top Management and Executive S&OP Need to be Hands-On with the Executive S&OP Process Stewardship & Leadership (Manager/Trustee & Guide/Command) President VP Operations VP Operations VP Sales/Mktg VP Sales/Mktg VP Finance VP Finance VP R&D VP R&D Done Properly... It takes Top Management between 1 & 2 Hours per Month Done Properly... It takes Top Management between 1 & 2 Hours per Month

22 Bob Stahl Making eS&OP Successful... The hard stuff (tools, techniques, processes) is easy The soft stuff (relationships, behavior, culture) is hard

23 Bob Stahl Market Research... Success with eS&OP is : 60% = Behavior/culture change 30% = Process improvement 10% = Technology *Lora Ceceri Altimiter/AMR Boston, Sept 2010

24 Bob Stahl Overcoming the Catch 22 of Implementation If you don’t get top management involved from the start, you won’t address the cultural or behavioral changes that are required. If you do get top management involved form the start, they realize that success does not come from doing what you do better, but from doing things differently to be better. That translates to personal and/or organizational discomfort and risk for those in charge – resulting in reluctance to implement.

25 Bob Stahl Discomfort = RISK In Change, there is no Comfort (In Comfort, there is no Change) Those who succeed with Executive S&OP are willing the endure the discomfort that is required! Risk

26 Bob Stahl Uninformed (before Go/No-go #1) Boss: “Okay, let’s do an Executive Briefing.” Semi-informed (after Briefing: Go/No-go #1) Staff: “Okay, let’s do a Live Pilot Demonstration” Fully informed (after Pilot: Go/No-go #2) Staff: “Okay, let’s go to full cutover.” Low Risk Low Risk How to do that... Mitigate RISK

27 Bob Stahl Implementation Path Months Business Improvement Phase I Pilot Demo Phase II Expansion Live Pilot Demonstration Go/No-Go #2 Phase III Financial Integration Executive Briefing Go/No-Go #1 Kickoff Session Low Cost Low Risk High Impact Quick Results Low Cost Low Risk High Impact Quick Results

28 Bob Stahl Implementation Alternatives “Build it and they will come” Design it first, get the mechanics working, and then attempt to sell it to top management. = Low probability for success (because you can’t address the cultural issues without Top Management) “Hold the high ground” Involve top management at the very outset of the implementation, and throughout. = High probability for success

29 Bob Stahl Parallel Paths Run the Business today A A Business Excellence B B Projects to support ‘A’ Leadership Responsibility : 1.Assuring resources for all 2.Use Pilot for learning, not benefits 3.Gain focus - application of principles Executive S&OP X X Z Z

30 Bob Stahl Implementation Pitfalls Middle Mgt. only It’s a Supply Chain thing Top Mgt. but not President (SBU Ldr) No Education (‘Build It’) Supply based Families Too much granularity No consensus on ‘end game’ No discipline Inadequate Pre-S&OP Conflict Aversion Executive S&OP Meetings: –Show & Tell –Unfocused –Short Term –Too Much Detail (MS) –Meeting Too Long –Finger Pointing Ongoing Data Problems Lack of Progress

31 Bob Stahl The Real Issue... Understanding Executive S&OP is simple. The hard part is... Behavioral Change changing the way everyone does their jobs. Keys: - Full cross functional buy-in - Counter- experiential/intuitive - Comfort vs Change - Path of low risk Authentic S&OP must be a Strategic Imperative

32 Bob Stahl Done Properly... Simpler (Not Easier) Better

33 Bob Stahl A CEO’S Perspective on eS&OP “We spent a lot of time gathering and validating data, which was time well-spent. But that challenge was nothing compared to the people side of things.” “The most difficult part was driving... constructive conflict in the demand alignment meetings.” An Interview* with Phil Dolci, President and CEO Jarden Branded Consumables *In Foresight: The International Journal of Applied Forecasting, Winter 2012 (www.forecasters.org/foresight)

34 Bob Stahl ContinuedContinued “The measureable benefits are easy... –Service levels are up and inventory is down. –For example, the two largest businesses in my portfolio today each have service levels above 99.5% with inventory that is 20% less than 3 years ago.”

35 Bob Stahl ContinuedContinued “I could argue, however, that the intangible benefits are just as valuable. We have much better teamwork because of the engagement and constructive conflicts that are natural components of S&OP. This approach has extended to almost every process and function within the business...” “Moreover, I feel much more in touch with the business without micro-managing it.”

36 Bob Stahl Aligning Human Energy Accomplishment

37 Bob Stahl Thanks for Listening & Good Luck!


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