1. Going Global with Sales and Operations Planning
© Oliver Wight International 2007

2. Topics Introduction Making the Choice to go Global
Reasons for Going Global
Global New Product Development
Global Demand
Global Supply
Inter-regional Supply Management
Global Financials and Inventory Management
Global Executive S&OP and Cultural Considerations
Design Guidance
Q&A
© Oliver Wight International 2007

3. The Sales and Operations Planning Process
Introduction
The Sales and Operations Planning Process
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

4. Overview of Steps In the Process
S&OP Process Cycle
Overview of Steps In the Process
MANAGEMENT BUSINESS REVIEW
STRATEGY BUSINESS PLAN PERFORMANCE
SUPPLY REVIEW
PRODUCT MANAGEMENT
REVIEW
DEMAND REVIEW
© Oliver Wight International 2007
IC330

5. Sales & Operations Planning
Guiding Principles
Sales and Operations Planning is a formal process led by Senior Management that, on a monthly basis, evaluates time-phased projections for New Products, Demand, Supply, and the resulting Financials for the next months
It is a Decision-Making process to ensure that the business plans in all functions and geographies are aligned and in support of the company/division strategy
The objective of S&OP is to reach consensus on a single operating plan, which members of the executive team hold themselves accountable, and allocates critical resources to most effectively and profitably meet customers’ needs
Business Management Ownership Speak The Truth Rolling Monthly Planning One set of operating numbers Simplification - Focus on Changes
Keys to Success
Commitment and regular participation from executive staff Common Goals across all participants
Benefits
Business Process Simplification New Product Execution Focus on the Customer Planning vs. Firefighting Revenue, Market Share, Margin, Customer Service, Cash-flow
© Oliver Wight International 2007
PV974/003

6. Definitions for “Global”
Global – Encompassing more than one geography. Typically this means the entire world, but we can use it to refer to multiple geographic spans of control
Geographies (or Regions) – A geographic entity which has a leadership team with functional responsibilities
Inter-Regional Sourcing – Supply Management which goes across geographies but is within the overall corporate entity.
© Oliver Wight International 2007

7. S&OP Process Cycle MANAGEMENT BUSINESS REVIEW PRODUCT MANAGEMENT
STRATEGY BUSINESS PLAN PERFORMANCE
SUPPLY REVIEW
PRODUCT MANAGEMENT
REVIEW
DEMAND REVIEW
© Oliver Wight International 2007
IC330

8. 4 3 1 2 S&OP Process Cycle – Global Environment weeks Global Region
9. MANAGEMENT BUSINESS REVIEW GLOBAL/CATEGORY
7. Global Reconciliation
8. MANAGEMENT BUSINESS REVIEW (REGION)
Global
5B. GLOBAL
SUPPLY
REVIEW
6. Regional Reconciliation
Region
weeks 1 3 2 4
Plants
1. GLOBAL
PRODUCT
REVIEW
5. PLANT
SUPPLY
REVIEW
2. REGIONAL
PRODUCT
REVIEW
3. COUNTRY/ REGIONAL
DEMAND
REVIEW
4. GLOBAL
DEMAND
REVIEW
© Oliver Wight International 2007
EAME 1028a

9. Making the Choice to Go Global
Defining the Value
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

10. What are the benefits to your company?
Choosing to Go Global
Start with the question –Why do we want run S&OP globally?
Utilization of Assets?
Complete Financial View?
It’s how we run the business?
Going Global should not be a casual decision.
As with all change, we need to have a clear idea of the benefits and be able to articulate them.
The organizational structure must support the process globalization, does this need to change?
Also, do the political power centers support or work against going global?
What are the benefits to your company?
© Oliver Wight International 2007

11. Global Manufacturing Benefits
Better utilization and balancing of plants
45%
40%
95%
90%
130%
85%
95%
70%
50%
90%
60%
80%
90%
© Oliver Wight International 2007

12. Sell it by showing the money!
Financial Benefits
Plant selection based on system economics
Remember to use “Total Delivered Cost”: Distribution Costs can offset any manufacturing costs benefits.
Identifying and managing future capital requirements
Supports make vs. buy decisions if outside suppliers are an option
Global Inventory Management
Financial Benefits can come from a variety of activities:
Selecting the plant to manufacture products from a total cost perspective
Capital management globally can ensure you allocate capital dollars to the right places, and eliminate regional competition
Make vs. Buy
Often the greatest benefit is managing inventory globally. There is usually an opportunity for 1 time cash flow improvements. Story: Reilly 2A6.
Also can be used to improve customer service. Story: Reilly Reillex 402 with Eli Lilly.
Sell it by showing the money!
© Oliver Wight International 2007

13. Organizational Considerations
Before Going Global, look at how the organization operates.
Is the business organized by geography or product line?
Where do the P&L Responsibilities lie?
Are manufacturing and sourcing done regionally or globally?
How much of the manufactured product is moved between geographies?
Align the process with how you operate
© Oliver Wight International 2007

14. Different Global Models
We have to define what is “Global”
Demand is global if business operates as one unit across all geographies
Supply is global if products are supplied by only one plant or supplier.
Supply may be global if sourcing can be changed based on changes in economics
If the business needs a consolidated view or a forum to reconcile issues between geographic business units, a final Global S&OP meeting may be required.
Go global only where you need to
© Oliver Wight International 2007

15. Global New Product / New Activity Management
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

16. Global New Product/New Activity
QUESTIONS TO GET STARTED
Question 1: Who sets the growth targets for the business?
Question 2: Who decides which New Products are developed?
Question 3: Are there global initiatives that utilize local resources?
Tell the Reilly 402 story
© Oliver Wight International 2007

17. New Product Organizational Structures
Decentralized
Americas
Development
Asia
Development
Europe
Development
Works best when:
Development Costs are High, and
Developed Products can be sold across regions.
Product Customization is minimal
Technical Service is a small part of the selling process
Works best when:
Development Costs are Low, and
Product are regionally specific
Products are developed for specific Customers or Applications
Technical Service is a large part of the business value proposition
Globally Centralized: Company Example is Reilly Industries
Globall Consolidated: Companies such as P&G, American Standard. Ask Ben Sellers: Caterpillar?
© Oliver Wight International 2007

18. S&OP Cycles Decentralized Americas Development Asia Development Europe
Executive S&OP
Review
Executive S&OP
Review
Key Initiatives Review
Key Initiatives Review
Key Initiatives Review
Finance, Reconciliation, and Executive Preparation
Finance, Reconciliation, and Executive Preparation
Americas Demand Review
Europe Demand Review
Demand Review
Supply Review
Global Demand Review
Supply Review
© Oliver Wight International 2007

19. Global Demand Management
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

20. Global Demand
Works best for businesses that operate globally and sell globally or regionally.
Question: Will you regularly perform Demand Control globally? If yes, then you need to have a global meeting for this.
Tell the Reilly 402 story
© Oliver Wight International 2007

21. Demand Organizational Structures
Works best when:
Functional Leadership is Global
Products and Product offering are the same in all regions
Limited offering with few SKU’s
Works best when:
Each region has functional leaders
Products and Product offering are regionally different
Broad Offering with many SKU’s
Globally Centralized: Company Example is Reilly Industries
Globall Consolidated: Companies such as P&G, American Standard. Ask Ben Sellers: Caterpillar?
© Oliver Wight International 2007

22. S&OP Cycles Executive S&OP Executive S&OP Review Review
Key Initiatives Review
Key Initiatives Review
Finance, Reconciliation, and Executive Preparation
Finance, Reconciliation, and Executive Preparation
Americas Demand Review
Europe Demand Review
Demand Review
Supply Review
Global Demand Review
Supply Review
© Oliver Wight International 2007

23. Global Supply Management
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

24. Global Supply
Question: How are manufacturing and sourcing aligned with geographic markets?
Plants tend to support one region: Global Supply manages System Capacity and Inter-Regional Sourcing; Geographies manage Utilization, Balancing, Capital Investments, and Master Production Scheduling
Plants support multiple regions: Global Supply manages Utilization, Balancing, Capital Investments, and Master Production Scheduling.
© Oliver Wight International 2007

25. Supply Structures Plants support one region
Plants support multiple regions
Supply Management and Master Scheduling are done at a regional level
Plants can belong to the regional General Manager
Capacity balancing is done globally, over a longer time horizon
Inter-regional sourcing is facilitated globally, managed between geographic partners
Supply Management is done globally, Master Scheduling may be done globally as well.
Plants do not belong to regional General Manager
Capacity balancing is done over the longer horizon and within the MPS
Inter-regional sourcing is managed within the MPS at the global level
© Oliver Wight International 2007

26. S&OP Cycles Plants support one region Plants support multiple regions
Executive S&OP
Review
Executive S&OP
Review
Key Initiatives Review
Key Initiatives Review
Finance, Reconciliation, and Executive Preparation
Finance, Reconciliation, and Executive Preparation
Demand Review
Demand Review
Inter-Regional Supply Reconciliation
Regional Supply Review
Global Supply Review
© Oliver Wight International 2007

27. Inter-regional Supply Management
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

28. Inter-regional Management
What criteria do we use to select inter-regionally sourced items?
Total Delivered Cost?
Volume and Stability of Demand?
Match with Supply Capabilities?
Ability to fulfill Quality and Regulatory requirements?
Consider total costs of inter-regional sourcing
© Oliver Wight International 2007

29. Inter-regional Management
Who should determine which customers we serve when supply is constrained?
SALES!
© Oliver Wight International 2007

30. Inter-regional Management
The process must allow the Commercial functions to drive priorities.
This is easy to do if the product lines are managed globally.
If the Global Commercial leader is also the business leader, you don’t want to have every allocation decided by the leader:
Set and enforce policy for setting inter-regional prioritization
Set ground rules for the conflict resolution process
© Oliver Wight International 2007

31. Inter-regional Management Process
Cover these bases:
Data. To make sourcing decisions, need to have:
Variable Manufacturing Costs
Distribution Costs
Inventory Valuations (for Inventory Carrying Costs)
Tax Rates
You may also need to look at Transfer Pricing, Cash Liberation Laws, and Tax Implications and Opportunities.
Cost side: Talk to American Standard Examples and Models
© Oliver Wight International 2007

32. Inter-regional Management Process
People are the critical element
Cross Cultural Communication may be challenging. One tactic is minimize the people involved in order to allow them to build relationships.
Have the people meet face to face and work together.
Data and systems can facilitate communication
Have a single data set for communication. Use your ERP if possible.
Map your master data between regions so that communication is clear. Better yet, have global master data.
Process Rules must be established
Agree on time fences and change processes up front.
Communication: American, Mexican, Singaporian, Englishman, Eqyptian, and Frenchman agreeing
Foundation of the Process is Trust
© Oliver Wight International 2007

33. Inter-regional S&OP Cycle
Executive S&OP
Review
Key Initiatives Review
Finance, Reconciliation, and Executive Preparation
Demand Review
Inter-Regional Supply Review
Regional Supply Review
© Oliver Wight International 2007

34. Inter-regional Reconciliation Meeting
Typical agenda would include:
Performance Metrics: Internal Fill Rates, Time Fence Violations
Plan Changes: Demand and Supply
Reconciliation and Allocation
Process areas requiring improvement
Issues to elevate
Participants
Global Facilitator
Regional Demand/Supply Representatives
© Oliver Wight International 2007

35. Global Financials and Inventory Management PURPOSE: INTRO PAGE TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

36. Global Financials
A purely global process uses the standard process flow.
When the business is regionally managed, we need a consolidation step prior to Executive S&OP.
Supply Review
Key Initiatives Review
Global S&OP
Review
Demand Review
Europe Finance/ S&OP Meetings
Americas Finance/ S&OP Meetings
Asia Finance/ S&OP Meetings
Global Financial Consolidation and Preparation
Tell story about consolidation errors (Reilly)
© Oliver Wight International 2007

37. Global Financials Purposes of the Consolidation step include:
Creating a consolidated financial view
Resolving inter-regional resource issues prior to the Executive meeting
Preparing issues to be elevated to the Executives
Supply Review
Key Initiatives Review
Global S&OP
Review
Demand Review
Europe Finance/ S&OP Meetings
Americas Finance/ S&OP Meetings
Asia Finance/ S&OP Meetings
Global Financial Consolidation and Preparation
Tell story about consolidation errors (Reilly)
© Oliver Wight International 2007

38. Global Inventory Management
Who determines what is in inventory?
Who determines how much inventory we can afford?
SALES
FINANCE
© Oliver Wight International 2007

39. Global Inventory Management - Centralized
Global Inventory Drivers tend to be financial more than operational.
Global Inventory Management works well with a highly centralized S&OP management structure.
Need real-time visibility of the global inventory for this to work well.
Centralized management structure: speak to Reilly turning on SAP in Europe
© Oliver Wight International 2007

40. Global Inventory Management - Decentralized
If inventory is regionally managed, you want a standardized approach to determining inventory requirements.
Global S&OP will validate the calculated results, but the mix should be managed within each region.
© Oliver Wight International 2007

41. Global Executive S&OP Meeting
PURPOSE: INTRO PAGE
TIMING:
COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

42. Standard Executive S&OP Agenda
Opening Comments (GM)
Summary of Business (Business Directors)
Performance Measures
Financial Review (CFO)
Review Assumptions and Vulnerabilities
Family by Family Review with Decisions
New Product
Special Projects
Review of Responsibilities (GM)
Self Assessment
Closing Comments (GM)
© Oliver Wight International 2007

43. Global Executive S&OP Meeting Agenda
Opening Comments (President)
Summary of Business (Regional Business Leaders)
Performance Measures
Financial Review (CFO)
Issue Resolution
Review of Global Projects (Functional Project Leaders)
Decisions (President)
Review of Responsibilities (President)
Self Assessment
Closing Comments (President)
© Oliver Wight International 2007

44. Potential Pitfalls of Going Global
Does the Organizational Structure support planning and control at a global level?
Does the central planning group have the political power to enforce their plans?
Do the reward systems support global plans or locally controlled plans?
© Oliver Wight International 2007

45. Cultural Considerations
While the principles and activities of planning are the same globally, communication is different in multiple cultures.
Best way to overcome cultural differences is for people to meet each other and work on a project together.
Facilitation may be necessary.
Question people: You are teaching the sales force about forecasting, and changing the process. Who should you include in the class?
What challenges might you face in the United States, China, Thailand? How might you overcome these?
© Oliver Wight International 2007

46. Design Guidance PURPOSE: INTRO PAGE TIMING: COMMENTS:
Set up the flow of the section – firstly help you to understand fairly commonly accepted view of S&OP and then show the potential and why we have re-branded as IBM.
S&OP is the first phase of developing a full IBM process
© Oliver Wight International 2007
EAME

47. Where Do The Following Activities Occur ?
Level 3
Region / Global
Level 2
Region / Country Grouping / Business Sector
Level 1
Customer / Country / Market
Strategic
Review
Financial
Consolidation
Supply
Demand
New Activity
Development
IC1690
© Oliver Wight International 2007

48. Where Do The Following Activities Occur ?
Example Company
Financing
Competition
Acquisitions
Holding
Company/ HQ
Primary
Manufacture
Original
Research and
Development
Level 3
Region / Global
Acquisition
Business
Unit
Packaging
Distribution
Multi-
National
Customers
Brand
Level 2
Region / Country Grouping / Business Sector In
Country
Product
Additions
Level 1
Customer / Country / Market
Strategic
Review
Financial
Consolidation
Supply
Demand
New Activity
© Oliver Wight International 2007
IC1700

49. Where Do The Following Activities Occur ?
Example Company 2
P&L to
Net Income
Global
Business
Unit
Manufacture
Site
Selection
Global Growth
Validation
Original
Research and
Development
Level 3
Region / Global
Contribution
Regional
Execution
Multi-
National
Customers
New Product
Level 2
Region / Country Grouping / Business Sector In
Country
Tech Service
Level 1
Customer / Country / Market
Strategic
Review
Financial
Consolidation
Supply
Demand
New Activity
© Oliver Wight International 2007
IC1700

50. 8. MANAGEMENT BUSINESS REVIEW GLOBAL/FUNCTION
Gap Closers
Constraints &
Issues
Global
Gap Closers
Regions
7. Global Financial Outlook Updated/Issues
Addressed – Region
Constraints
weeks 1 3 2 4
Plant/
Country Level
1. GLOBAL NEW
PRODUCT
REVIEW
2. REGIONAL
New Product
New Business
REVIEW
Reconcile
24 mo
3. Sub-Region
Demand/Price
REVIEW
4. REGIONAL
DEMAND/PRICE
REVIEWS
Regional
Director’s
Sign-Off On
Demand View 
6. GLOBAL
SUPPLY/OPS
REVIEW
5. GLOBAL
DEMAND
REVIEW
© Oliver Wight International 2007

51. Where Do The Following Activities Occur ?
Example Company 3: Multiple SBU’s
Business
Full
P&L
Original
Research and
Development
Level 3
Region / Global
SBU Full
SBU
SBU Supply
SBU Demand
SBU R&D
Level 2
Region / Country Grouping / Business Sector
BU Demand
Level 1
Customer / Country / Market
Strategic
Review
Financial
Consolidation
Supply
Demand
New Activity
© Oliver Wight International 2007
IC1700

52. 9. MANAGEMENT BUSINESS REVIEW GLOBAL/FUNCTION Business Director Level
8. SBU Financial
Outlook
Plan
Total Business
Plan
Business Director Level
7. SBU MANAGEMENT BUSINESS REVIEW
weeks 1 3 2 4
Business Manager Level
1. NEW
PRODUCT/
GROWTH
REVIEW
6. Business Financial Outlook
2. SBU
New Product
New Business
REVIEW
Reconcile
24 mo
3. BU Demand/Price
REVIEW
4. SBU
DEMAND/PRICE
REVIEWS
5. SBU
SUPPLY/OPS
REVIEWS
Diversified Business Analogy
© Oliver Wight International 2007
EAME 1028c

53. Summary Global S&OP adds complexity, so:
Go Global where there is clear value.
Be able to articulate the value.
Design the organizational structure to support Global Management. OR
Design the process in alignment with the current organizational structure.
People are the critical element in a successful process.
Data and Systems are the process enablers.
As with any complex process, simple and clear policy is essential.
Question people: You are teaching the sales force about forecasting, and changing the process. Who should you include in the class?
What challenges might you face in the United States, China, Thailand? How might you overcome these?
© Oliver Wight International 2007

54. Q&A
© Oliver Wight International 2007