1. Stephen Crane Director S&OP Flavors Division NA September 13-14, 2012
The Power of Metrics in Achieving Supply Chain Excellence
(Firmenich Case Study)
Sales & Operations Planning Summit - Boston, MA
Stephen Crane
Director S&OP Flavors Division NA
September 13-14, 2012

2. Agenda
Who is Firmenich Evolution of S&OP S&OP Process Hierarchy Role of Performance Metrics Eight Steps to Success KPI Scorecard Benefit Examples
FLAVORS

3. Over 117 Years of Success Firmenich FLAVORS
Founded by Charles Firmenich in 1895
Largest Privately Owned Company in Fragrance & Flavor Industry
Headquartered in Geneva Switzerland
Divisions: Perfumery, Flavors, Ingredients
Company Foundation
1895 in Geneva, Switzerland
Global Sales
2.78 Billion Swiss Francs
Average Growth per year: 7%
Number of Employees:
6,000
Global presence:
Over 64 Countries
Manufacturing Worldwide:
22 Plant Sites
R&D  Centers:
Geneva, Princeton, Shanghai
R&D  Awards:
35 awards including a Nobel Prize
Patents:
1,400
Annual Investment in R&D
Around 10%
FLAVORS

4. Firmenich ERP Platform
SAP R/3 Single Instance
Initial NA Go-Live December 2009 (Princeton)
Global Implementation Completed in December 2011
APO (Advanced Planner & Optimizer) v4.1
Deployed Demand Planning (DP) and Supply Network Planning (SNP) modules
Implemented standardized processes for S&OP, Demand Planning, Supply Planning
Performance Management (KPI Scorecard)
S&OP implementation started in 2008
Standardized KPI Metrics for plant sites, regions, and global business
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5. Firmenich Roadmap To S&OP Excellence
Competitive Advantage
Scenario Planning
Network Optimization
Supply Chain Automation
Benchmark Performance
Now focusing on these aspects of the process
Profitable Growth
Focus on Costs & Productivity
Cost-To-Serve
Customer Segmentation
Product Portfolio Management
Complexity Reduction
Continuous Improvement
Execute the Plan
Executive S&OP
Align all Functions to One Plan
Integrate NPI into S&OP
Regional Independence
Align Demand w/Finance
Identify Plan Gaps & Actions
Link Planning w/Execution
The Fundamentals
Demand
Supply
Inventory
Service
Improve Planning
KPI Scorecards
Creating a Competitive Advantage for Firmenich and our Customers
FLAVORS

6. Enterprise Process Blueprint Level 1 Process
Business Strategy & Portfolios S
Supply Chain
KPIs
To Measure
Improvement
Competency Center
Sales
S&OP (Planning)
Innovation
Purchasing
Operations
Customer Care
Customers
Quality HR
Finance
HS&E
Technology
Master
Data
FLAVORS

7. S&OP Monthly Process Level 2 Process
Production Planning
Sales & Operations Planning
Procurement Planning
Demand Planning (How much could we sell?)
Balance Demand & Supply
(Do they match?)
Issue Supply Chain Plans
(Can we execute plans?)
Inventory Planning
Supply Planning
(How much can we supply?
Logistics Planning
Financial
Projections
S&OP provides outputs to, and needs
Input from many other processes
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8. S&OP Detailed Process Steps Level 3 Process
Demand Planning
Balance Supply With Demand
Approve & Communicate
Supply Chain Plans
Gather & Maintain Data
Complete CVC Realignments
Sales History Loaded into APO
Make Historical Sales Adjustments
Generate Demand KPIs
Correct Demand Master Data
Monthly S&OP Meeting
Executive S&OP
Inventory Planning
Finalize & Approve Supply Plan
Create Unconstrained Demand Plan
Review SC KPIs
Review Business Strategy & Objectives
Statistical Forecast is Generated
Make Stat Forecast Adjustments
Upload/Enter Customer Forecasts
ACM Forecast Validation
Hold Key Customer Demand Reviews
Set MOH and Write-off Targets
Correct Supply Master Data
Review Revenue & Cost Projections
Review Demand & Supply Plans
Determine Monthly MOH Deviations
Develop Supply Options & Proposals
Calculate Long Term Forecast
Copy Forecasts to Final Forecast
Demand Planner Makes Final Forecast Adjustments
Final Forecast is Copied to BW
Publish Unconstrained Demand Plan
Review Major Supply Chain Issues
Review Financial Projections vs. Budget
Generate Inventory Optimization KPIs
Determine Financial Impact of Supply Options
Supply Network Planning
Modify Supply Chain Plans
Review Major Supply Chain Risks
Review Service Improvements Needed
Present Options For Approval
Gather & Maintain Data – Define Supply Capability
Forecast Passes From DP to SNP
SNP Heuristics Runs
Extract Data From SNP
Generate Month Supply Plans
Define/Update Resource Capacities
Agree to Supply Plan Actions
Review Capital & Resource Requests
Optimize Planning Parameters
Publish Approved Supply Plan
Publish Meeting Minutes
Publish Decisions and Minutes
Identify Supply Imbalances or Shortages
Generate Supply Planning KPIs
Review Supply Alerts
Hold Pre-S&OP Supply Reviews w/Sites
Finalize Product Transfers for DP & CC
Complete Monthly Provisioning & Obsolesce

9. Definitions: Metrics, KPIs & Measurement
Metric – “a standard of measurement”
Inches, feet, meters
Value of inventory
Key Performance Indicator – a metric that is important to understanding past, present, or future business performance
Braking Distance
Inventory Turns
Measurement – the value derived from applying the metric
Braking Distance of a car traveling 50 MPH is 82 feet
Inventory turns 6 times per year
FLAVORS

10. What Drives Functional Metrics?
If it moves, measure it
If it is easy to measure, report it
My boss decided it was a good thing to measure
If it went wrong once years ago, but we still measure it
Just in case we ever get asked
This way we know everything
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11. Performance Measurement & Strategic Alignment
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12. Role of Performance Metrics
To provide a quantified definition of what is important and how the organization is performing.
To ensure alignment between strategic, tactical, and operational goals & objectives.
To facilitate a cross-functional view of relative importance among individual, team, and functional goals & objectives.
To motivate the organization towards continuous improvement.
To provide a means to link individual and organization performance to reward systems.
“You cannot improve what you do not measure”
FLAVORS

13. Eight Steps to Measurement Success
Plan: Create a development plan for metrics with timeframes and milestones
Scope: Focus on a few metrics that really matter providing the most balanced view of end-to-end supply chain performance
Process: Define clear ownership, roles, responsibilities, and structure
Culture: Proactively address organizational resistance
Communication: Create a balanced scorecard to track historical data and for easy organizational communication
Tools: Invest in the tools that will make it reliable and repeatable
Turn Data into Action: Hold weekly/monthly scorecard reviews to monitor progress, prioritize corrective actions, and engage the organization
Power Through Process: Institutionalize your measurement program through a business process to “make it sticky”
FLAVORS

14. 12 Key Metrics To Maximize Supply Chain Performance
Forecast Accuracy (Demand Planning)
Supply Plan Accuracy (Supply Planning)
On Time Shipping Rate
Fill Rate
Perfect Order Fulfillment
Capacity Utilization
Inventory Days of Supply
Freight Bill Accuracy
Freight Cost per Unit
Cash to Cash Cycle Time
COGS % of Revenue
Revenue Forecast Accuracy
Largest Profit Drivers
“Without a yardstick, there is no measurement. And without measurement, there is no control.”
FLAVORS

15. Metric Profile Develop a Detailed KPI Profile For Each Metric
Balanced Scorecard Perspective: Select the perspective – Financial, Customer, Growth, or Internal
Frequency: How often is this metric reviewed? Hourly, Daily, Monthly, Quarterly, etc.
Business Process Category: What business process should be measured ? Customer Service, Inventory, Forecasting, Production, or Procurement
Level of Detail: What level of information is available? By product, business, country, customer, customer segment, etc.
Owner: Who is accountable for the result of this KPI? Document name and function
Calculation: Document the formula and any special components – average count, mean absolute deviation, percentages, differences, etc.
Data Coordinator: Who is responsible for gathering data for KPI? Document name and function
Baseline Data: What year, month, or other time period was used as the baseline?
Data Source: Where does the information come from? BW, SAP, Financial systems. What is measured? What are primary components? Fit into one sentence
Tolerance: What is the allowable error to target?
Data Availability: When is the data available for updating?
Purpose: Why do we measure this KPI? What is the desired outcome?
Comments: Include possibility of automating data collection, issues around gathering the data, potential resources for the information. Include any other information that tells the user more about the KPI
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16. Separate Tabs For Each Plant
S&OP Scorecard Example Increases Visibility of Performance to Organization
Separate Tabs For Each Plant
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17. KPI Benefits Over Last 2 Years Communicate Successes Along the Way
Forecast Accuracy increased by 250%
Supply Planning Accuracy increased by 30%
Customer On Time Delivery increased by 26%
Inventory MOH decreased by 53%
Supply Chain Costs decreased by 15%
Order MOQ Compliance increased by 8%
Supplier On Time Delivery increased by 20%
Total Recordable Cases (TRC) decreased by 46%
Lost Time Cases decreased by 87%
FLAVORS

18. Questions? Thank you for participating! Stephen P. Crane, CSCP
Director S&OP Flavors NA
Firmenich
FLAVORS