1. Debrief 2

2. Debrief after round 2 Strategy in The Fresh Connection
What is your strategy?
How did you translate it into action?
Was everything clear?
Please give us your reflection in headlines
Review team results
Ask the teams for their strategy?
How did they translate it into action?
Assign a spokesperson per team
Have all teams briefly reflect and drive the discussion towards S&OP

3. Maturity scan: Alignment and collaboration
Stage of evolution
Characteristics
Stage I:
React
Ad hoc decisions, no connection with business strategy, no specific sequence
Stage II:
Anticipate
Functional organization with each function making separate decisions in its own silo, little or no connection with business strategy
Stage III:
Collaborate
Joint decision making with a rough logical sequence, not formalized or detailed. Limited preparation on trade offs, connected to business strategy
Stage IV:
Orchestrate
Formalized logical sequence of joint decision making based on business strategy. Individual preparation of decisions and trade offs beforehand

4. Sales & Operations Planning

5. What is happening 6-12 months from now?

6. A typical board meeting: Let’s eavesdrop
President: “This shortage situation is terrible. When will we ever get our act together? Whenever business gets good, we run out of product and our customer service is lousy.” VP Operations: “I’ll tell you when. When we get some decent forecasts from Sales and Marketing…” VP Sales (interrupting): “Wait a minute. We forecasted this upturn.” VP Operations: “… in time to do something about it. Yeah, we got the revised forecast – four days after the start of the month. By then it was too late.” VP Sales: “I could have told you months ago. All you had to was ask.” VP Finance: “ I’d like to be in on those conversations. We’ve been burned more than once by building inventories for a business upturn that doesn’t happen. Then we get stuck with tons of inventory and run out of cash.”
Source: Thomas F. Wallace, Robert A. Stahl, ‘Sales & Operations Planning’, 3rd ed., 2008

7. What is causing these type of discussions?

8. No connection between business strategy and execution
No ownership, high forecast bias, no identification of gaps between forecast, plan, budget etc…
Execution
Business Strategy
We all mean well, but we get nowhere

9. We all mean well, but we get nowhere
Where does S&OP fit?
No ownership, high forecast bias, no identification of gaps between forecast, plan, budget etc…
Execution
Business Strategy
S&OP
We all mean well, but we get nowhere

10. What is S&OP? S&OP, at heart, is a very simple idea:
make forecasts of what you are going to sell and what you can make (or buy)
take actions to balance the equation supply = demand over the whole horizon you have decided you need to look at
look at the financial consequences of those actions versus your targets
initiate actions to address the difference between the target and the current, balanced forecast

11. S&OP is business planning in 5 steps…
From Forecasting to Demand Shaping
Getting the right info to make decisions into the last 60 minutes of the process
Demand
Reconcile demand and supply
Reconcile with financial plans
Sales and Ops Planning
Meeting
Supply
“What if?” Rather than “Yes/No”
S&OP is a means of aligning targets and objectives across the different functions by taking sales & marketing ambitions, supply possibilities and financial goals and balance them to create a single,
achievable plan. It must be a cross-functional business activity which needs to be led from and owned by the Board or the senior decision making body of the company or business unit.
Generating, shaping, and orchestrating the demand
Identifying supply capabilities
Aligning Demand & Supply
Financial Considerations
Reconciliation with Financial
From Capacity Planning to Supply Network trade offs & design
Source: Deep Parekh, Partner, Equus Group, LLC

12. The process seems simple but some principles are a challenge….
Discussions should be fact-based
There must be clear ownership of each element of the process and of the decisions made
The operating plan must be formally linked by assumptions to a financial plan
There needs to be a formal balancing of demand and supply across a rolling horizon
Gaps (vs set targets…) must be recognised and action plans formulated to close them taking into consideration the relevant lead times
Trade-offs must be clearly articulated and commercially evaluated

13. In Practice – it’s a balancing act
Demand Shaping
Marketing programs
New product introductions
Promotions
Trade deals
Sales incentives
Price management
Supply shaping/run-out strategies
Capability response
Postponement
Improve transparency: e.g VMI
Design for supply. Reuse.
Logistics policies
Adaptive networks
Flexible manufacturing strategies
Tie agility strategies to demand shaping
Source: AMR

14. S&OP is also about behavior and collaboration
“You have done well: you have consistently beaten your forecast.” “You consistently under-forecast; please look into your process.” “Your forecast is well below your target; this is unacceptable.” “What options have you considered already and what can be done more to close the gap.” “This is our bottom up forecast; this is our best outlook based on current plans; there is nothing I can do”. “Our bottom up forecast fell short of target. We are working to improve our Q3/Q4 promotional program.”

15. Benefits of a well functioning S&OP
Improved Customer Service by aligned, anticipated action
Simplicity of decision making framework
Alignment of actions, incentives in the organisation
Visibility of Information
Empowerment/Development and motivation of people
Clarity on Roles & Responsibilities
Ownership of Key Inputs

16. Functional silo approach Ineffective behaviour Fire fighting
Sales: we can sell 200
Marketing:
the promotion
will sell 400
Manufacturing: they will
only sell 150
Finance:
we have
budget of 300
one
consensus
plan
Functional silo approach
Ineffective behaviour
Fire fighting
Lots of ad-hoc meetings
Lots of effort, little reward
Key decision making forum
Manage together
Routine things done routinely
Issues addressed early – efficient response & anticipation
Source: Red Pepper, Modified E&Y, 1999

17. Who Brings What to the Table?
Marketing
Product
Development
Demand
Capital
MPS and
Supplier
Constraints
Business
Plan
Workforce
Availability
Finance
Materials
Operations
Human
Resources
Engineering
General
Management
Capacity
Customer
Interface
Sales
Source: Launchbury, Keith J. Principles of Planning Omeric, 1999

18. How to translate this to The Fresh Connection
Purchasing
Sales
Servicelevel
Demand pattern
Shelflife
Leadtimes
Quality
Reliability
Trade Unit
Strategy
Operations
Capacity
Improvements
Frequencies
Stocklevel
Fixed period
Supply
Chain
Adapted from: Launchbury, Keith J. Principles of Planning Omeric, 1999

19. Strategy into action Levels in version 2013
Theme
Sales
SCM
Operations
Purchasing
Level 1
Reliability
Service level
Order deadline
Shortage rule
Safety stocks
# Shifts
# Pallet locations
# FTE
Delivery window
Delivery reliability
Level 2
Batches and frequencies
Shelf life
Trade unit
Lotsizing in production and purchasing
SMED
Increase speed
Level 3
Speed and quality
Payment terms
Frozen period
Intake time
Preventive maintenance
Solve breakdowns training
Raw materials inspection
Supplier selection
Quality
Transport mode

20. Extensions in version 2013 Theme Sales SCM Operations Purchasing
Extension a
S&OP
Promotional pressure
Category management
Forecasting
Production interval tool
Resource selection
Dual sourcing
Extension b
External
collaboration
Promotion horizon
VMI
Outsourcing warehouse (MCC) Inflate PET
Supplier development
Extension c
CO2 footprint
Sustainabilty
CO2 sla
Decrease of water usage
Decrease of energy usage
Decrease of start up productivity loss
Extension d
KPIs and targets
KPI selection
Extension e
Supply chain risk management
Risk events
Relaunch (horizon)
Scenarioplanner
Tracking & tracing
Quarantine
Pooling warehouse FTE
Contract duration

21. Decision making Decision making sequence Who is involved?
Sales
Operations
Supply chain
Purchasing
sequence
Decision making
Who is involved?
What sequence makes sense?

22. Set up a logical sequence of decisions and roles involved for The Fresh Connection
Sales
Operations
Supply chain
Purchasing
Inventory policy raw mat. (batch size, safety stock)
Production capacity plan (shifts/projects)
Forecasting demand (pattern)
Inventory policy finished product (safety stock)
Supplier selection and agreements
Production policy (interval / fixed period)
Production resources and allocation
Decide about portfolio/ customer service
The value proposition
Capacity plan inbound warehouse
Capacity plan outbound warehouse