Bridging the Gap between Budgets & Reality Oracle's Next Generation S&OP Solution, Oracle

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Bridging the Gap between Budgets & Reality
Oracle‟s Next Generation S&OP Solution
Gerald O’Sullivan Director Value Chain Planning
January 27, 2011

Agenda
• Business Case for Next Generation S&OP
• Oracle Solution Overview
• Solution Detail
– Executive S&OP Dashboard
– What-If Simulation
– S&OP Process Management
– Demand Management and New Product Introduction
– Supply Planning and Long-Term Capacity Planning
– Financial Planning
• Achieving Next Generation S&OP
• Summary

5
Adrian Gonzales
ARC Advisory Group
“Past Performance is No Guarantee of Future Results: The Case for Innovative
Supply Chain Networks, Processes, and Technology” Nov 2010
Tomorrow‟s Supply
Chain Leaders Will...
• "They will all view supply chain as a synchronized system, not
a fragmented collection of processes, functional groups, and IT
applications."
• "They will all make smarter decisions faster.―
• "They will collaborate and share networks with suppliers and
customers."
• ―They will all have flexible, adaptable, and scalable IT
systems.

Today‟s Value Chain is Complex…
Suppliers Customers
Innovation
Procurement
Human Capital Management
Value-Creating
Activities
Supporting
Activities
Financial Management
• Geographically Distributed
• Dynamically Networked
• Increasingly Collaborative
• Product & Service Oriented
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Service
Value Creation

7
“The successful business
executive is a forecaster first,
everything else follows”
Peter Bernstein
„Against the Gods:
The Remarkable
Story of Risk‟
Predict

8
Align
“Vision without execution is
hallucination”
Thomas Edison
American Inventor

9
“The world is changing very fast.
Big will not beat small anymore.
It will be the fast beating the slow.”
Rupert Murdoch
Chairman & CEO,
News Corporation
Adapt

Information is Critical to Create a Value Chain
• PREDICT Market Requirements and Risks
• ALIGN Operations to Business Goals
• ADAPT to Value Chain Disruptions
Information
Enables
You to…
PREDICT ALIGNADAPT
Value Chain Focus
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Service
Undefined,
Ambiguous
Information
Corporate
Objectives
Cross-LOB
Programs
Disruptive
Changes
External
Processes &
Information
Unplanned
Scenarios

Oracle‟s Information-Driven Value Chain Platform…..
Driving Best Practice
Value Chain
Planning and
Execution
Complete
The broadest and
deepest SCM solution
on the market
Modular
Start anywhere, go
anywhere; create value
where most needed
Open
Designed as an open
platform for any ERP
or mix of ERPs
Integrated
Cost-effectively expand
scope and leverage of
the solution

13
Achieve Benefits Incrementally
• Leverage single model as central starting point: focus on high value
• Plug-in new components incrementally: ―crawl, walk, run‖
• Re-configure without re-implementation: upgradeable modifications
SOLUTION PROCESS FULL SOLUTION
Value Chain
Planning and
Execution
Value Chain
Planning and
Execution
Value Chain
Planning and
Execution
Value Chain
Planning and
Execution
Value Chain
Planning and
Execution

Achieving Next Generation S&OP is a Journey
Oliver Wight S&OP Maturity Model
Mature Integrated Business Planning
• Drives responsive optimization of the business in pursuit of business strategy
• Continuous Reconciliation, managing gaps and alternative scenario planning
Integrated Business Planning
• Rolling business management process including gap analysis versus strategy and focus on
competitive priorities
• Integrated Reconciliation is the driver: business analysis provides underlying understanding, drives
improvement priorities and gap closing actions
• Process frequently reshapes to meet changing organizational structure
• Used to deploy and drive the value proposition
Capable S&OP
• Process is established driving integrated operational and financial planning
• Full suite of KPI’s to drive operational effectiveness, achieving 95%+ capability
• Issues are identified and this is the decision making process
• Annual budgeting process removed – S&OP numbers drive forward plans
• Team working behaviors are demonstrated throughout the process
Foundation S&OP
• All elements defined with correct accountability, KPI’s and structure
• Focus is demand /supply tactical balancing
• Initiate integrated supply chain KPI’s
• Challenging behaviors but not yet working
Disconnected Management Processes
• Traditional management meeting focused on the past
• Annual budgeting process with poor basis for forward projections
• Functional/silo management – few/unaligned objectives & measures
• Defensive functional behaviors
Note: Model courtesy of Oliver Wight
Phase 1
Phase 2

Companies Should Focus on Next Generation S&OP
to Maximize Benefits
• Often owned by supply chain group
with limited involvement by others
• Focused on balancing supply and
demand
• Too much focus on explaining the past
• Standalone process not easily
integrated with operational planning
and execution
S&OP as Typically Implemented
• Cross-functional
• Focused on meeting overall corporate
goals in areas such as revenues,
costs, and service levels
• Forward looking
• Monitoring of corporate performance
linked with planning processes
allowing companies to drive decisions
into operations
Next Generation S&OP

Customers
Suppliers
Finance
Supply
Chain
Sales
Marketing
R&D
Partners
Supply Chain Planning
Demand Planning
Sales & Operations Planning
Financial Planning &
Goals
Strategic Planning
Collaborative Planning
Design Collaboration
Sales Forecasts
Market Requirements
Business Plans
Sales Forecasts
New Product Launch
Product Life Cycle Plans
Product Forecasts
Promotion Plans
Forecast Collaboration
Product Requirements
Operating
Plan
Excess & Obsolete
Inventory Exposure
Key Account Planning
Revenue Planning
SKU Rationalization
New Products Planning
Product Allocation
Profit Planning
Working Capital
Planning
Spreadsheets are Not Up to the Task of
Coordinating Complex Web of Planning Processes

Emerson Real-Time Sales & Operations Planning
SOLUTIONS
• Demantra Demand Management
• Demantra AF&DM
• Demantra RT S&OP
• Advance Supply Chain Planning
• Inventory Optimization
COMPANY OVERVIEW
• Emerson is a diversified global manufacturing & technology
company offering a wide range of products & services in the
areas of process management, climate technologies,
network power, storage solutions, professional tools,
appliance solutions, motor technologies, industrial
automation.
• Revenue: $24.8B
• 140,000 Employees
• 265 Manufacturing Sites
CHALLENGES/OPPORTUNITIES
• Decentralized and non-formal S&OP Processes
• Manual & inconsistent forecasting process across sites.
• Difficulty measuring forecast accuracy :SKU & Piece Part
• Forecasting performed qualitatively, without a solid
statistical basis for decisions.
• Multiple Master Schedulers for the same product group;
difficult to get global roll up view
• Communication of forecast decisions within and across
sites was sporadic and typically not timely
• Each site is on a different legacy system
• Lack of Forecast ownership: Marketing & Sales provide
dollarized annual amount as forecast
• Lack of Global Visibility
• No Bottoms up fcstng & reconciliation to upper levels
RESULTS
• Single Global Master Scheduler per
Product Line
• Centralized Planning Process for
Collaboration and Consensus.
• Demand Capture at Model and
Options level for Independent and
Dependent Demands
• Integrated Planning Process for the
entire ‗Model Option Tree‘
• Enhanced Service Levels, Superior
Forecast Accuracy
• 43% reduction in Inventory
Month 2008

VTech Builds a Consumer Driven Supply Chain with Oracle
CUSTOMER PERSPECTIVE
Demantra's solution allows us to collaborate with our
customers in a single, consistent planning environment
where changes in forecasts dynamically update
replenishment and shipment plans. This next generation
CPFR solution allows VTech to maintain its lead in the
consumer electronics business by delivering the highest
possible service levels, while reducing current inventory
levels.
- Nick Delany, Senior Vice President
VTech Telecommunication Products Business
COMPANY OVERVIEW
VTech is one of the world‘s largest suppliers of corded
and cordless phones and a leading supplier of
electronic learning products. Founded in 1976, VTech
manufacturers innovative, high quality consumer
electronics products, and distributes them to markets
worldwide in the most efficient manner.
RESULTS
• Increased order fill rate from 55% to over 95%
• Increased inventory turns from 3x to 6x per year
• Reduced logistics costs by 65%
• Reduced retail compliance fines by 85%
• Reduced price protection claims by 40%
• Rapid time-to-benefit with implementation in 90 days
• Legacy systems a hodge-podge of incompatible
hardware and software
• Inefficient planning and execution leading to rising
costs
• Excess inventory; poor response to market
requirements
SOLUTIONS
• Real-time Sales and Operations Planning

CUSTOMER PERSPECTIVE
We wanted to choose a player that would be in the game
for the long haul, so we looked at Oracle's investment in the
outsourcing model and its expertise in technology. Simply
put, Oracle provides us with the best technology available.”
- Tim Roessler ,CIO
User adoption happened very quickly, almost automatically,
we were surprised how easily it went with no complaints
from the field.
- James Dillon, Director Global Sales Operations and
Customer Service
COMPANY OVERVIEW
• Develop, manufacture and market high performance Chemical
Mechanical Planarization (CMP) polishing slurries for advanced
semiconductor devices
• #1 Supplier of CMP Slurries — Cabot Microelectronics believes it
has approximately three times the annual revenue of the next
largest CMP slurry competitor
• Industry: Chemicals
• Employees: 1000
• Revenue: US$500M
• AsiaPac customers increased to 71% in 2007 from 53% in 2002
• 70% market share through technology leadership
• CMP is an enabling technology
• One of the fastest growing sectors in the semiconductor industry
• Track record of profitable growth, despite semiconductor cycle
• Pursuing multiple new market and product opportunities -
acquisitions
SOLUTIONS
• Demantra DM and RTSOP
• Advanced Supply Chain Planning/CBO
• Inventory Optimization
• Global Order Promising
• Hyperion Planning
• All deployed OnDemand
• OPM backbone
RESULTS
• Reduced Monthly forecasting cycle 48% from 21 to 11 days
• Reduced Forecast error (MAPE) from 50% to 20% and falling
• Full enterprise planning solution with Hyperion integration
• Enabled live on-line consensus ability
• Saved $2-$4 million in hardware and facility expenses (on
demand)
• Saved $1 million in compensation costs (on demand)
• Improved employee morale
Cabot Microelectronics Integrates
Value Chain Planning with Hyperion

5-Step S&OP Process
Most S&OP Solutions Simply Monitor Processes
Management
Review
Product
Review
Demand
Review
Supply
Review
Financial
Review
Supporting Planning Processes
• Supply Planning
• Long-term Capacity Planning
• Financial Planning
• What-If Simulation
• S&OP Process Management
• Demand Management
Most S&OP software applications are standalone solutions limited to
periodic monitoring of S&OP processes at a high level
Only Oracle links high level monitoring with operational planning
applications, allowing companies to continuously monitor
performance and drive decisions into operational planning
Note: Process steps based on Oliver Wight 5-Step Model

© 2008 Oracle Copyright, Proprietary & Confidential
Detailed
analysis and simulation
Only Oracle Links Performance Monitoring with
Operational Planning
Supply FinanceDemand
Executive S&OP Dashboard
Detailed Planner Workbenches
Real-Time S&OP
Executive S&OP Dashboard is core
application for Oracle S&OP process,
with tabs for Executive, Demand,
Supply, and Financial Review
Real-Time S&OP application provides
process management for integrated
demand, supply, and financial
planning
Individual planning applications for
• Supply Planning and Simulation
• Finance

Solution Spans Strategic, Tactical, and Operational
Issues
Operational
Events
Tactical
Decisions
Strategic
Decisions
• Track orders
• Track shipments
• Alert issues
• Balance capacity
• Rebalance
inventory
• Allocate products
• Shape demand
• Service levels
• Inventory policy
• Carrier contracts
• Product mix
• Supply network
sourcing
Continuous S&OP Process Execution

Dashboard Offers Visibility Across S&OP Process
Four Tabs

Financial Review
Compare alternative
scenarios
Analyze key
planning metrics
Analyze profit
and loss
Evaluate supply
constraints
Link directly to
detailed planning
• Aggregate key
performance indicators
enable decision makers
to see the business
impact of plan
alternatives
• Analytics based on
planning data provides
forward looking view
• Drill-down for greater
detail and link to
planning applications
• Execute company-
specific planning
scenarios
Dashboard Monitors Key Metrics

Pre-Configured Views Accelerate Time to Value
More than 300 KPIs to Choose From
• Executive Summary
• Top Difference –
Operating Plan and
Budget by Category
• Consensus Change by
Customer
• Consolidated Analysis
• Profit and Loss Statement
• Constrained Forecast
Comparison
• Budget Analysis
• KPI reports: Forecast
Accuracy; Customer
Service; Inventory and
Production
Executive Review Tab
• Demand Summary
• Top Absolute Difference –
Consensus and Budget by
Category
• Consensus Change by
Customer and Category
• Forecast Comparison
• Forecast Accuracy
(MAPE)
• Projected Backlog
• Consensus Tracking
• Forecast Scenario
Comparison
Demand Review Tab
• Supply Summary
• Bottom Demand Fill % by
Customer
• Supply Change by
Category
• Consolidated Analysis
• Demand Fill
• Production Plan
• Production Plan by
Organization
• Top Resource Utilization
by Organization
• Top Resource Utilization
• Top Supplier Item
Utilization
• Consolidated – Scenario
Comparison
Supply Review Tab
• Financial Summary
• Operating Plan and
Financial Forecast
Comparison
• Top % Difference -
Operating Plan and
Budget by Category
• Margin Difference by
Category
• Year-over-Year Financials
• Financial Forecast and
Budget Comparison
• Revenue / Cost / Margin
by Category /
Organization / Zone /
Customer
Financial Review Tab
Note: Above highlights just a sample of the available pre-configured views in each tab

Rapid What-If Simulations Generate Alternatives for
the S&OP Process
• Real-time supply simulations
– Support what-if scenario analysis to
identify alternatives for the Pre-S&OP
and Executive S&OP meetings
• Evaluate supply constraints
– Quickly and interactively simulate
impact of demand changes on the
supply picture
• Plans visible in Executive S&OP
Dashboard
Supply
Planning
Demand
Management
Rapid supply constraint simulations
Balance

Powerful Planning Application for Drilling into More
Detail on Simulations and Supply Plans
• Fast What-If Simulation
– Copy plans to sandbox to simulate impact of
changes
 Demand increases, ECOs, shortages, etc.
 Planning parameters with mass edits
– Compare plans at detailed and aggregate
levels
– Analyze constraints and exceptions
– Reduce/eliminate need for Excel
• Supply Planning
– Improve plans by considering material and
production constraints
– Real-time planning runs in minutes not hours
 Incremental and complete plan regeneration

WebCenter Work Spaces Facilitate Collaboration
Among all Members of the S&OP team
• WebCenter work spaces to
collaborate on planning,
S&OP scenarios
– Group members
– Group calendar
– Group documents
– Group Wiki
• Unified work list
• Links to other VCP apps
– Linked or embedded reports

Automated Consensus Planning Improves Plan Quality
and Acceptance
• Create consensus plan through
continuous collaboration across sales,
marketing, finance, supply chain and
customers
– Continuously evaluate impacts of demand, supply, and
financial decisions
– Maintains relationship between monetary values and
supply chain units
• Each participant gets tailored view
– Configurable worksheets
– Offline mode
• Combine top down business planning
with precise bottom up forecasts
– Interactive simulation
• Automate process with workflow
– Manage by exception
Sales
Mgrs
Sales: Plan by Product Line
Manufacturing: Plan by Plant
Sales Reps
Marketing: Plan by Region
Asia Americas
Finance: Budget in Dollars
Promotions
plan
Sales
forecast
Financial
plan
Operations
plan
Plant
Mgrs
Consensus
S&OP plan

Supply and Demand Balanced Profitably
• Visibility to logistics and production
constraints in one number planning
process
– Based on single demand plan
• Rapid Planning and Advanced Supply
Chain Planning to evaluate supply
constraints
– Interactively simulate impact of demand
changes on the supply picture with a
common presentation layer
• Strategic Network Optimization to
evaluate capacity constraints
– What-if analysis of supply chain capacity
and resource constraints

Configurable Worksheets, Automation, and Exception
Management Further Enhance Collaboration
• Configurable worksheets
– Display and edit information at any level
– Flexible graphics
– Color code areas of interest
• Automate reconciliation and
approval process
– Combine multiple inputs by defined rules
– Measure accuracy of each input
– Automate approvals
• Manage by exception
– Automated exception handling
– Alerts and visual cues easily point to
important issues
– Document all assumptions with a
complete audit trail of decisions taken
Marketing
Sales Rep

Forecasts at the Lowest Level Provide the Most
Accurate Forecasts
• Demand history and causal factors
maintained at lowest level
• Forecasts done at lowest level
• Coefficients calculated and maintained
at the lowest level for which there is
demand history
• Forecasts and promotion predictions
reflect local, regional, product group
customer, time period, sensitivity, and
so on
• Approach yields most granular
analysis of demand for more accurate
forecasts
Product/Group
ItemItem Item
Item at a Customer
Item at a Customer/Ship-to A
Item at a Customer/Ship-to B
Demand history
Promotion Lift
Seasonality
Cannibalization
Other Causal Factors
Demand history
Promotion Lift
Seasonality
Cannibalization
Other Causal Factors
Per time period
(week/day/month)

Automated New Product Forecasting Key to Including
Product Lifecycle Management in S&OP Process
• Improve forecast accuracy for new products
• Manage product life cycles in the S&OP process
– Define and/or evaluate cannibalization of existing products on
revenue and inventory goals
– Determine optimal timing of product launches
– Align new product schedules to financial targets
– Adjust forecast based on actual demand
– Determine price breaks and promotions that can be leveraged
for sell-off or ramp-up
New Product C =
30% Product A +
70% Product B
Apply shapes, scaled
for volume and time
Re-scale base on
initial demand data
Model new item based
on past behavior of
other items with
similar attributes
CHAINING SHAPE MODELING
ATTRIBUTE-BASED
FORECASTING

E&O Performance
Summary
Excess Performance
Details by Category
Obsolescence Performance
Details by Category
Analyze Excess and Obsolescence Associated with New Products
Use What-If Simulation to Determine Best Phase-In Timing

Shape Demand with Integrated Promotion Planning
• Synchronizes sales, marketing, and supply
chain
– Develop integrated strategies to adjust demand to
available supply
– Implement profitable sales and marketing strategies that
are feasible for supply chain to execute and check
availability of material and capacity to satisfy promotion
demand
– Leverage excess capacity to influence demand
• Predict the impact of marketing programs
– Decompose lift to understand halo effects,
cannibalization, and consumer stock piling
• Simulate volume and profitability of future
promotions
– Optimize promotional events based on goals and
constraints - profit, revenue, units, budget, timing, margin
– Perform what-if analysis to understand the impact of
varying promotional tactics
Predictive Trade Planning and Optimization

Oracle Supply Planning Spans Strategic and Tactical
Tactical
Supply
Plan
Network design and
inventory strategy
Tactical supply planning
Event-driven simulation
Business
Scenario Simulation
(strategic, tactical,
operational)
Supply network
Sourcing and
Postponement
strategy
Supply network
Sourcing and
Postponement
strategy
• Respond to changing markets and
product mix changes
• Adjust supply network while
preserving future growth
• Develop supply chain risk mitigation
strategies
• Plan your extended value chain with
holistic supply and distribution planning
• Improve demand fulfillment through
constrained order promising
• Improve production throughput with
plant level scheduling and monitoring
• Improve supply chain visibility through
collaboration with trading partners
• React quickly to supply chain events
• Empower planners with rapid what-if
scenario simulation
• Leverage embedded analytics in UI
for insightful analysis while making
rapid decisions
• Translate decisions in actions

Compare scenarios for
decision making
Generate constrained
forecast and balance
supply network
Publish working
consensus forecast
Plan Capacity for Long-Term S&OP

Financial Planning
– Financial plans reflect
operational realities
– Revenue forecast is based on
bottom-up consensus
operating forecast
– Top-down financial plan
validated from bottom-up
S&OP
– Operating plan aligned to financial
targets
– Revisions to revenue plan visible to
sales and operations planning
process
– Monetary to units translation
continuously maintained to ensure
plan changes are synchronized
Extend S&OP with Hyperion Integration
Align Financial and Operations Planning

Oracle + Oliver Wight Working Together for a
Complete Solution
People Process Technology
Oracle Value Chain Planning
implementation partners
+ +
• Executive S&OP education
courses
• FastTrack S&OP business
process transformation
program
• Oracle software
• Software implementation
services
+

―Leggett & Platt, Incorporated, together with Oracle and Oliver Wight,
was able to rapidly deploy Oracle S&OP and implement Demantra
across 19 unique business units across the globe. This three way
partnership, the flexibility of Oracle‘s Demantra, Oliver Wight‘s best
practice education and mentoring on the business processes, and
the engagement of Leggett & Platt business leaders will provide
Leggett & Platt with a solid foundation to leverage our supply chain
capabilities around the globe.‖
Randall Wood
Vice President, Leggett & Platt
Oracle and Oliver Wight Work Together
for Success at Leggett & Platt

Summary
How Oracle Enables Next Generation S&OP
5-Step S&OP Process
Management
Review
Product
Review
Demand
Review
Supply
Review
Financial
Review
Supporting Planning Processes
• Supply Planning
• Long-Term Capacity Planning
• Financial Planning
• What-If Simulation
• S&OP Process Management
• Performance monitoring integrated with planning applications so that decisions
can be driven into operations
• Aligns value chain planning and operations with strategic financial plans and
budgets
• Built-in forward looking analytics so executives can see where the business is
heading and make informed decisions
• Rapid, robust, constrained and profit-optimized "what if" capabilities to enable
event-driven S&OP

50
Oracle provides the technology that
enables the people and processes
for today‘s companies become
tomorrow‘s Supply Chain Leaders

Bridging the Gap between Budgets & Reality Oracle's Next Generation S&OP Solution, Oracle

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