Implement S&OP, as a critical business process, championed by a cross-functional team of senior executives

1. S&OP Implementation Roadmap Implement S&OP, as a critical business process, championed by a cross-functional team of senior executives Anand Subramaniam

4. Executive S&OP – Close Loop

5. Executive S&OP - Close Loop Execute Demand Planning Supply Planning S&OP Meeting Market Demand Forecasting New Product Forecasting Promotion Planning Consensus Forecast Safety Stock Demand Inventory Optimisation Constraint-Based Production Scheduling Evaluate Supply Constraints Measure Financial and Customer Service Level Results S&OP Outputs: Service levels Profitability Inventory Levels Promotions DRP / MPS S&OP Review Demand Data

6. S&OP - Demand Planning Data Gathering & Setup (Analysis, Exception Reporting, Statistical Models, Data Aggregation) Routine Forecasting Cycle (Demand Change Reviews, Sales History and Future Forecast Adjustments, Unconstrained Forecast) Monitor & Improve Forecast Accuracy (Forecast Accuracy KPI, Forecast Value Added from Business Intelligence) Sales & Operations Planning Process Inventory Plan, Supply Plan MPS, Raw Material Plan Distribution Plan Financial Forecast Process Network Optimisation Safety Stocks Capacity Planning Input from Marketing, Sales, Customers & R&D

7. S&OP - Supply Planning Data Gathering & Setup (Source, Make, Deliver, Product, & Capacity Plans) Define Supply Capability (Available Inventory, Sources of Supply, Summarise Supply Changes, Adjust Constraints, Initiate Master Data Changes) Develop Supply Plan Proposals (Assess Impact & Develop Options, Submit Supply Plan Options) Stakeholder Meeting MPS, Raw Material Plan Distribution Plan Approve Supply Plan Input from Plants, Asset Management Network Optimisation Changes Unconstrained Demand Plan

8. S&OP - Senior Executive Meeting Review Demand Plan (Review Product Families, Demand Assumptions) Review Supply Plan (Inventory Plan, Cost Projections, Supply Assumptions, Issue Resolution) Agree to Supply Plan (Develop Supply Chain Plans, Source, Make, Deliver) Develop Revenue Projections (Identify Gaps) 18 Month Projections Communicate Approved Plans (Source, Make, Deliver) Communicate Plan Implications (Financial, Sales)

9. S&OP – Life Cycle

10. Importance of Alignment Doing The Right Things Doing Things Right Exploit What We Did Align Measure Execute Holistic Approach to manage S&OP Initiatives

11. S&OP Lifecycle – Critical Success Factors Benefit Assurance Stakeholder Management Sponsorship S&OP Best Practices Organisation Alignment Measurement Capability Development Project Management Risk, Quality, Scope, Cost, Quality, Resources, Time etc Process, Tools, checklist Risk, DOS, ROI, QA Project Select. Prioritise Leadership, Commitment Communication, Integration Coach / Mentor Knowledge Mngt Prof Development PIR, Lesson Learnt Capture Communicate Collaborate Continuously Improve Critical Success Factors

13. S&OP – Output Planning Unit of output Productive days in planning horizon Excess demand Inventory Accumulation Cumulative Demand Cumulative output

14. S&OP – Implementation Road Map

18. Why Phased Approach? Why? Minimise risks & maximise opportunities Leverage and extend existing investments (by deciding what you should add or replace) To deliver S&OP implementation at a defined cost in the shortest time possible Improve ROI in all aspects of implementation with proven tools and methods Limit business disruption through well defined scope based on industry best practices Address key business and processes issues Improve knowledge via training & support future growth Improve stakeholder buy in via change / relationship build Implement the functionality required and defer other investments until required

19. S&OP Implementation Plan Months Business Improvement 1 2 3 4 5 6 7 Phase I Preparation Phase II Expansion Phase III Financial Integration

20. S&OP – Phased Implementation Phase 1 Phase 2 Phase 3 Initiation / High Level Planning As ~ Is Assessment To ~ Be Assessment Knowledge Portal Method / Tool Development Manage Stakeholder Expectations S&OP Pilot - Implementation Continuous Improvement Skill / Capability Development Multi-Product Family Rollout Business Improvement Financial Expansion 1 2 3 4 5 6 7 Months Project / Change Management

21. S&OP – Project Schedule

28. S&OP – Implementation Benefits Benefits Increased teamwork & shared risk management among internal functions Improved material / product fulfillment - reduced expediting $ Increased confidence in planning systems Improved Supply, leading - to on-time delivery, improved profits and customer satisfaction Effective bottleneck and constraints management on the supply side Acceptable lead times Reduced inventories obsolescence Improved collaboration among stakeholders - internal or external (no more finger-pointing) Effective utilisation of resources

30. S&OP - Education / Training

31. S&OP - Education As above, but in more procedural detail for S&OP, Master Scheduling and all other functions of MRP II. Middle Management 2-Hour In-House Educational Sessions Determine how the concepts will be applied, set operating policies, assign implementation responsibilities Top Management 2-Hour In-House Educational Sessions Understand how to implement and operate the system All S&OP & MPS Same as above, but with more detail Middle Management MRP II ( Detailed Level) Understand MRP II process and the role S&OP plays Top Management MRP II (High Level) Purpose Participants Education

32. S&OP - Forecasting

34. Forecasting Process Services Sales and Operations Planning Master Scheduling Customer Scheduling Materials Planning Workforce Scheduling Order Scheduling Manufacturing Collect Data Select Model Plot Data Develop Forecast Check Accuracy Forecast Adjust Forecast Monitor Forecast Forecasting

35. Integrate - Sales Forecast & Production

36. S&OP - Demand Management

37. Demand Management Process

38. S&OP - Governance & Risks

40. S&OP – Governance Process Audit Committee Stewardship Committee Enterprise Business Process Owners Audit Readiness Working Group People, Process, Systems, Activities Business Teams Remove Barriers Issues / Status Validate & Control Establish Objectives Implement Correct

42. Risk - Enterprise Wide Policies and standards in place and are strong, effective, and are followed completely Policies and standards in place but weak or not followed completely No policies or standards in place or ill-defined and ineffective Policies and Standards Very experienced with similar projects Moderate experience or experience with different type of projects (ERP, BI) No experience with projects of this type or projects in general Experience with Similar Projects Strongly committed to success of S&OP project Has support for S&OP project but demonstrates lack of commitment Little or no support for S&OP project Commitment to S&OP Project Verifiable scope, requirements, and measures clearly defined Scope defined at a high level and/ or requirements to be defined in detail S&OP Priorities / Scope not established or requirements are ill-defined and not measurable Priorities / Scope / Requirements Agreed to support S&OP project S&OP issues unresolved or in process of being defined or approved No support for S&OP project or major unresolved issues Executive Management Support Has extensive history with successful S&OP projects Has experience with S&OP systems or has had some successful projects Has a poor history or has little experience with S&OP systems Project History/ Experience Project directly supports one or more of the strategies and mission Project indirectly or partially supports strategies & goals S&OP Project does not support any Organisation’s Strategies, Mission & Goals Low Risk Medium Risk High Risk Risk Factor

43. Risks - Technology & Fit Time lines are not critical Has critical time line, but little to no impact on quality Time line likely to adversely affect quality and completeness Quality Control Uses proven technology that integrates well Limited use of new technologies Introduces new technologies to the environment Fit with Existing Environment Little or no integration or interfaces required Some integration or interfaces required and/or of some importance to project Extensive integration of systems, or exchange of information or interfaces are a major part of project System Integration/ Interfaces Requirements are few and easily defined; few users to provide input Project is fairly complex with some requirements more easily defined; several user groups will be aiding in the design S&OP Project is very complex with multiple requirements from many different users; requirements are complex and hard to define Complexity of Requirements Analysis of alternatives complete, all alternatives and options considered, and assumptions verifiable Analysis of alternatives completed, some assumptions questionable, and alternatives not fully considered Analysis of alternatives not completed, not all alternatives considered, and/or assumptions faulty Analysis of Alternatives Low Risk Medium Risk High Risk Risk Factor

44. Risks - Approach / Benefits / Change Formal change control process in place, followed, and effective Change control process in place but not being followed completely, or ineffective No change control process being used to manage S&OP (overtime, planning horizon, scope etc) Change Control Management All deliverable requirements defined, reasonable, and measurable Some deliverable requirements remain to be defined or are vague and un-measurable S&OP requirements not defined for deliverables or unreasonable requirements Deliverable Requirements Defined Benefits well-defined, baseline established, measurable, and verifiable Some questions remain about benefits, or baseline changing and measurements doubtful S&OP Benefits not defined, no baseline established, unattainable, or un-measurable Achievable Benefits Project development methodology in place, established, effective, and followed by staff Project development methodology established, but not followed or ineffective No formal project development methodology being used, either commercial or in-house system Development Methodology Project management approach is strong and effective Project management approach is good, but needs development Project management approach is weak or ineffective Management Approach Low Risk Medium Risk High Risk Risk Factor

45. Risks - Project Management Well-defined, consistent, established, well-distributed, effective Requirements are defined, some inconsistencies remain, and requirements may not have been distributed to all employees None in place, defined, or ineffective Management Requirements Quality assurance system established, well followed, highly effective Procedures established, but not well-followed or effective No quality assurance process or procedures established Quality Assurance Requirements well-established, baseline defined, user acceptance high, and few or no changes Requirements defined and users signed-off but changes to baseline expected Rapidly changing size or scope, requirements not defined and not signed off by users S&OP Project Size and Scope Process well-established, procedures followed, and highly effective Process established, not well followed, or is ineffective No process established or process is ignored Monitoring Process Comprehensive plan is approved, monitored, updated, and used by all project team Plan is approved, complete, and used by most of project team Project plan is not updated and/or plan is not followed by most of project team Project Plan Low Risk Medium Risk High Risk Risk Factor

46. Risks - Project Team Project staff is all available, in place, experienced, and stable Project staff is available, but not all in place, training plan established Project staff has high turnover rate, little or no experience, or is not available for project Available Personnel Resources A balanced mix of client and vendor staff with client personnel capable of taking over new system A small percentage of client staff personnel being trained on new systems Complete reliance on contractor or vendor staff with no client staff being trained in new system Vendor / Client Mix Project staff is highly committed to success of project Project staff states commitment to project, but indications are that commitment is not genuine Project staff has little or no commitment to the success of this S&OP initiative Commitment of Staff Productivity tools being used and staff are trained in use of tools Productivity tools available but not being used to full potential, or in process of being implemented and training needed Productivity tools not being used or considered Availability of and Experience with Productivity Tools Project staff is highly experienced with projects of this type, and has experience with S&OP software Project staff has some experience with projects of this type, but lacks experience with S&OP software Staff has little or no experience with S&OP projects and lacks experience Experience of Staff Low Risk Medium Risk High Risk Risk Factor

47. Risks - Budgetary / Cost Justification Complete agreement on incremental payments based on product deliverables Some set of agreed-upon incremental payments based on product deliverables No set, agreed-upon incremental payments based on product deliverables (i.e. per module, per feature, per product) Incremental Payments Based on Deliverables Sufficient funds available to complete project as currently defined Questions remain concerning budget Insufficient budget available to complete S&OP project as defined Budget Size Completely justified and cost-effectiveness proven Justification questionable or cost-effectiveness not completely established Not justified or cost-effective Economic Justification/Cost Effectiveness Cost controls well-established, in place, and effective Cost control system in place but weak in some areas Cost control system lacking or nonexistent Cost Controls Funds allocated without constraints Some questionable allocations or doubts about availability Budget allocation in doubt or subject to change without notice Funding Sources and Constraints Low Risk Medium Risk High Risk Risk Factor

48. Risks - User Participation Users have accepted all concepts and details of the system and process in place for user approvals Users have accepted most of the concepts and details of the system and process is in place for user approvals Users have not accepted any of the concepts or design details of the system User Acceptance User training needs considered, training or training plan in place and in process User training needs have been considered but training or training plan is in development Requirements have not been defined or have not been addressed User Training Requirements User justification complete, accurate, and sound User justification provided, justification complete with some questions about applicability Users have not provided any or satisfactory justification for system development User Justification Users highly involved with project team, provide significant input and have significant ownership of system Users on project team play minor roles or have only moderate impact on system Minimal or no user involvement on development team or little user input into process Involvement of Users User requirements are well-defined and no changes are anticipated User requirements have been defined but changes are anticipated User requirements have not been defined or are insufficient for a successful project User Requirements Defined Low Risk Medium Risk High Risk Risk Factor

49. S&OP – Measures & Metrics

50. Integrating Key Performance Indicators Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Customer Metrics Operational Metrics Financial Metrics Customer Service Safety Stock Holding Cost Supplier Reliability (Lead Time Variability) Forecast Error ROI Return On Investment ROCE – Return On Capital Employed Average Inventory Fill Rates On - time Delivery Price Quality Turns Total Assets Days Sales Outstanding Cash to Cash Cycle Asset Utilisation Back Orders / Expediting Growth Logistics costs Directly Proportional Indirectly Proportional Directly Proportional Indirectly Proportional

51. S&OP – Checklist

54. S&OP – Process Mapping (As~Is / To~Be)

55. S&OP - Process Improvement Framework Continuous Improvement Identify Best Practices As~Is Analyse & Evaluate To~Be Implement Business Process Reengineer Business Process Improvement Approaches

56. S&OP - As~Is Process Design Select a specific Process Scope, Plan & Schedule Resources Select Technique Individual Interviews Focus Group Mapping Document As~Is Process & Improvement Opportunities Analyse, Evaluate & Sign-off

57. S&OP - To~Be Process Design Implementation and Change Management Improvement Opportunities from As~Is Process Design Visioning Workshops Senior Management Vision Best Practice, Benchmarks, Performance, Goals Visioning Workshops

58. Information Required for Process Mapping S&OP - Information Required Responsibility Key responsibilities of the process area Output Key deliverables of each activity - products and services Input methods, materials, manpower, information, equipment etc Activities Key Activities of the process area KPIs Volumes Key volumes related to an activity Customers Recipients of each activity output Suppliers Suppliers of each activity input

59. S&OP - Process Mapping Select the process Get the right people together Establish process boundaries List steps, activities and decisions Map the “as-is” process Simplify the process Collect Data Is the process stable? No Yes Is it capable? No Yes Perform root cause analysis Map and implement the “to-be” process Collect Data Is the process stable? Perform root cause analysis Is it capable? No Yes Yes Yes Benchmark the process Institutionalise the process

60. S&OP - Project / Change Management

63. S&OP – Project Success Factors Project Management Bottom Up Buy-in Sponsor reports to Board Training / Coach Manage Stake-holder Top Down Support Clear Charter

64. S&OP - Benefit Realisation Key Measurement Criteria Benefit Ownership Benefit Key Success Criteria Communication Plan Business Case for S&OP S&OP Benefits Delivered Progress Monitoring S&OP Benefits Identified Responsibility Matrix Benefit Delivery Execution Governance Risk Management S&OP

65. Stakeholder Management

67. S&OP - Stakeholder Engagement Areas to Focus

68. Knowledge Management

69. S&OP - Knowledge Areas Principles, Beliefs, Expectations, Vision, Mission, Goals, Objectives, Action Plans Critical Success Factors, Strategies, Continuous Improvement of Projects, Investments, Incentives, Communication, Policies, Attitudes, Practices S&OP Technology Measurement Methodology Skills Organisation Culture Work Product, Quality, Time, Productivity, Cost, Impact, Defects, ROI, Value, Satisfaction Experience, Method Training, Technical Training, Management Education, On-the-Job Training, Learning Curves Methods, Specifications, Outputs, Procedures, Techniques, Standards, Guidelines, Controls, Tools, Tool Classes, Platforms, Standards, Protocols, Architectures, Physical Environment Roles, Jobs and Responsibilities, Formal and Informal Structures, Resources and Resource Allocations, Support Staff Services, Relationships

70. S&OP – Knowledge (Capture & Improve) Lessons Learnt Capture Communicate Collaborate Continuously Improve

71. Conclusion