Steelwedge Agility Webinar Series Featuring Lora Cecere, Supply Chain analyst and author of the enterprise software blog "Supply Chain Shaman" with Nari Viswanathan, Steelwedge Companies want to be more agile in driving growth regardless of volatililty in the global business environment. But there is no clear, consistent industry standard definition of business agility. To better understand what this means and how organizations like yours are using S&OP to drive supply chain agility, Lora Cecere, Founder of Supply Chain Insights and former Supply Chain Analyst and Partner with Altimeter Group, conducted a survey of business professionals in April about the importance of agility in business planning. On May 15th, Lora will be sharing her analysis of this research during her featured webinar. View recorded webinar to learn how others are prioritizing and enabling agility in their organizations. Get tips from Lora and Steelwedge’s VP of Product Marketing, Nari Viswanathan on how you can use S&OP to drive better resilience in your operation.

1. How Agile is Your Business?
Presenters: Lora Cecere & Nari Viswanathan
May 15, 2012

2. How S&OP Drives Agility
Research Results
March-April 2012
Supply
Chain
Insights

3. Key Findings
• Today, S&OP landscapes are more complex. It is not a
bell curve. The average company now has five S&OP
processes. Eight years ago there was one.
• Today, a company is 5X more likely to have a supply
chain center of excellence than eight years ago.
However, there is still a large gap in the effectiveness of
S&OP.
• 90% of companies surveyed believe that a mature S&OP
improves agility. However, only 13% of companies have
effectively tied S&OP planning to execution.
p. 3
Supply Chain Insights, LLC © 2012

4. An Athlete Needs:
Strength
Flexibility Balance
And so does a supply chain….
p. 4
Supply Chain Insights, LLC © 2012

5. Agenda
Overview & Demographics
What is Agility?
Increasing Complexity of S&OP
So What? Who Cares?
p. 5
Supply Chain Insights, LLC © 2012

6. Study Overview
WHY WHAT
• OBJECTIVE: To assess the importance of • Survey topics included:
supply chain agility and tactics used to • Supply chain organization definition
improve agility and to understand the role of • Agility definition and techniques
S&OP in driving agility in organizations. • S&OP process details and impact on agility
• HYPOTHESIS: The greater the complexity of
the supply chain, the more important it is to
have a mature S&OP process.
WHEN & HOW WHO
• Online interviews were conducted between • 117 business leaders, primarily Managers and
March 22 – April 9, 2012. above.
• Respondents were recruited via email • Across over 50 companies in 13+ industry
Steelwedge. groups (primarily Food & Beverage, Make to
Order Discrete, Consumer Packaged Goods,
and High Tech & Electronics).
• 62% from Process industries, and 34% from
Discrete manufacturers.
p. 6
Supply Chain Insights, LLC © 2012

7. Who Was Surveyed?
Industry, Company Size & Title
From 13+ Industry Groups 47% from Companies with Over 5K
Employees
62% Process vs. 34% Discrete
Food and Beverage 18%
Over
Make to Order Discrete 18% 15,000 ≤1000
Consumer Packaged Goods 11%
25% 27%
High Tech and Electronics 11%
5001-15,000 1001-5000
Chemical - Industrial 9%
Chemical - Specialty 9% 22% 26%
Pharmaceuticals 9%
Medical Devices 4%
Oil and Gas 3%
88% Managers & Above
Fashion Apparel 2%
Commodity Apparel and… 1% 47%
Retail - Convenience 1% 25%
Retail - Specialty 1% 12% 11%
5%
Other 4%
Internal consultant
Manager Director Senior Director President
Vice
Base: Total Sample (117)
Q2. Which industry grouping best defines your company? Please select the one that best applies.
Q3. What is the size of your company, in terms of number of employees? Your best estimate is fine. p. 7
Q4. Which of the following best describes your current position? Please select the one that best applies. Supply Chain Insights, LLC © 2012

8. Who Was Surveyed?
Supply Chain Organization
Functions Reporting Through Supply Chain Leader
Supply Chain
Chief Operating Officer 43% 69% Profit
Center
Supply Chain Gen Mgr of Business Unit 26% Managers
Planning (Supply) 80%
Leader of Manufacturing 12%
Supply Chain
Planning (Demand) 72%
Chief Financial Officer 9%
Inventory 63% Head of Procurement 3%
Chief Information Officer 2%
Deliver (Distribution) 56%
Supply Chain Definition
Transportation 52% Not Sure
Configure
3%
to Order
Source 12%
(Procurement) 51%
Make Build
38% 58%
(Manufacturing) 26% to
Build to Stock
Customer Service 37% Order
Base: Total Sample (117)
Q5. Please tell us how you define your company’s supply chain organization by selecting which function(s) report through the supply chain
organization. Please select all that apply. p. 8
Q7. To whom does your supply chain organization report? Q6. How would you characterize your company’s supply chain? Supply Chain Insights, LLC © 2012

9. S&OP Process
Existence & Processes
Have a Sales & Operations Planning Process
Not sure
No 3%
10%
Yes
87%
# Distinct S&OP Processes
5 S&OP processes on average
59% have 3+ processes
27%
20% 19%
14% 12% 9%
1 2 3 4 5 More than 5
Base: Total Sample (117)
Q17. Does your company have a Sales and Operations Planning (S&OP) process? A S&OP process is a tactical planning process to forecast sales and plan operations.
Base: Have a S&OP process (102) p. 9
Q18. Which one of the following best defines the goal of your current S&OP process?
Q19. How many distinct S&OP processes does your company currently have? Your best estimate is fine. OPEN-ENDED Supply Chain Insights, LLC © 2012

10. Center of Excellence
Primary Functions of
Center of Excellence
Center of Excellence
Definition of best practices for process 90%
Not sure 2%
Definition of supply chain metrics 82%
Supply chain planning 77%
No Inventory strategies 74%
30%
Facilitation of horizontal processes, like… 72%
Yes Evaluation of new technologies 69%
64% Network design 69%
Establishment of goals 51%
Supplier development 18%
Other 3%
6 functions of the center of excellence on average
Base: Total Sample (61)
Q8. Does your company have a supply chain center of excellence – in other words, a dedicated team focused on improving supply chain process excellence?
Base: Have Center of Excellence (39)
p. 10
Q9. What are the primary functions of your supply chain’s center of excellence? Please select all that apply. Supply Chain Insights, LLC © 2012

11. Center of Excellence
Importance vs. Performance
Importance vs. Performance
120%
Importance (6-7) Performance (6-7) Gap (Perf - Impt)
100%
82% 77% 74% 80%
66% 62% 57% 58%
52% 60%
43% 44% 42%
34% 30% 40%
28%
21% 20%
20%
0%
-16% -20%
-22%
-33% -30% -31% -34% -37% -40%
-61% -60%
-80%
Facilitation of Supply chain Network design Definition of Inventory Definition of best Establishmt Evaluation of
horizontal planning supply chain strategies practices for of goals new technologies
processes, like metrics process
S&OP
Base:
Have 28* 30 27* 32 29* 35 19* 27*
function
NOTE: Supplier Development is not shown because not enough respondents
report it is a function of their supply chain center of excellence
Base: Have Center of Excellence & Particular Function (varies by function) *CAUTION: SMALL BASE SIZE
Q10. For each of the following functions of the supply chain center of excellence, how important is it to your overall company? SCALE:
7=Extremely important – 1=Not at all important p. 11
Q11. For these same functions, how would you rate your company’s performance? SCALE: 7=Excellent– 1=Poor Supply Chain Insights, LLC © 2012

12. Audience Question
How balanced is your S&OP Process?
• Big OP and little s
• Big S and little op
• We are balanced
p. 12
Supply Chain Insights, LLC © 2012

13. Agenda
Overview & Demographics
What is Agility?
Increasing Complexity of S&OP
So What? Who Cares?
p. 13
Supply Chain Insights, LLC © 2012

14. What is Agility?
How Define Supply Chain “Agility”
Shorter supply
Flexibility to make cycles
and deliver
whatever is ordered 3%
10% Most Mature Definition:
Ability to recalibrate plans
in the face of
market, demand and
supply volatility and deliver
49% the same or comparable
cost, quality and customer
38% service
Ability to
adapt to
variations in
demand and
supply
Base: Total Sample (117) p. 14
Q11. How would you define what it means for your company’s supply chain to be “agile”? Please select the one that fits best. Supply Chain Insights, LLC © 2012

15. Agility Importance vs. Performance
Agility Importance vs. Performance
(7-Point Scale)
6%
5%
40% Low (1-3)
89% 32% Middle (4)
Agility
Performance is
62 % Points
Lower than 27% High (5-7)
Importance
Importance Performance
Base: Total Sample (117)
Q12. How important is it for your company’s supply chain to be “agile” in 2012? Please base your answer on however your company defines agility.
SCALE: 1=Not at all important, 7 = Extremely important p. 15
Q13. How would you currently rate your company’s supply chain in terms of being “agile”? SCALE: 1=Not at all agile, 7 = Extremely agile Supply Chain Insights, LLC © 2012

16. Importance of S&OP Process
for Agility
Importance of S&OP Process to Agility
3% Not important (1-3)
7%
20%
(4)
(5)
90% 42%
Important
(6)
28%
Extremely important (7)
Base: Have a S&OP process (102) p. 16
Q22. How important do you think your S&OP process is to improving the agility of your supply chain? Supply Chain Insights, LLC © 2012

17. Audience Question
How well can you plan and build scenarios to
plan for agility today?
• Works well. My system lets me easily build
what-if scenarios.
• Area for improvement. I can plan, but I
cannot easily build what if scenarios.
p. 17
Supply Chain Insights, LLC © 2012

18. Agenda
Overview & Demographics
What is Agility?
Increasing Complexity of S&OP
So What? Who Cares?
p. 18
Supply Chain Insights, LLC © 2012

19. S&OP Evolution
Greater Benefit
Business- • Growth
Sales Driven
planning Driven • Resilience
Match Demand
Maximize • Efficiency
with Supply
Profitability
Market Driven
Manufacturing- Demand Driven
Driven Maximize
Maximize
Opportunity and
Deliver a Feasible Opportunity
Mitigate Risk.
Plan for Operations Sense and
Orchestrate
Match Demand Shape
Demand
with Supply Demand
Market to Market

20. S&OP Goal
By Supply Chain Leader
S&OP Goal by Supply Chain Leader
43% Total
Match demand with supply 43% GM or COO
41% Other*
32%
Maximize opportunity and mitigate risk 37% Most Mature Goal
19%
14%
Develop a feasible plan 7%
33%
8%
Determine the most profitable plan 9%
7%
3%
Other (please specify) 4%
0%
Base: Have a S&OP process -- Total (102), Supply Chain Leader is GM or COO (70), Other (27) – *CAUTION: SMALL BASE SIZE p. 20
Q18. Which one of the following best defines the goal of your current S&OP process? Supply Chain Insights, LLC © 2012

21. What is Agility?
By S&OP Goal
Agility Definition by S&OP Goal
Ability of the supply chain to recalibrate plans in Most
the face of market, demand and supply volatility 64%
Mature
and deliver the same or comparable cost, quality 48%
and customer service
Definition
Ability to adapt the supply chain to variations in 30%
demand and supply 41% Mature S&OP Goal
(Maximize
Opportunity, Mitigate Risk)
3% Other S&OP Goal
Flexibility to make and deliver whatever is ordered
10%
3%
Shorter supply cycles
1%
Base: Max Opp/Min Risk (33), Other (69) p. 21
Q11. How would you define what it means for your company’s supply chain to be “agile”? Please select the one that fits best. Supply Chain Insights, LLC © 2012

22. S&OP Plan Execution
S&OP Plan Execution
Execution is not connected to S&OP plan 9%
We try to execute the S&OP plan, but hardly do
in practice 25%
We execute the S&OP plan most of the time 35%
We execute the S&OP plan nearly all of the
time 19%
We monitor market events and adjust to S&OP Sense &
plan within limits 13%
Respond
Base: Have a S&OP process (102) p. 22
Q25. After your S&OP plan is generated, how is it executed? Please pick the one that describes it best. Supply Chain Insights, LLC © 2012

23. Agility Techniques
Primary Technique to Improve Agility
Better visibility of market events due to improved S&OP decision making 32%
Improved demand forecasting 28% Top 3
Techniques
Lean manufacturing 15%
Use of channel data to sense demand (decrease demand latency) 5%
Vendor managed inventory (VMI) 3%
Inventory postponement 3%
Manufacturing products closer to market 3%
Change in transportation modes 3%
Supplier managed inventory (SMI) 1%
Ability to speed up new product launch process to be more responsive to customers 1%
Other 3%
Not sure 4%
Base: Total Sample (117) p. 23
Q15. What is the primary technique your company currently uses to improve supply chain agility? Supply Chain Insights, LLC © 2012

24. Top 5 Agility Techniques
By Agility Definition
Top 5 Techniques to Improve Agility by Agility Definition
Mature Agility Definition Other
Mature Agility = Same Cost, Quality & Customer
Service Given Variable Supply & Demand
Better visibility of market events due to improved S&OP decision making
49%
17%
Improved demand forecasting
19%
37%
Lean manufacturing
12%
17%
Use of channel data to sense demand (decrease demand latency)
2%
8%
Vendor managed inventory (VMI)
2%
5%
Base: Mature Agility Definition (Same Cost, Quality & Customer Service Given Variable Supply & Demand) (57), Other Agility Definition (60) p. 24
Q15. What is the primary technique your company currently uses to improve supply chain agility? Supply Chain Insights, LLC © 2012

25. Agility Challenges & Efforts
Supply Chain Agility Challenges (Open-Ended Verbatim Responses)
• S&OP does not report into the Supply Chain structure. It maintains an independent force for impartial
influencing of Demand, Supply and Finance
• S&OP is only happening in the markets and not on a global level. We are operating a federated
organizational model. Therefore we have numerous processes in place today.
• Plan S&OP according to your best possible effort in line with your manufacturing capacity and logistic
support
• We have currently put the S&OP process on hold due to implementing a new ERP process and most
people do not physically have the time. However in the mean time we are in the process of re
vamping the process to move up one more level.
• We are a telecommunications provider. We don't manufacture in a traditional sense, so supply chain
(other than the procurement of mobile handsets and network equipment) doesn't occur. Matching
supply to demand is not based on a linear one-to-one relationship between units sold matched to units
consumed. The BOM is complex and statistical only. In saying that, we operate a robust S&OP
process to try to match network and other resources to the products we sell. Questions about S&OP
vs. agility are difficult to answer in our context.
• We're investigating new sales forecasting software for installation in 2013. Ours no longer meets our
needs.
• The challenge in maturing a customer base/market to enable effective forecasting is a significant
challenge in moving S&OP maturity - we are typically a second tier supplier
Base: Total Sample (117) p. 25
Supply
Q26. Is there anything else that you think we should know about your supply chain and your company’s efforts to make it more agile? OPEN-ENDED Chain Insights, LLC © 2012

26. Audience Question
What is your largest challenge in building an agile
S&OP?
• Understanding and support by the executive team
• Clarity of a supply chain strategy and supply chain
excellence
• The role of finance and the budget
• Availability of skilled resources
• Technologies that support the process
p. 26
Supply Chain Insights, LLC © 2012

27. Agenda
Overview & Demographics
What is Agility?
Increasing Complexity of S&OP
So What? Who Cares?
p. 27
Supply Chain Insights, LLC © 2012

28. Key Findings
• Today, S&OP landscapes are more complex. It is not a
bell curve. The average company now has five S&OP
processes. Eight years ago there was one.
• Today, a company is 5X more likely to have a supply
chain center of excellence than eight years ago. However,
there is still a large gap in the effectiveness of S&OP.
• 90% of companies surveyed believe that a mature S&OP
improves agility. However, only 13% of companies have
effectively tied S&OP planning to execution.
p. 28
Supply Chain Insights, LLC © 2012

29. Who is Lora?
• Founder of Supply Chain Insights
• Partner at Altimeter Group (leader in open
research)
• 7 years of Management Experience leading
Analyst Teams at Gartner and AMR Research
• 8 years Experience in Marketing and Selling
Supply Chain Software at Descartes Systems
Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and
Distribution operations for Clorox, Kraft/General
Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
p. 29
Supply Chain Insights, LLC © 2012

30. Where do you find Lora?
Contact Information: loracecere@gmail.com
Blog: www.supplychainshaman.com
Q&A
(over 6000 pageviews/month)
Twitter: lcecere 2950 followers. Rated as the
top rated supply chain social network user.
Linkedin: linkedin.com/pub/lora-
cecere/0/196/573 (2450 in the network)
May 15, 2012 p. 30
Supply Chain Insights, LLC © 2012