1. Effective Sales & Operations Planning -
Laying the Foundation for
Global Supply Chain Management
Mark C. Hardison, CPIM
Banner Pharmacaps
Patrick J. Bettini, CPIM
Oliver Wight Americas
October 30, 2002

2. Agenda
S&OP - A Prerequisite for SCM
Why S&OP was and is the right approach
Fast Track S&OP - Operational < 6 months
Data Becomes Information
Experiences - Benefits & Opportunities
Global Implementation Approach

3. Sales & Operations Planning:
A Prerequisite
for Supply Chain Management

4. Supply Chain Management (SCM)
APICS Definition
The design, planning, execution, control,
and monitoring of supply chain activities
with the objective of creating net value,
building a competitive infrastructure,
leveraging worldwide logistics,
synchronizing supply with demand, and
measuring performance globally

5. The Heart of
Supply Chain Management
Dependence on Infrastructure
Works in concert
Moves quickly and efficiently
Dependence on Information
Speed and Accuracy
One Entity, One Team
Dependence on Eliminating Waste
Everyone works to an integrated, singular plan
Second guessing eliminated

6. Sales & operations planning is a process led by senior
management that, on a monthly basis, evaluates revised, time-
phased, projections for supply, demand, and the resulting
financials.
It is a decision-making process that ensures that the tactical plans
in all business functions are aligned and in support of the business
plan.
The objective of S&OP is to reach consensus on a single, operating
plan which allocates the critical resources of people, capacity,
materials, time and money to most effectively meet the marketplace
in a profitable way.
The horizon for planning is typically a rolling 12 to 18 month
horizon.
Sales & Operations Planning
Oliver Wight Americas

7. S&OP - How the Internal
Organization Conducts Business
Backbone of entire Supply Chain
Systems, processes, external links all
aspects of the business
Logical and methodical flow of meetings
Natural progression of information flow
Key Issues Identified
Focuses management team on resolving
conflicts
Culmination with single S&OP Meeting
Yields a consensus plan

8. S&OP - A Total System Concept

10. Why S&OP Was and Still is
the Right Approach

12. Banner Pharmacaps and
Supply Chain Management
Prior to S&OP
Sales (Demand) avoided having anything to
do with forecasts
Manufacturing (Supply) was blamed for being
inflexible and unresponsive
Budgeted (Finance) performance was often
5-15% in error
Management team did not interact well with
each other - no harmony
Instituted weekly meeting with no change in
processes - only learned bad news faster

13. Banner Pharmacaps and
Supply Chain Management
After S&OP
Sales forecasts monthly and manages with
formal Demand Manager
Manufacturing considered flexible and very
responsive - often involved with Sales efforts
Financial targets are routinely met or
exceeded
Management team is “team” - interact in and
out of work (need reason to golf?)
Many other meetings eliminated - actually
created time instead of consuming more time

14. Banner Pharmacaps and
Supply Chain Management
Common sense approach
Think about who needs what
No surprises
Doesn’t mean there haven’t been tough times
but often headed off
Everyone is aware and understands issues -
no blame assignment
Now extending collaboration to select
customers and suppliers

15. Oliver Wight Fast Track S&OP:
Operational in
Less Than 6 months

16. Banner “Champion”
Starts the Process
New senior manager had experience with
Oliver Wight and S&OP at his previous
company
Recognizes need to implement S&OP to
solve obvious business problems at
Banner
Informally becomes the Banner S&OP
“Champion”

17. S&OP/SCM Relationship and
Foundation
S&OP builds needed integration
Functional alignment is created internally
and externally across the supply chain
Builds the required discipline &
accountability for accurate planning,
timing and data integrity
Require consistent metrics across the
involved functions (internally &
externally)

18. S&OP & SCM
S&OP hierarchy can be developed to
represent the “backbone” of your Supply
Chain
Provides consistent planning model
Aligns accountable functions for direct
collaboration
Requires a monthly “refreshment” of the
supply chain plans based upon recent
performance

19. U.S. Operation Objectives
Produce a quality product
Deliver as promised
Optimize customer service
Reduce lead times
Reduce inventories and overall costs
Increase resource utilization
Profitability to plan

20. S&OP Determined to be the Needed
Solution for Banner
VP/GM previous experience with S&OP
Senior Management attended APICS
meeting by Oliver Wight on S&OP/DM
Oliver Wight engaged to provide business
needs assessment
Situation analysis completed
Action recommendations identified

21. U.S. Operations Problems
Lack of synchronized plans
High inventory levels
Late customer deliveries (poor promises)
New product Intro’s need better
coordination
High manufacturing costs and quality
problems
Flexibility & reaction to market difficult

22. Educating & Selling Senior
Management on Needed Support
High level presentation by Oliver Wight
(Pat Bettini) to explain S&OP & Demand
management
Presentation of assessment findings
Typical problems identified at Banner
Identification of specific process
improvements needed
Management commitment requested

23. Management Commitment to
Implement S&OP
Oliver Wight provides the “vision” and
Champion “sells” senior management
Implementation scope limited to U.S.
Operations (initially)
Timing & rough budget outlined
S&OP Team resources outlined
A start date is announced

24. The S&OP Implementation Plan
Agreed upon scope and timing
Budget development & approval
Identification of key process owners and
support personnel
Appointment of Demand Manager and
S&OP Project Facilitator
“Kick-off” meeting with the Team
S&OP & Demand Management Education

25. Implementation Plan - Continued
Process design (Policy/Procedures)
Product families identified
Rough-Cut Capacity data organized
Systems & Data issues for S&OP
Oliver Wight Template Training
Reports, screens and presentation
graphics identified
S&OP Scenario requirements finalized

26. Implementation Plan - Continued
S&OP calendar developed & distributed
Pilot S&OP cycle scheduled
Limited data used in pilot
Complete pilot & critique
Adjust & ”tune” processes and data
Schedule first full formal cycle
Complete cycle, critique & improve

27. Educating The “Banner Team”
S&OP and Demand Management
education provided by Oliver Wight
Problems and Solutions
S&OP Concepts & Mechanics
S&OP process ownership
Accountabilities & Deliverables defined
OW S&OP Template introduced

28. 1. Long Range
Planning
2. Annual Budget
3. Sales & Operations
Planning
Years
1 2 3 4 5
“S&OP, a rolling monthly update of
the business plan”
Levels of Business Planning

29. Strategic Plans
Business Planning
Master Scheduling
Detailed Material/
Capacity Planning
Plant & Supplier
Scheduling
Execution
Rough Cut Capacity
Planning
Manufacturing
Engineering
Suppliers
Inventory
Records
Work
Centers
Bill
Of
Material
Routings
Customers
Sales & Marketing
Distribution
Financial Plans
Closing the Gap with S&OP

30. Strategic Plans
Business Planning
Sales & Operations
Planning
Master Scheduling
Detailed Material/
Capacity Planning
Plant & Supplier
Scheduling
Execution
Rough Cut Capacity
Planning
Demand
Management
Manufacturing
Engineering
Suppliers
Inventory
Records
Work
Centers
Bill
Of
Material
Routings
Customers
Sales & Marketing
Distribution
Financial Plans
Top to Bottom Integration

31. S&OP Process
Synchronized Business Management
Process
Process owned by the “General Manager”
Process led by senior management team
Reviews and updates time phased future
demand, supply, new products, programs
and resulting financials

32. S&OP Process - Continued
Aligns and re-aligns the functions of the
business monthly
Decision making process
Consensus on a single operating plan
Manages critical company resources
Objective is to effectively support the
marketplace in a profitable way
The planning horizon is 12-18 Months
Builds teamwork

33. S&OP - Business Integration &
Functional Alignment
The Company
Sales And Operations Planning
Marketing
Sales
Product
Mgmt.
Mfg.
Materials
Logistics
Purchasing
Research &
Development
Engineering
Financial
Planning
Accounting
Quality
HR
Admin.
IT
Customer
Service
Etc.
Demand Supply New
Products
Finance Support

34. Pre-S&OP Process Steps
Preliminary Meeting(s)
Objectives
Outputs
 Functional Manager and Middle Management
 Marketing & Sales
 Manufacturing and Materials
 R&D / Project Reviews
 Finance
 Review Performance and Impact on Future
 Build Preliminary Consensus
 Identify Best Alternatives
 Reduce Top Management Time in S&OP Meeting
 Eliminate Surprises in S&OP Meeting
 Agenda
 Product Family Plans
 Assumptions and Vulnerabilities
 Analysis
 Recommendations

35. US Operations S&OP Meeting Cycle
Resources
FinancialReview
Nutritional
Performance
Measures
R&DReview
S&OPMeeting
START
Pharmaceutical
DemandReview
SupplyReview
Executive
New
Products
Demand
Supply
Finance

36. Etc.
Month 2
Month 1
Continuous Monthly
Re-planning

37. S&OP Process Design
Develop US Operations S&OP model
Formal policy & procedures defined
Area review meeting preparation
procedures & agendas developed
Data, interface & collection methods
determined for Banner’s systems and
Oliver Wight Template
Key Process Owners trained
S&OP Pilot scheduled

38. S&OP S&OP
S&OP
Supply
SupplySupply
SupplyDemand
Demand Demand
Demand Demand
NAC360
Banner US Model
R&D
S&OP Process Models

39. Banner Pharmacaps US Operations
S&OP Process Team
R o g e r G o r d o n
O w n e r
U S O p e r a t i o n s
A q u e e l F a t m i
R & D / P r o d u c t
D e v e lo p m e n t
P r o c e s s O w n e r
R o g e r L o p e z
N u t r it i o n a l
S u p p l y
P r o c e s s O w n e r
J e f f T w e e d y
M a n u f a c t u r i n g
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
Z a c h B o w m a n
N u t r i t io n a l
P r o j e c t s M a n a g e r
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
J o h n B a r b e e
N u t r it io n a l
D e m a n d
P r o c e s s O w n e r
M i k e C ie le n s k y
N u t ir t io n a l
S a l e s
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
T i m D o r a n
P h a r m a c e u t i c a l
D e m a n d
P r o c e s s O w n e r
J o h n F r a n c i s
P h a r m a c e u t ic a l
S a l e s
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
B r e n t S t o u d t
P h a r m a c e u t i c a l
S u p p l y
P r o c e s s O w n e r
T o m S w ie r
M a n u f a c t u r in g
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
M a r k H a r d i s o n
P r o je c t
F a c i lit a t o r
J o h n T e a g u e
F in a n c e
P r o c e s s O w n e r
N i c k G a b r i e l e
F in a n c e
S u s a n C o s t e llo
D e m a n d M a n a g e r /
P r o c e s s F a c i lit a t o r
C h u c k W a ld r o u p
P h a r m a c e u t ic a l
P r o j e c t s M a n a g e r
B i ll J o n e s
P h a r m a c e u t ic a l
B u s . D e v e lo p m e n t
B e v E m e r s o n
M a r k e t in g
A n g i e B o w m a n
C u s t o m e r S e r v ic e
B e v E m e r s o n
M a r k e t i n g
A n g i e B o w m a n
C u s t o m e r S e r v ic e
S u s a n K o h a n
M a t e r ia ls
M a n a g e m e n t
N ic k G a b r ie l e
F i n a n c e
Z a c h B o w m a n
P r o d u c t P l a n n in g
Z a c h B o w m a n
P r o d u c t P l a n n in g
Z a c h B o w m a n
P r o d u c t P l a n n in g
Z a c h B o w m a n
P r o d u c t P l a n n in g
D o n D e e g a n
M a t e r ia ls
M a n a g e m e n t
C in d y R o g e r s
F in a n c e
C in d y R o g e r s
F in a n c e
S u s a n C o s t e ll o
D e m a n d M a n a g e r /
P r o c e s s F a c ili t a t o r
P a t J a c k s o n
H u m a n R e s o u r c e s
P r o c e s s S u p p o r t
P a t r ic k B e t t in i
O li v e r W ig h t
C o n s u lt a n t
R o b e r t A n d r e w s
Q u a l it y
N e l s o n C lin e
Q u a l it y

40. Data Becomes Information

41. The Oliver Wight S&OP Template
Software developed to save time and
provided with the engagement
Access based with Excel data
Designed to be an S&OP presentation
tool for senior management
Can be interfaced or used standalone
Brings together all the plans for
comparison & alignment
Provides Demand/Supply Numbers &
graphs

42. Demand View

43. Banner Pharmacaps
S&OP Interface Data Report

44. Banner Pharmacaps
Forecast File
Banner’s business is a “Make to Order”
environment and heavily dependent on
our customer’s relationships with their
customers
We needed customer/product relationship
and created our own database

45. Demand Data Elements
Orders
Units scheduled to be shipped by period
Demand
Difference between forecast for given period
and units on order in same period

46. Demand Data Elements
Bookings
Demand offset by manufacturing lead time
Production
The manufacturing level of planned output,
and, for Banner’s environment, always ties to
the demand for a given period

47. Supply View

48. RCCP Data Elements
Rough Cut Capacity Planning data built
from two sources:
ERP System
• Routing File
• Grouped by Product Class
• Multi-plant mix is calculated percentage
Manufacturing / Materials Management
• Identified constraint operations, resource
requirements, and planned and maximum
capacities

50. Rough-cut Capacity Planning

51. “Waterfall” Example
“What it was, What it was, What it is”

52. “Drill Down”Data

55. Experiences:
Benefits & Opportunities

56. “Lessons Learned” At Banner
Top Management support is critical
Don’t underestimate the workload!
Over-Educate all the “Players” on S&OP
Allow more time for S&OP Software
Template Training
Assign I.T. resources early
Closely monitor I.T.’s progress on
systems interface development and
testing

57. “Lessons Learned” - Continued
Oliver Wight coaching during the first
three to four cycles is critical
Expect 3 to 4 monthly S&OP cycles
before positive results are obvious
Critique each cycle and drive for needed
Improvements

58. Global Implementation Approach

59. Global Roll-Out of S&OP
Worldwide
Mexico
Canada
The Netherlands
India
Global S&OP results
Build on US proven tools
Refined Agendas and Processes
Proven Demand and Supply Models
Refined Roles and Responsibilities

60. Global Roll-Out - Continued
Use Oliver Wight resources again for:
Formal Education
Process Owner indoctrination
Select Pre-S&OP and S&OP meeting critiques
Use S&OP Project Facilitator to manage
global projects and local reinforcement
Utilize data warehousing software to pull
together disparate systems

61. Orchestrating Success
Richard C. Ling,
Walter E. Goddard
John Wiley & Sons
Enterprise Sales and
Operations Planning
George E. Palmetier
with Colleen Crum
J. Ross Publishing
Resources in the APICS Bookstore

62. Questions?