This is a quick view of the process and the importance to to have a aligned the stakeholders into the process.

1. Next Generation of S&OP
Raúl
Alejandre
García
Industry
Expert
Consumer
Products
October
2012

2. Understanding that
• You
are
familiar
with
S&OP
Process.
• You
understand
the
basic
mechanics
and
steps
of
the
process.

3. Top 3 Pressures to Improve
Sales and Operations Planning
Improve
top
line
revenue
59%
45%
53%
56%
Reduce
supply
chain
operaIng
costs
Management
of
increasing
demand
volaIlity
45%
Customer
mandates
for
faster,
more
accurate
and
more
unique
fulfillment
26%
0%
Aberdeen
Group,
July
2010
40%
31%
Need
to
uIlize
manufacturing
assets
with
maximum
efficiency
10%
49%
35%
20%
30%
40%
Percent
of
Respondents,
n=196
2009
50%
2010
60%

4. Why do you care about S&OP?

5. Your organization should be
aligned… S&OP will do this!!!!

6. So before we get started… who is
this guy in front of you?
BUY
DESIGN
PLAN
BUY
MAKE
STORE
MOVE
SELL
CUSTOMER
SERVICE
Supply Chain Planning
Manufacturing
Supply Chain Execution
Customer Service
S&OP / Demand Planning
Supply Chain Performance Management and Continuous Improvement Change Agent

7. What would I like for you to take
away from today’s session…
Understand
how
S&OP
will
make
your
organizaIon
beYer
financially
and
operaIonally
Think
about
how
S&OP
may
require
you
to
rebuild
your
current
business
processes
and
pracIces
What
it
will
take
organizaIonally
for
S&OP
to
be
successful
at
your
business
What
does
S&OP
look
like
and
how
do
you
measure
it’s
success

8. What would I like for you to take
away from today’s session…
Focused
on
how
your
can
enable
your
organizaIon
and
your
teams
to
make
beYer
and
more
Imely
decisions

9. Is S&OP right for your organization?
•
•
Sales
“
I
think
I
can
sell
100,
but
I
want
to
make
sure
I
keep
my
boss
happy
by
making
my
number,
so
I
will
say
80.”
•
•
Finance
“Our
numbers
are
hard
to
es?mate
and
I
can’t
rely
on
the
rest
of
the
organiza?on,
so
I
will
do
my
best
and
create
the
P&L”
•
•
Brand
MarkeIng
“I
can’t
tell
anyone
when
this
new
product
will
be
ready,
it
must
be
kept
a
surprise.”
•
•
Factory
Planner
“I
can’t
make
this
SKU
today,
so
I
will
just
pull
something
else
into
it’s
place
and
make
it
next
week.”
•
•
Supply
Planner
“I
think
we
will
sell
more
than
the
forecast,
I
can
always
adjust
it
down
later,
so
I
will
add
20.”
•
•
Demand
Planner
“We
are
con?nuing
to
sell
less
than
our
plan
so
irregardless
of
what
anybody
else
says,
I’m
going
to
reduce
my
forecast
by
50.”

10. Pain points experienced by typical organizations in
early S&OP process maturity…
§
§
§
§
Too
many
spreadsheets
and
systems
involved
in
the
S&OP
process
Cannot
get
users
to
provide
input,
especially
sales,
markeIng
and
execuIves
Spend
more
Ime
assembling
data
than
planning
Outdated
demand,
supply
and
finance
plans
§
§
§
§
Working
at
aggregates
only
and
can’t
connect
to
detailed
mix
Cannot
change
demand
and
view
impact
on
supply
and
financials
right
away
Too
hard
to
simulate
and
compare
planning
scenarios
Planning
decisions
made
without
considering
supply
chain
constraints
and
profitability
§
§
§
ExecuIve
S&OP
views
lack
latest
informaIon
ExecuIve
S&OP
meeIng
informaIon
is
hard
to
share
and
is
disconnected
from
planning
tools
Process
is
not
controlled
and
stakeholders
don’t
know
what
is
expected

11. Sales & Operations Planning Problem
Planning objectives, data and measurement vary by department
MarkeIng
Sales
Demand
Planning
New
Products,
Promo3ons,
Events
Sales
Forecas3ng
Consensus
Demand
Planning
Ÿ Event
Horizons
Ÿ Campaign,
Product
Ÿ Units
&
Value
Ÿ Fcst,
Actuals,
Budget
Ÿ Weekly
for
next
3
months
Ÿ Customer
level
Ÿ Units
&
Value
Ÿ Quota,
Forecast,
Performance
Different
Views
Ÿ Weekly,
Monthly
next
12
months
Ÿ Product,
customer,
category
Ÿ Units
Ÿ Fcst
Accuracy,
History,
Trends
Different
Time
Horizons
OperaIons,
Supply
Planning
Finance
Materials,
Produc3on,
Inventory
Mgmt
Ÿ Daily,
weekly
Ÿ LocaIon,
resource,
material
Ÿ Units,
capacity
Ÿ UIlizaIon,
Coverage,
Turns,
Lead-­‐Imes
Different
Levels
of
AggregaIon
Planning,
Budge3ng
Ÿ Monthly,
Quarters
Ÿ Geo,
Division,
Cost
Center
Ÿ Value
Ÿ Revenue,
Working
Capital,
Velocity
Different
Conversions

12. S&OP Overview

13. What is S&OP
Satisfy Needs
Demand
Supply
Service Levels
Product Availability
Response Time
Financial Reporting
Distribution Points
Customer Satisfaction
Utilize Resources
Inventory/Cash Flow
Manpower
Facilities
Suppliers
Capital

14. What is S&OP
Annual Budget / Plan
Gap Analysis
Forecast
New markets
New customers
New products
Merges and acquisitions
S&OP is a business process that allows companies to make effective and
timely business decisions that lead to overall improved profitability and
customer satisfaction

15. What is S&OP
Forecast
Annual Budget / Plan
It is equally as important to understand what is going good in your
business; learn from your successes

16. What does S&OP look like
Demand
Planning
Demand
Review
Product
Supply
Review
Partnership
Meeting
S&OP
Meeting
ES&OP
Meeting
Decision / Exception Management Funnel
Consensus Demand Planning
Innovation
Strategy
Pricing
& Trade
Strategy
Supply Chain
Synchronization
Customer
Strategy
Alignment & Agreement
Procurement
Strategy
Business Strategy (Long Range Planning)
Annual
Business
Plan

17. Key Activities
Process
Steps
High Level Process View
1
Demand
Planning
Meetings
• Review previous
month’s
performance
• Review and gain
consensus on 18
month
unconstrained
demand plan @
business unit /
brand / category
level
• Document
assumptions
• Identify, problemsolve, and
document major
anomalies, quality,
and service issues
2
Demand
Review
Meeting
• Review previous
month’s performance
• Review summary
consensus demand
plan
• Review significant
demand related
variances to identify
root cause
• Identify and
document open
issues, assumptions,
opportunities and
risks
• Develop gap closure
plans / options
3
Product
Supply
Review
• Review significant
supply related
issues, identifying
plans to fill gaps
• Identify and
document open
issues,
assumptions,
opportunities and
risks
• Develop gap
closure and
continuous
improvement
options
• Review SPI at
MBU level with
lower level
exceptions
4
Partnership
Meetings
• Review exceptions,
capacity issues, over
inventory positions
and options analysis
and determine
recommended action.
• Review new product
initiatives timelines
• Review significant
exceptions in end-toend performance
• Final alignment on
sales & operations
plan at business unit
level
• Align on sales and
inventory dollar plan
5
S&OP and
ES&OP
Meeting
• Verify closure of
previous month’s
action items and
open issues
• Review previous
month’s
performance
• Gain approval on
synchronized
demand & supply
plan
• Review and resolve
current open issues
• Review significant
changes in end-toend performance
• Provide feedback
to S&OP
participants

18. What are KPI’s of S&OP success
Key Performance Indicators (KPIs), as a tool for the S&OP process, have to be established at both
the overall process level and within each functional area. Many times issues will occur at the
functional level and not reflect immediately at the overall process view.
•
•
•
•
•
•
•
Overall Planning process: All measures (pounds/units/$) vs. plan; Overall
measures (pounds/units/$) variances; Overall fill rates; Overall inventory levels for
RAW, WHIP and FG; Planning bias; Perfect order
Sales, Marketing: Customer Fill Rates; Forecast Variances; Sales and Finished
Goods Inventory by promoted group; Product Life Cycle forecasts; SKU
complexity; Assumption accuracy
Production: Schedule Attainment; Quality Measures; WIP Inventory; MFG cost
and variances
Procurement: Raw Material Inventory; Quality Measures; On-Time delivery;
Material Cost
Logistics / Order: Order and Transportation Lead Times; Overall Cost; Finished
Goods Inventory across distribution locations
Financial: COGS; Profitability; Cash flow
Process: Attendance; Participation; Benefit; Documentation; Process critique

19.
Sales & Operations Planning Maturity Model
Evolutionary process, different steps of maturity
Strategy
Balance:
S&OP
Stage 1: Reacting
Stage 2: Anticipating
OP
S
Stage 3: Collaborating
OP
S
OP
S
Stage 4: Orchestrating
S
OP
Demand sensing, and conscious
trade-­‐‑offs to drive an optimized
demand response
Goal
Development of an operational
plan
Demand and supply matching
Cross-­‐‑
functional
Alignment
Supply chain-­‐‑driven process,
with strong sales or operations
basis leading to imbalance
Lack of goal clarity
Supply chain orchestrates
S&OP
Supply chain-­‐‑driven process
Business takes ownership of
that achieves optimum forecast
and supply response to demand
input, output and results,
including financial impact of
decisions
Business ownership at multiple
levels, with strong participation
from executives and finance
Collaboration and consensus
extends beyond the enterprise to
achieve end-­‐‑to-­‐‑end value creation
Progress and
Technology
Emerging
Inconsistent and marginal
Tools are typically Excel/ERP
Tailored to business model
Formal one-­‐‑size-­‐‑all structure
Tools extend to what-­‐‑if
Tools extend to forecasting
analysis and demand and
SCP and inventory optimization
supply, financial reconciliation
Balanced, dynamic and event-­‐‑
driven
Stronger connection to strategic
planning and execution
Tools extend to risk-­‐‑value trade-­‐‑offs
and value optimization
Metrics
Order fill rate, asset utilization
and inventory levels
Order fill rate, forecast error,
inventory turns and functional
costs
Demand risk, customer service, cash
flow, market share and profit
Gartner (April 2011)
Profitability
Demand error, customer
service, working capital
and total costs

20. Guidelines your
organization should follow
Collaborative
Decision Making
Why?
FINANCIALS
Meaningful
One View of Demand
KPI Driven
Standardized
SPONSORSHIP

21. When S&OP will work fine
Does
exist
a
Manager
or
Director
running
behind
the
process
who:
• Is
organized
and
always
prepared.
• Knows
the
process
very
well.
• Hard
working.
• Has
the
respect
of
all.
Will
work
as
a
good
ConInuos
Improvement
Process
because
everybody
knows
the
ExecuIve
Team
who
wants
this
and
hold
everyone
accountable.

22. You have a choice to make…
Take the journey…

23. Gracias!
Raúl Alejandre García
Industry Expert Consumer Products
raleja@hotmail.com
hOp://www.linkedin.com/in/mxraleja