Introductions. Gerald O Sullivan

(1)

Agenda



Introductions



Journey to Business Excellence:

Integrated Business Planning – Next Generation Sales &

Operations Planning by Terry Johnson



Oracle Customer Success Stories

(2)

Introductions

Terry Johnson

Senior Principal – Oliver Wight Americas

Professional speaker, educator and coach for Class A Business Excellence - Keynote at management conferences worldwide

Gerald O’Sullivan

Director, Application Strategy Group

(3)

Key Takeaways

•

Value Chain Planning implementation is a journey, not a project – each phase has its own short time to value, but one should have a

long term vision.

•

Where to start – Focus on the highest bang for your buck within each BU/Region and don’t wait for ERP Implementation or upgrade

•

Pick your critical “green” KPIs – one cannot be perfect at all measures – which KPIs defines you as a company, and meet your

strategy?

•

Create transparency between All departments, Sales, Marketing, Finance, and SC and align your Supply with your Opportunities

(4)

Terry L. Johnson

Oliver Wight Americas

[email protected]

800-258-3862

A Contemporary View of “Best Practice” S&OP

Integrated Business Planning

(5)

Oliver Wight are leading business

improvement specialists

who educate, coach and mentor people

to lead and sustain change

on the journey to business excellence and

outstanding business performance

(6)

We “Wrote the Books”

(7)

Our Clients

(8)

S&OP Has Been Evolving for Decades

1970s – 1980s

Production Planning

1980s – 1990s – Present

Sales and Operations Planning

1990s – Present

Integrated Business Planning (Internal)

Present

Integrated Business Planning

(With Supply Chain Collaboration)

(9)

Advanced Planning Command Center

Integrated Business Planning . . . .

Through

Through People, Processes and Technology

People, Processes and Technology

MANAGEMENT BUSINESS REVIEW DEMAND MANAGEMENT MARKET MANAGEMENT SALES MANAGEMENT PROCUREMENT MANAGEMENT PROCUREMENT MANAGEMENT STRATEGY BUSINESS PLAN PERFORMANCE SUPPLIER MANAGEMENT SUPPLY POINT MANAGEMENT SUPPLY REVIEW PRODUCT MANAGEMENT REVIEW RESOURCE MANAGEMENT PORTFOLIO MANAGEMENT PROJECT MANAGEMENT SUPPLY CHAIN MANAGEMENT

“Aggregate”

Planning

“Detailed”

Planning

&

Execution

MANAGEMENT BUSINESS REVIEW DEMAND REVIEW SUPPLY REVIEW PRODUCT MANAGEMENT REVIEW Demantra Demantra MANAGEMENT BUSINESS REVIEW SUPPLY REVIEW PRODUCT MANAGEMENT REVIEW Procurement Rapid Planning Sourcing Procurement

Real-Time Sales & Operations Planning

Predictive Trade Planning Agile PLM Projects & Primavera Demand Management Advanced Supply Chain Planning HCM Strategic Network Optimization

Demantra Integrated Business Planning

Hyperion Planning

(10)

S&OP/IBP Is a Simple, Common Sense Process

for Aligning Company Plans Every Month

(11)

Introductions-What are your experiences?



Are you practicing S&OP – what vintage?



Are you generating significant benefits?



Is S&OP a key decision making process for your business?

(12)

S&OP/IBP Ownership & Accountability

GM /CEO

Dir / VP

(13)

Broadly Speaking, the Differences Between S&OP

and IBP Are:

1. Greater financial integration

– Income statement, balance

sheet, cash flow projections (including anticipated results

from projects and initiatives) across the planning horizon

resulting in improved information for decision-making and

greater accountability; financial performance metrics

2. Inclusion of strategic initiatives and activities

in the monthly

management process, reinforcing that one primary

management process is used to run the business

3. Improved simulation

– Changing operating and financial

parameters resulting in improved contingency planning

(volume, mix, pricing, costs, SG&A)

(14)

Broadly Speaking, the Differences Between

S&OP and IBP Are:

(con’t.)

4. Easier translation from detail information to aggregate and

aggregate to detail

enabling quicker, more timely

simulations and greater granularity of information for

operations and finance

5. Improved decision-making

– Integrated reconciliation

keeping decisions at the lowest practical level

6. Improved trust

throughout the management team with one

process, clear accountabilities and commitment to “Class A

Behaviors.”

(15)

Improved Business Results

Through

Integration

-- Alignment and Synchronization

Excellent Performance Requires Continuous Focus,

Alignment (Realignment) and Synchronization of

People, Processes and Tools

(16)

To create and sustain a successful enterprise … multiple business processes require the integration, “communication” and precision of a watch!

The more effective the processes, the more predictable the

output!

Greater financial predictability is one of the driving forces

for performing the S&OP process well!

(17)

(18)

(19)

Managing Products

Managing Demand

Managing Supply

IBP Integrates Core Processes & Finance and Ensures

Alignment / Realignment With Business Strategies

F

I

N

A

N

C

E

PV977/015

(20)

From My Personal Perspective . . .



Now the knobs are connected . . . Decisions turn into action!



Of all the benefits . . . Management teamwork was a bonus!



Thought we wouldn’t be in business . . . Look at us!

(21)

Typical Results – Oliver Wight Clients

Increased Forecast Accuracy 18 – 25% Increased Sales Revenue 10 – 15% Increased On-Time Delivery 10 – 50% Inventory Reduction 18 – 46% Safety Stock Reduction 11 – 45% Increased Productivity 30 – 45%

Source: Oliver Wight

(22)

Best Practice Is Now to Integrate Product

Portfolio Management Into S&OP/IBP

(23)

A Focus on and Integration of “Product Management” into the S&OP Process is Required to Successfully Grow the Business

New Product Demand Plan Inventory Plan Production Plan

Product Management – Business Reconciliation

 Will our collective programs deliver commitments? Annual plan / Strategy  Enough new product plans in the pipeline?

 Are the priorities still correct? Working on all the right ones?  Projects still attractive – revenue & margins?

 Consensus impact on current portfolio – revenue / margin?  Impact on the organization – resources / priorities / capacity?

(24)

Best Practice Is Now to Incorporate a Financial

Appraisal into the S&OP Process

(25)

Bridging the Gap - Financial Plans & Reality

Integrated

Business Planning

Ensures that all processes (pieces of a business) are working together to produce a single, agreed to correct time ($$$)! Single Set of Numbers CEO /COO Board Street

(26)

The Finance Organization has Specific

Responsibilities during each S&OP Review

Ensure that Demand and Supply has the financial information that they need to prepare for S&OP meeting

Work with Product Management, Demand and Supply to ensure one set of numbers Review Product Management, Demand

and Supply plans from a financial

perspective – challenge assumptions that do not seem realistic and ensure that plans are financially achievable

Present financial implications of Product Management, Demand and Supply plans at the MBR, compare plans to annual and strategic objectives

(27)

How Are Misaligned Plans and Performance

Concerns Addressed?

(28)

Integrated Business Planning

Strategy

4/5 years horizon Business Plan – 2/3 years horizon

S&OP –

24 Months horizonS&OP – 24 Months horizonS&OP –

24 Month Horizon Top Down Process Bottom Up Process 1) What is

different about the assumptions to cause the gap…?

2) Is the assumption

change transient or a trend…?

3) What plans can I now put in place to close the gap…?

(29)

Executive Team Reaches Consensus, Approves

Plans and Makes Needed Decisions in the MBR

Executive Led

(30)

Inventory Supply

Demand

AGREED ACTIONS, DECISIONS AND RECOMMENDATIONS

Identification of key issues identified from the Integrated Reconciliation Review: Actions Agreed

Decisions required

options and alternates costs and implications

recommendations

Focusing on “Management” Information

The One Page Summary by Family

CHANGES EXPLAINED

Explanation of the change depicted in this month versus last month or versus annual plan projections

KEY ASSUMPTIONS

Customers Markets

Product Management and rate of NPI Supply / Distribution Resource

VULNERABILITIES / OPPORTUNITIES Identify key upside / downside issues for this family from an understanding of the

assumptions

(31)

Information Management – A Critical Component

31 Compare alternate scenarios Analyze key Planning metrics Analyze profit and loss Analyze constrained forecast Drill down to relevant details

(32)

S&OP / IBP – The Issue Is:

Most companies that have Sales and Operations Planning have set

too low an ambition

and treat it as:

Logistics and Supply Chain planning process only

Demand & Supply Volume Balancing 1 to 12 months only

(Fiscal year)

And they believe that they

already have the process in place …

so

they miss out on the benefits of

doing it well

.

Executive teams that use S&OP/IBP as

the

primary

management process to

run the business

achieve the

greatest benefits and ROI.

(33)

Achieving Benefits - Two Keys to Success:

Financial Alignment & Executive Led and Owned

Financial Plan

Alignment

Executive Leadership

& Ownership

(34)

S&OP … A Necessity?



Harvard Business Review: "... S&OP is

indispensable

to

creating a world-class global supply chain, which in turn

would become a major competitive advantage for the

company.”



AMR Research at Stanford Global Supply Chain

Management Forum “… S&OP is the

ultimate best

practice

.”

“Virtually all enterprises, irrespective of starting S&OP capabilities, size, and industry, generated improvement in key business

performance with an S&OP program, sufficient to justify investment in these programs.”

The Sales and Operations Planning Benchmark Report: Leveraging S&OP for Competitive Advantage – The Aberdeen Group

(35)

S&OP/IBP Should Be Implemented Quickly…

And Continuously Improved

• Proven implementation process

• “Fast Track” implementation -- takes months, not years • Continuous improvement approach -- improve each cycle

• Formal progress assessment points and documentation of results

Integrated Reconciliation Financial Appraisal Product Review Supply Review Audit/

Assess EducationExecutive ImplementationEducation Demand

Review

Implement the Process

Cycle 0 Cycle 1… Cycle 4… Cycle 7… _{Cycle 9}

Assess Progress Performance Measures Assess Progress Improve CommunicationsImprove

Communications ProblemProblemSolvingSolving PreventionPreventionProblemProblem

Tactical/ Strategic Decision Making Tactical/ Strategic Decision Making Document Results Management Bus. Review Pr oc es s D es ig n In ve sti ga te /D ec id e

(36)

Final Message … Simply Stated

1. S&OP/IBP is Organized Common

Sense

2. Implementing S&OP/IBP is worth the

effort

3. Companies that do S&OP/IBP

well

make more money than those that

don’t do it well

4. S&OP/IBP continues to evolve

5. S&OP/IBP is the industry best

practice model today

Key Words: “Organized” and “Integrated” “Common sense is

not so common”

(37)

Agenda



Introductions



Journey to Business Excellence:

Integrated Business Planning – Next Generation Sales &

Operations Planning by Terry Johnson



Oracle Customer Success Stories

(38)

38

Oracle Value Chain Planning Solution

Complete ● Open ● Integrated

●

Modular

Demand Signal Repository Demand Management and Advanced Forecasting Collaborative Planning Production Scheduling Global Order Promising Service Parts Planning Trade Promotion Planning and Optimization Advanced Supply Chain Planning Strategic Network Optimization RT Sales and Operations Planning Adv. Planning Command Center

• Single source of truth

• Integrated with ERP

Deductions and Settlement Management Rapid Planning Inventory Optimization Planning Manufacturing Operation Center

(39)

•39

Synchronize Demand Signals - Sense & Shape

POS Inventory Movement Store Inventory DC Inventory Shipments To Retailer Weather Warehouse Withdrawals Demand Forecast ASN Purchase Orders Loyalty Promotions Campaign Calendar Shelf Price $ Geo-Demo Trusted 3rd Party Data Interchange EDI-XML-GDSN DSR DSR Trade Management Trade Optimization

Sales & Operations Planning Demand Planning Demand Signal Repository C a p tu re C le a n s e V a li d a te A g g re g a te H a rm o n iz e Leverage Downstream Demand Data of all types

Capture, Cleanse &

Harmonize Data Leverage Data inDownstream

Processes

Network Optimization Distribution Resource Planning

Product Lifecycle Management Transportation Management

(40)

Compare alternative business scenarios Analyze key planning metrics Analyze profit and loss Evaluate supply constraints Link directly to detailed planning

Engage Managers With IBP Dashboards

KPIs for key decision makers

 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  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

(41)

Oracle Integrated Business Planning

Provides critical link between operations, sales and finance

 Planning driven from key performance indicators to engage managers and

planners

 Aggregate roll up for financial reconciliation; supports $ to units

synchronization

 Workflow coordinates 9-step process and drives consensus process to gather

sales forecast and customer demand

 Works with Oracle ERP and legacy ERP applications

 What-if simulation to examine alternative plans

 Strategic supply chain analysis and inventory planning

Supply Chain Planning Inventory Optimization Demand Management Performance Management Strategic Network Optimization Sales and Operations Planning

Financials Targets

Sales Forecast

(42)

Interactively Reconcile To Financial Plans

Review financial implications of operational plans

Compare consensus forecast, constrained forecast, and financial plan

Track YTD performance of aggregate fiscal year

constrained forecast vs. budget

View Demand Plan and Supply Plan translated into revenue, cost and gross margin by period  Designed to integrate with financial planning and budgeting applications  Supports top-down

and bottom-up plan reconciliation

 Enables profitable

demand/supply

balancing to ensure company goals are achieved  Designed to integrate with financial planning and budgeting applications  Supports top-down

and bottom-up plan reconciliation

 Enables profitable

demand/supply

balancing to ensure company goals are achieved

(43)

Compare scenarios for informed decision making

Profit-optimized supply scenarios Optimized demand shaping

Scenario Analysis Provides Alternatives

Simulate and analyze interactively

 Powerful what-if simulation capability enables alternative scenarios to be tested  Assesses supply chain capacity to meet demand changes  Enables lowest cost, most profitable, best customer service level and other scenarios to be evaluated  Powerful what-if simulation capability enables alternative scenarios to be tested  Assesses supply chain capacity to meet demand changes  Enables lowest cost, most profitable, best customer service level and other scenarios to be evaluated

(44)

Cost Volatility and Low Margin

Fierce Competition

Products becomes a commodity

Pressure on Product Life Cycle

(45)

Alcoa moved to a global demand and supply review greatly improving their sales and operations planning process

Motorola achieved weekly sales and operations planning process that incorporates demand and supply planning cycles to improve supply chain responsiveness

Organic Valley streamlined sales planning, demand management and

operations planning to improve revenue and save $6M in trade spend Zoran integrated supply/demand review in semiconductor industry Baxter rolled global demand/supply plan across more than 90

countries

VTech reduced order fill rate from 55% to 95%, increase inventory turns by 100%, reduced price protection claims by 40%

Kodak has aligned demand creation activities with critical components to improve customer service

Wilton reduced inventories by 20% while improving customer service

(46)

Cabot MicroElectronics Achieves value

with VCP OnDemand

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." said Tim Roessler , CIO

“User adoption happened very quickly, almost automatically, we were surprised how easily it went with no complaints from the field” said James Dillon Dir Global Sales Ops 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

CHALLENGES/OPPORTUNITIES

• 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

July 2009

Internal Use Only

(47)

Emerson Real-Time Sales & Operations Planning

SOLUTIONS

• Demantra Demand Management

• Demantra AF&DM

• Demantra RT S&OP

• Demantra Predictive Trade Planning (PTP)

• 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

• 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

(48)

General Parts, Inc./CARQUEST

CUSTOMER PERSPECTIVE

“Oracle’s Value Chain Planning has enabled CARQUEST to get to the Holy Grail of Supply Chain-Improve service & sales while reducing inventory .”

- David Collier, Director of Demand

Planning

• Industry: Aftermarket Auto Parts Distribution • Annual Revenue: US $2.4 Billion

• Employees: 23,000 • ERP: EBS

• CARQUEST Auto Parts is the premier supplier of

replacement products, accessories, supplies and equipment for virtually all makes of automobiles, as well as light and heavy-duty trucks, off-road equipment, buses, recreational vehicles and agricultural equipment. Additionally, it distributes and sell tools, equipment, chemicals, paint and accessories.

• Reduce inventory cost

• Increase revenue (avoid lost sales) • Improve customer service

SOLUTIONS

• Demantra Demand Management (DM)

• Advance Forecast Demand Modeling (AFDM)

• Real Time Sales and Operations Planning (RT-SOP) • Advanced Supply Chain Planning (ASCP)

• Constraint Based Optimization (CBO) • Inventory Optimization (IO)

• Strategic Network Optimization (SNO)

RESULTS

• Reduced inventory nby $20

Million

• Expect to reduce obsolete

inventory sat store level an average of $200,000 per store

• Identified opportunity to add high

velocity items at the store level an average of $100,000 per store

Month 2008

Internal Use Only

(49)

Evolve at your own pace to a best in class solution

World Class Value Chain Solutions

Eliminate spreadsheets

From less complex to best in class

Competitive Necessity Competitive Advantage

In c re m e n ta l V a lu e Eff ec tiv en es s Eff icie nc y O pt im iza tio n

Manage rolling forecasts Collaborate with all constituents

on one number Use basic statistics, alerts, and

seeded worksheets Deploy fast MRP across multiple

ERP instances

Focus on return on assets Optimize networks and sourcing

decisions

Collaborate with customers Constraint based supply chain

planning

Executive dashboards and reporting

Optimize inventory holdings and deploy inventory networks Use advanced statistics and causal

factors

Real-Time Sales and Operations Planning

Focus on return on assets Optimize networks and sourcing

decisions

Collaborate with customers Constraint based supply chain

planning

Executive dashboards and reporting Manage rolling forecasts

Collaborate with all constituents on one number Use basic statistics, alerts, and

ERP instances

Manage rolling forecasts Collaborate with all constituents

on one number Use basic statistics, alerts, and

ERP instances

(50)

Key Takeaways

•

Value Chain Planning implementation is a journey, not a project – each phase has its own short time to value, but one should have a

long term vision.

•

Where to start – Focus on the highest bang for your buck within each BU/Region and don’t wait for ERP Implementation or upgrade

•

Pick your critical “green” KPIs – one cannot be perfect at all measures – which KPIs defines you as a company, and meet your

strategy?

•

Create transparency between All departments, Sales, Marketing, Finance, and SC and align your Supply with your Opportunities