Essential Lessons from Monthly Business Planning at Nestlé

Monthly Business Planning at Nestlé DSD – Essential Lessons

Geoff Fisher – Dir. Of Supply Chain, Nestle DSD

Anthony Reese – Partner, IBP2 CPIM

Speaker Background

Geoff Fisher Director of Supply Chain, Nestle USA – Direct Store Delivery Div. Before merging with Nestle, he served in the same capacity for Dreyer’s Ice Cream where he was a member of the Supply Chain team for over 14 years. Before starting his rewarding (and tasty) career in ice cream, Geoff was a consultant for 9 years with Andersen Consulting and Price Waterhouse in the Consumer Products and Retail industry segments.

2

Speaker Background

Anthony Reese CPIM Is a founding partner at Integrated Business Planning Associates and is a visionary leader with passion for bringing exciting products to market. His early interest in cars led to his first job as an auto mechanic and then into an impressive career in the automotive/motorcycle industry. Along the way, Tony earned two advanced degrees from MIT and now brings in-depth knowledge of Product Lifecycle Management along with strong understanding of Sales and Operations Planning and its current best practice form, Integrated Business Planning.

3

Presentation Outline

• A Business Overview

• Our Planning Challenges

• Getting Started

• The Winning Game Plan

• So What Happened?

4

Nestlé DSD – An Overview

Great Brands

National Network

Superb “To The Shelf” Service

5

Nestlé DSD – An Overview

= Happy Consumers!

6

Business Planning Challenges

• Highly seasonal

• Highly promoted

• Large network of demand points

• Capacity Constrained

• Organizational Challenges

7

Planning Challenges – Seasonality

• Two Highly Seasonal Businesses

• Two Separate Planning Teams

• One Supply Chain

8

Planning Challenges – Promotions

• Our Promotions Do Well

• Planning For Them Is Challenging

9

Planning Challenges – Geography

• Over 100,000 Sell To Locations

• Over 75 Warehouses

• -20F Cold Chain

• Many Plants & Lines

• Over 1,000 SKUs

• Short Shelf Life

• A Daily & Weekly Business Pulse

• A High Service Level Expectation

10

* Demonstrative Data Only

Planning Challenges – Constraints

• Tight capacity on popular product lines

• Requires longer range forecast accuracy

11

Planning Challenges – Organization

• PLAN is king and predictability is rewarded

• Unwillingness to call off of Plan

• Skip over trade realities until too late

Below Plan Plan

S&OP Forecast?

12

Getting Started

• The Right Coach

• Making A Case For Change

• Start The Project

• Remain Open To Change

13

Getting Started – Find A Coach

• Design A Winning Game Plan from Experience

• Guides Project Around Potential Pitfalls

Alright Folks! I will show you how we can win at this game! But first – let’s make sure we are warmed up and ready to

do the right work!

14

Getting Started – The Case For Change

Huddle Play: Consensus Demand Only

10 20 30 40 50 40 30 20 10

10 20 30 40 50 40 30 20 10

X

X

X

X

X X X X X X X

W

I

N

L

O

S

E

Partial Huddle: Finance &

Demand Planning

Other Team Members On The Sidelines

15

Getting Started – The Case For Change

Lack of a huddle forced “at the line” audibles

10 20 30 40 50 40 30 20 10

10 20 30 40 50 40 30 20 10 X

X

X X

X

X

X

X

X

X

X

W

I

N

L

O

S

E

Players Join The Game After The Huddle – Ready

To React

16

Getting Started – The Case For Change

Other operational forecasts not aligned

Many “broken plays” and missed scoring opportunities – big plays always needed to achieve PLAN

17

Getting Started – Project Start Up

• Gained executive support for an S&OP Project

• Built a core team

• Some skeptics thought we were fine

• As-is Sessions were cathartic – the dysfunction was unanimous

18

Getting Started – Changed Game Plan

• Crossed paths with a new Monthly Business Planning project out of HQ

• Saw the approach as aligned with our To-be approach with the addition of better customer alignment highlighted during the As-is

19

Winning Game Plan

• Define The Core Process

• Build The Transition Plan

• Execute Flawlessly

20

The Winning Game Plan – MBP

Monthly

Account

Review

Updated Customer Demand Forecast

Customer-Level Inputs

Monthly

Sales

Review

Updated Business Demand Forecast

Consol. Business Demand Forecast

Monthly

Gap

Review

Updated P&L

Forecast & Scenarios

New P&L Forecast

Monthly

Forecast

Review

Aligned Business Forecast

Full Business Forecast

Monthly

Operations

Review

Aligned Supply

Outlook

Aligned Business Forecast

21

The Winning Game Plan – Transitions

22

The Winning Game Plan – Execution

• Assigned meetings to functions/leads

• Rolled out one meeting at a time, get good at the basics

• Broke old habits and held Execs out of early cycle meetings

• Created safe environment for start up meetings and feedback

23

So What Happened?

• Results Achieved

• Best Practices

• Take-Aways

24

Results Achieved

• Best Ever Forecast Performance (>5 percentage points improvement)

• Better and Earlier Alignment on “One Number” (Proactive decisions made earlier)

• Cross-functional Engagement (Right People + Right Topics + Right Time = Trust)

• Achieving Plans with Less Stress (Eliminated off-cycle meetings/decisions)

• Worldwide Standard Process for S&OP

25

Lessons Learned – Best Practices • Create a Safe Environment

• Start with unconstrained demand

• Constrain Transparently

• Align P&L on Constrained Demand

• Collaborate – Share Leadership across all key planning functions (Right People, Right Topics, Right Time)

• Track Implementation To Ensure Process Fidelity

26

Lessons Learned – Take-Aways

27

Our MBP Mantra

When you are not feeling the MBP magic, just boldly say our project slogan…

“MBP IS FOR ME!”

And you will feel happy inside

28

Questions

Contact Information

Geoff Fisher, Oakland, California

geoff.fisher@us.nestle.com

Anthony Reese, San Jose, California

anthony.reese@ibp2.com