Overcoming the “Catch 22” of Sales and Operations Planning Implementation Joe Shedlawski, CPIM...

Overcoming the “Catch 22” of Sales and Operations Planning Implementation

Joe Shedlawski, CPIM

R.A.Stahl Company

• Introduction

• Why Engage Top Management

• The Elements of Successful S&OP

• What's the Challenge (Catch '22’)

• How to Engage Top Management

• Discussion

Agenda

Introduction

A catch-22 is a paradoxical situation from which an individual cannot escape because of contradictory rules

What is a Catch 22?

Why Engage Top Management?

Top Management’s Role:

“Keep the Herd Moving, Roughly West”

Energy Alignment

Accomplishment Accomplishment

Executive S&OPA process to raise and reconcile

disagreement/conflict, agree upon, & communicate THE company game plan

Sales/Marketing(Units or $ by Family)

Operations(Units/hours/

Material)

Finance(Gross Revenue)

Product Development(New Product Issues)

Implementation Alternatives

Hard Benefits

• Customer service UP• Inventory DOWN• Obsolescence DOWN• Freight cost DOWN• Order lead times DOWN• Supplier lead times DOWN• Time to launch new products DOWN• Plant productivity UP

Soft Benefits

• Enhanced teamwork• Improved communications – institutionalized • Better decisions with less effort and time• Better $$$ plans with less effort and time• Greater accountability and control• Enhanced execution of strategic plans• Window into the future• Energy alignment: Keep the herd

moving roughly west

The Elements of Successful Executive S&OP

•Which Ones?•Timing/Sequence•The Details•Products/SKU’s/Orders•Tactics/Execution•Weekly/Daily 1-3 Months•Middle Mgt. Responsibility

•How Much?•Rates•Market Facing Families•The Big Picture•Strategy/Policy/Risk•Monthly / 18 - 36 Mos•Executive Responsibility

Volume

Mix

Demand Supply

ProActive Behavior

ReActive Behavior

Top Management’s Place

What’s the Challenge?

Keeping that herd moving roughly west is more of a cultural challenge than a

technical one!

• Interpersonal relationships reflect the culture of an organisation

• The sum of those relationships defines the organisation’s culture

• These relationships reflect a web of implicit and explicit agreements throughout the organisation

Culture

Success with Executive S&OP consists of:

• 10% technology• 30% process definition and discipline• 60% culture change

Research (AMR study, 2010)

Cultural Changes:Pre-S&OP

• Lack of involvement by Top Management

• Acceptance of poor data

• Silo mentalities that inhibit interdepartmental collaboration

• Reactive decision making

• Post-S&OP• Inter-functional

collaboration, with open trust between departments

• Data-driven decisions• High level of cross-

functional discipline Proactive approaches to demand and supply plans

* How S&OP Changes Corporate Culture: Results from Interviews with Seven Companies

Stahl/Mello; Foresight Journal: Winter 2010

In Executive S&OP, it’s necessary to voice disagreements! Management must:

• Create a culture that allows the Ugly Moose to be put on the table -- so that they can completely and effectively resolve disagreements and conflict, setting proper:– Policy– Strategy– Risk assessment– Performance measurements

Before it’s in the MIX Space!

Top Management’s Role

• Disagreement has two parts:– Substantive issue– Emotion behind that issue

• Disagreement becomes conflict when the emotion is not completely addressed

• Lasting conflict resolution must deal with both elements of disagreement

• Doing that effectively can be learned:– With a motive to do so and

– A framework on which to work

Conflict Resolution *

* “Getting to Resolution” Stewart Levine

• If Top Management does get involved from the very beginning:– There is risk of personal or organisational discomfort that

comes from changing the culture– BUT that is necessary to bring about lasting results

• If Top Management does not get so involved and committed:– There is less personal risk of disruption– BUT there will likely not be any substantial business

improvement

Top Management’s Catch 22

* Overcoming the "Catch 22" of Implementationby Robert A. Stahl and Joseph F. Shedlawski

Foresight Journal Spring 2012

How to Engage Top Management

“A detailed plan may be comforting, but it’s not a strategy.”

“The Big Lie of Strategic Planning”Harvard Business Review – Jan/Feb 2014 by Roger Martin

The Problem: Executives know that strategy is important. But almost all find it scary, because it forces them to confront a future they can only guess at. Strategy making is uncomfortable. The Solution: Reconcile yourself to feeling uncomfortable, and follow three rules:

1. Keep it simple2. Don’t look for perfection3. Make the logic explicit

• Identify and enlist an Executive Champion; someone with executive influence, willing to “put skin in the game”

• Connect the hard benefits of executive S&OP to successful implementation

• Follow a path of low risk/low cost• Obtain quick results to build confidence • Provide feedback on progress/success• Generate local ownership and enthusiasm

Engage Top Management

Low Risk Implementation Path

1 2 3 4 5 6 7 8 9Months

Bu

sin

ess

Imp

rovem

en

t

Phase IPilot Demo

Phase IIExpansion

Live PilotDemonstrationGo/No-Go #2

Phase IIIFinancial

Integration

ExecutiveBriefing

Go/No-Go #1

KickoffSession

Low CostLow RiskHigh ImpactQuick Results

During Change: Immerse in the Detail• Lead educational process• Manage cultural changes• Assure proper resources• Approve procedures• Insist on clear targets (goals)• Participate• Measure progress

Leadership’s Role

Ongoing: Remove from Detail• Insist on meaningful participation• Insist proper homework be done• Raise and resolve disagreement and conflict• Make clear decisions• Hold people accountable to process and to

results• Encourage and expect realistic improvement• Lead management development• Measure performance

Leadership’s Role(Continued)

• Mandate the fundamental concepts and principles of executive S&OP

• Demonstrate a willingness to air disagreement

• Assure resources to develop necessary and appropriate tools

• Track progress – process discipline, cultural, key performance measures

• Reward success

Corporate Role*

* S&OP Principles: The Foundation for SuccessRobert A. Stahl and Thomas F. Wallace

Foresight Journal Fall 2012

Discussion

joeshedlawski@gmail.com

Thanks for Listening!