Embed Size (px)
Citation preview
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2010 Gartner, Inc. and/or its affiliates. All rights reserved. © 2010 AMR Research, Inc. | Page 1
Jane BarrettNoha Tohamy
Best Practices in Sales & Operations Planning
© 2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.<docname>_<date>_<author> 2
65% of Fortune 1000
80% ofGlobal 500
55Conferences
3,800CIOs
730 Analysts Serving Clients
in 80 Countries
100,000IT End-User
Inquiries
10,000Media
Inquiries
2.7 MillionIT End-User
Searches
60,000Clients
10,800 Client
Enterprises
5,500Benchmarks
Welcome!Thank you for joining us on today’s Gartner webinar.
© 2009 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.<docname>_<date>_<author>
Here's how to participate in today's webinar• You can listen to the presentation using
your computer's speaker system as the default (VoIP).
• Or dial the conference line by selecting Use Telephone in the webinar audio pane.
• Have a question for the presenter(s)? Type it into the Questions pane—we will answer as many as time permits.
• A recording of this presentation will be sent to you within 48 hours.
• If you would like a copy of today's presentation, contact your Gartner Account Executive or gartner.com/webinars.
• Please note you may be polled during the webinar; only aggregate answers will appear.
This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates.© 2010 Gartner, Inc. and/or its affiliates. All rights reserved. © 2010 AMR Research, Inc. | Page 4
Jane BarrettNoha Tohamy
Best Practices in Sales & Operations Planning
Agenda
•Sales & Operations Planning: Process Best Practices• Findings from 2009 study• S&OP maturity• The seven deadly challenges of S&OP
•Sales & Operations Planning : Technology Best practices• What are the functional capabilities needed to support S&OP?
• Findings from 2009 Study
S&OP Key Research Findings
- As the curtain closes on the recession, S&OP has gained steam
- Performance gaps have grown
- Metrics remain a stumbling block
- Gap between strategy, S&OP and execution
- Data accuracy and timeliness issues causing pain
- Better use of technologies drives S&OP maturity
- No clear definition of S&OP technology space
August 2009 Study of 182 Manufacturers and Retailers
S&OP Process Definition Changes
1990s Early 2000 Demand-driven Leaders
1. Develop a demand forecast
2. Balance demand with supply
3. Consensus meeting4. Publish the plan
1. Collect sales input2. Develop a forecast3. Shape demand
consensus refinement4. Develop a constrained
supply plan5. Review and gain
agreement through a Consensus meeting
6. Publish the plan
1. Collect sales and market input2. Develop a demand plan3. Demand consensus refinement including
financial reconciliation4. Shape demand based on what-if analysis
on demand for supply5. Develop a constrained plan by supply6. What-if analysis by supply to determine
trade-offs on the measurements, financials, and identify demand-shaping opportunities
7. Review and gain agreement through a consensus meeting
8. Publish the constrained plan9. Measure and communicate the plan
65%
55%
53%
48%
48%
47%
46%
46%
42%
41%
40%
38%
28%
36%
37%
35%
38%
38%
32%
34%
32%
36%
Increasing revenue
Improving forecast accuracy
Improving new product launch
Improving logistics planning
Better supply planning/chedule adherence
Improvements in the perfect order/customer service
Capital planning and asset management `
Improving asset utilization
Improve translation of demand into procurementrequirements/buy-side contract needs
Developing and executing demand shaping programs
Reduction of inventory
[TOP 3 Box Summary]
The benefits are recognized, but hard to attain………Q. Please rate how important each of the following business benefits are.
Q. Please rate how well your company performs at achieving each of these benefits. PerformanceGap Score
27%
27%
18%
11%
14%
9%
8%
14%
9%
8%
4%N = 182 Total Respondents
[TOP 3 Box Summary]
Managing demand is still an issue for most……..Q. Please rate how important each of these S&OP capabilities are to the success of your companies 2009 business strategies.
Q. Please rate how well your company performs on each of these capabilities.
70%
68%
66%
60%
55%
51%
48%
43%
41%
37%
29%
44%
40%
44%
40%
41%
43%
36%
25%
44%
29%
26%
Collect sales/market input
Develop a demand plan
Communicate the plan/measure effectiveness
Review /gain agreement of total demand, supply and f inancial plan
Use S&OP for the annual planning process
Evaluate implications of a constrained supply plan
Use S&OP for demand plan execution
What-if analysis by supply to determine trade-offs o
Publish the constrained plan
Shape demand based on w hat-if analysis of demand
Demand consensus refinementImportancePerformance
26%
28%
23%
19%
14%
9%
12%
18%
-3%
8%
3%
Performance Gap Score
N = 182 Total Respondents
Stage IReacting
IIAnticipating
IIICollaborating
IVOrchestrating
Balance: S&OP
Goal Development of an operational plan
Demand and supply matching
Profitability Demand sensing, and conscious tradeoffs for
demand shaping to drive an optimized demand-response
Ownership S = SalesOP = Factory capabilities
S = Sales and Marketing Plans
OP = Planning and factory capabilities
S = Go to Market PlansOP = Design of demand
driven plan, make & deliver processes
S = Go to Market Strategies and Solutions
OP = Translation of demand into plan, make, deliver, source and
service strategies, with connection to execution
Metrics Order fill rate, asset utilization, inventory
levels
Order fill rate, forecast error, inventory turns,
functional costs
Demand error, customer service, working capital,
total costs
Demand risk, customer service, cash flow, market share and profit
S
OP
S
OPS OP S OP
Increase in Organizational Balance
S&OP Maturity Model
27% 40% 19% 14%
67% of companies cannot get beyond stage 2
Demand maturity must be synchronized with S&OP maturity
Orders Orders
VMI
ForecastsConstraint-based S&OP
Demand Visibility
Channel Sensing
Demand Shaping
Market Opportunity
Opportunity-based S&OP
Active Demand Translation
MRP
I II III IVReacting Anticipating Collaborating Orchestrating
Balance is Required
7 Levers of Agility• Postponement/late-stage
differentiation
• Drive transparency through VMI and SMI
• Design for supply and reuse
• Logistics policies
• Adaptive networks
• Flexible manufacturing strategies
• Tie agility strategies to demand shaping
7 Levers of Agility• Postponement/late-stage
differentiation
• Drive transparency through VMI and SMI
• Design for supply and reuse
• Logistics policies
• Adaptive networks
• Flexible manufacturing strategies
• Tie agility strategies to demand shaping
7 Demand-Shaping Levers
• Marketing programs
• New product introductions
• Promotions
• Trade deals
• Sales incentives
• Price management
• Supply shaping/runout strategies
7 Demand-Shaping Levers
• Marketing programs
• New product introductions
• Promotions
• Trade deals
• Sales incentives
• Price management
• Supply shaping/runout strategies
30%
20%
18%
17%
14%
We use attribute-basedforecasting techniques
along with marketintelligence
We wait until the newproduct is through ramp-up before we include it in
the S&OP process
We use a rough cut salesforecast from sales or
marketing
New product launch is aseparate process
New productintroductions are fully
integrated in the processacross the full planning
horizon
N = 182 Total Respondents
Q. Which of the following best describes your company’s plans for new product introductions as it relates to S&OP?
Planning for new product introductions must improve
Only 14% have an integrated process, yet NPI is the top strategy S&OP is focused on
14
Example: Chemical Company Change Impacts
Mindset
Process
Tools
Primarily, DDBO is a change in MINDSET, as the business moves from a Supply Driven to a Demand Driven mentality.
The mindset is formalized through the Demand Driven Business Operations PROCESS.
Once the mindset and work process are established, TOOLS enable individuals in executing specific tasks. Tools support work throughout the DDBO sub-tracks.
For Demand Driven Business Operations to be successful, people must change their MINDSET to accept and learn the PROCESS using TOOLS as needed.
Getting out of Neutral – Why is it so hard?The Seven Deadly Challenges of S&OP
- Clarity of goal - Alignment to strategy- Reward systems- What is a good decision?- Governance- The Role of the Forecast- Connection of planning to execution
60% Change Management30% Process10% Technology
S&OP: Technology Key Capabilities Required:
• Data management and quality
• Integration into operational planning
• Visibility into financial plans
• Multilevel and multidimensional hierarchies
• Assumption tracking and management
• Workflow and process management
• Performance management
• What-if, scenario management, simulation
9-Step S&OP Cycle
Base demand plan
Demand consensus
Collect sales and market input
Demand shaping what-If
Publish the Plan
Enact and measurethe plan
Base supply plan
Supply what-if
Integrated Scenario Analysis
Next Generation S&OP
Base demand plan
Demand consensus
Collect sales and market input
Demand shaping what-If
Publish the Plan
Enact and measurethe plan
Base supply plan
Supply what-if
Integrated Scenario Analysis
Base financial plan
Financial what-if
Functional Requirements
Pre S&OP Foundational Pieces…
S&OP1. Building the
operational consensus plan
How closely integrated should each PreS&OP function be?Depends on the vertical
Closing The Loop: Process Playbooks
Actual Revenue BelowTarget
Actual Revenue BelowTarget
Problem
CompetitorPromotion
CompetitorPromotion
Sales Selling Wrong Product Mix
Sales Selling Wrong Product Mix
Pricing IssuesPricing Issues
Critical Part ShortageCritical Part Shortage
Lost ProductionCapacity
Lost ProductionCapacity
Lost Sales Due to LackOf Supply
Lost Sales Due to LackOf Supply
Root Cause
Sales Below TargetSales Below Target
Supply ShortagesSupply Shortages
Promote Alternate Product
Promote Alternate Product
Change Product MixChange Product Mix
Launch PromotionLaunch Promotion
Adjust PricingAdjust Pricing
Plan OvertimePlan Overtime
OverflowProduction
OverflowProduction
Inventory TransferInventory Transfer
Hedge SupplyHedge Supply
Options
Promote Alternate Product
Promote Alternate Product
Outcom
e
33%
12%
53%
35%
14%
23%
0%
25%
0%
5%
S&OP technology is essentialto supporting S&OP process
S&OP is a business process,not a technology area. No
additional tools are necessary.
Strongly Agree Agree Neither Agree/Nor Disagree Disagree Strongly Disagree
Q. To what degree do you agree with the following statement: We believe that S&OP technology is essential to supporting S&OP process?
Q. To what degree do you agree with the following statement: S&OP is a business process, not a technology area. We don’t need any additional tools to support our S&OP process?
N = 182 Total Respondents
S&OP – Just a business process?
29%
29%
21%
16%
5%
S&OP technology is a naturalextension to ERP
S&OP technology is an extension tosales forecasting and sales
performance management tools
S&OP technology is an extension toBI tools
S&OP technology is an extension toSCM tools
S&OP technology should be a stand-alone functional capability
Views on S&OP TechnologyQ. Which of the following best describes your views on S&OP technology?
N = 182 Total Respondents
41%
28%
22%
9%
5%
S&OP technology is an extension toSCM tools
S&OP technology is an extension tosales forecasting and sales
performance management tools
S&OP technology is a naturalextension to ERP
S&OP technology is an extension toBI tools
S&OP technology should be a stand-alone functional capability
Extremely Effective Only
Views on S&OP Technology Among Extremely Effective CompaniesQ. Which of the following best describes your views on S&OP technology?
N = 32 Respondents who feel their current S&OP process is extremely effective
Extremely Effective Only
N = 150 Respondents who invest or plan to invest in tools other than MS Excel, Access or PowerPoint
Top 3 decision making criteria for purchasing S&OP toolsQ. In order of importance, what three factors are most important when considering purchasing tools to support S&OP?
49%
39%
37%
35%
29%
24%
23%
22%
22%
19%
Ease of use
Flexibility
Feature/function to support the S&OP process
Integration with ERP systems
Proof of capability in similar environments
Existing Vendor relationship
Integration with SCM tools
Technical architecture
Vendor services and expertise
Collaborative capabilities
[TOP 3 COMBINED]Most
Important
Yes49%
No51%
26%
39%
35%
Plan to invest inother S&OPtools next 12
months
Plan to invest inother S&OP
tools within thenext 12 to 24
months
We currentlyhave no plans
to invest inother S&OP
tools
Penetration of formal S&OP Q. Are you currently using an S&OP tool other than Microsoft Excel, Microsoft Access or PowerPoint?
Q. Which of the following describes your plans to invest in S&OP tools other than Microsoft Excel, MS Access or PowerPoint over the next 2 years?
Using tools other than MS Excel, MS Access or PowerPoint for S&OP
N =182 Total Respondents
Plans to invest in other S&OP Tools over next 2 years
2009 average spend on deployment of tools to support S&OPQ. Which of the following best describes the total amount your company will spend on deployment of tools to support S&OP in 2009
N =162 Respondents who can confidently estimate spend
14%
20%
22%
20%
17%
8%
Less than $100K
$100K to less than$250K
$250K to less than$500K
$500K to less than$1M
$1M to less than$2M
$2M or greater
Average Spend in 2009:
$763K
2009 Breakdown of spend
2010 Spend plansQ. Is your planned spend on deployment of tools to support S&OP going to increase, stay the same or decrease in 2010?
N =162 Respondents who could confidently estimate spend
Decrease7%
Stay the same53%
Increase40%
2010 spending plans over 2009
Average change in spending in 2010 over 2009
+6.8%
S&OP: Technology Best Practices:
• Phase in technology support for S&OP after S&OP processes are defined
• Resolve major outstanding issues with the underlying operationalplanning systems before proceeding with S&OP technology
• Leverage SCP investments into S&OP lower level reviews
• Focus on support for technology-enabled collaboration in S&OP tools
• Get the financial plan integrated with the S&OP plan• Support scenario-based planning, & timeliness of scenario-based
planning at the right level of detail
Recommended Research
© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
Recommended Research -
Research conducted by the AMR Research Team:• Conquering the Seven Deadly Challenges of Sales and Operations
Planning• Sales and Operations Planning: Transformation From Tradition • Toolkit: How to Select Technology Tools to Power Your S&OP
Process• S&OP Technology Market Update: Picture Still Murky• Embraco Transforms Its Value Chain Through Integration of S&OP
and Order Fulfillment • A Chemicals Formula for S&OP Success • Just How Long Do We Have To Wait for True S&OP in Life
Sciences?
Thank you for participating – Do you have any questions?
Have a question for the presenter(s)?
Type it into the Questions pane—we will answer as many as time permits.
31
Two simple steps for increasing the value of today’s webinar experience
• Contact your Gartner account executive (or e-mail [email protected]) with any additional questions, comments or requests—or to order a complimentary copy of today’s presentation
• Visit gartner.com/webinars for a schedule of upcoming Gartner webinars (plus replays of previous webinars) and share these resources with your colleagues
