Conference Center Best Western Royal Plaza Robert A. Stahl ... A. Stahl.pdfTuesday, October 2 nd, 2007 Robert A. Stahl 2007 Northeast Supply Chain ... Inventory 132 New Plan 152 162

2007 Northeast Supply Chain

Educational Conference & Exhibition

Robert A. Stahl

www.tfwallace.com

Executive S&OP

Top Management’s Handle on the Business

Executive S&OP


Best Western Royal Plaza

Conference Center

Marlborough, MA

Tuesday, October 2nd, 2007

Robert A. Stahl


Education Conference & Exhibition


Education Conference & Exhibition



Robert A. Stahl

www.tfwallace.com

‘The Books’

QuickTime™ and aTIFF (LZW) decompressor

are needed to see this picture.



Robert A. Stahl

www.tfwallace.com

The Mission

High Quality

Low Cost (Low Inventory)

Customer Service

Quick Response

Reliability

Wide Variety

Meeting

World Class Standards

In

Getting to AND . . . Diminishing OR



Robert A. Stahl

www.tfwallace.com

Maintaining Balance

Mix vs Volume

Plant Scheduling/Pull

MS

Exec. S&OP / Rough Cut

PTF

24MonthsTime

Most Detail Aggregate OnlyExac Config. . .Precise Mat’l. . .# People. . .Capital Equip . . .Factory Space

VolumeMix

Detailed Forecasting &

Master Scheduling• Lost in the woods- Detail

• Engage Top Management?

• Added Little Value outside

the Planning Time Fence

MarketingSales

Super MS



Robert A. Stahl

www.tfwallace.com

PTF

Horizon

De

tail

1

Suicide

Quadrant

2

Aggregate Only

Quadrant

ES&OP

2

Aggregate Only

Quadrant

ES&OPES&OP

3

Building toCustomerDemand

Forecasting Perspective



Robert A. Stahl

www.tfwallace.com

Forecast Review

Product Mgr, reviewing forecast for 1st time in 3 months.

Product Mgr revises the forecast downward.

Feb Mar Apr May Jun Jul Aug SepForecast (000) 100 100 100 100 120 120 120 120

Actual Sales 90 95 85Difference -10 -5 -15Cum Difference -15 -30

Feb Mar Apr May Jun Jul Aug SepForecast (000) 100 100 100 Old Forecast 100 120 120 120 120

New Forecast 90 90 90 90 90Actual Sales 90 95 85Difference -10 -5 -15Cum Difference -10 -15 -30



Robert A. Stahl

www.tfwallace.com

Production Plan

Current Production Plan.

Plant Manager gets bad news & adjusts Production Plan.

Feb Mar Apr May Jun Jul Aug Sep Plan Production (000) 100 100 100 110 120 120 120 120 Actual Production 98 100 101 Difference -2 0 +1 Cum Difference -2 -2 -1

Feb Mar Apr May Jun Jul Aug SepPlan Production (000) 100 100 100 Old Plan 110 120 120 120 120

New Plan 110 100 100 90 90Actual Production 98 100 101Difference -2 0 +1Cum Difference -2 -2 -1



Robert A. Stahl

www.tfwallace.com

Inventory Review

CFO observes the high inventories.

Feb Mar Apr May Jun Jul Aug Sep Plan Inventory (1 Mo) 100 100 100 120 120 120 120 120 Actual Inv. 103 111 116 132 Difference +11 +16 +32



Robert A. Stahl

www.tfwallace.com

Inventory Review

CFO gets new Forecast & Prod. Plan, & has a fit. Feb Mar Apr May Jun Jul Aug Sep

Forecast (000) New Forecast 90 90 90 90 90Actual Sales 90 95 85Difference -10 -5 -15Cum Difference -10 -15 -30

Plan Production New Plan 110 100 100 90 90Actual Production 98 100 101Difference -2 0 +1Cum Difference -2 -2 -1

Inventory 132 New Plan 152 162 172 172 172

From $13.8 Million to $22.4 Million



Robert A. Stahl

www.tfwallace.com

Decision Making(Sales Plans, Production Rates, Order Backlogs, & Inventories)

Traditional

Response toa Problem

+

Later

~

Reactive & ‘Radical’’

With Exec. S&OP

Part of anOngoing Process

+

Sooner

=

Proactive & ‘Fine-Tuned’

The Challenge:

Make S&OP THE Framework for Decision Making



Robert A. Stahl

www.tfwallace.com

The Four Fundamentals

Demand Supply

Volume

Mix

•How Much?

•Rates

•The Big Picture

•Families

•Strategy/Policy/Risk

•Monthly / 18 - 36 Mos

•Executive Resp.

•Which Ones?

•Timing/Sequence

•The Details

•Products / SKU’s

•Tactics/Execution

•Weekly/Daily 1-3 Mos

•Middle Mgt. Resp.

Demand Supply



Robert A. Stahl

www.tfwallace.com

Sales & Operations Planning

Demand Supply

Volume

Mix

Executive S&OP

Demand

Planning

Supply

Planning

Master Scheduling

Demand Pull



Robert A. Stahl

www.tfwallace.com

An Essential Point . . .

Executive S&OP is essential for the

other pieces of


to work at their best.



Robert A. Stahl

www.tfwallace.com

What is Executive S&OP?


is a

Decision-Making Process

to

Balance Demand & Supply(at the volume level)

to

Establish Relevant Strategy & Policy

and to

Integrate Financial & Operating Plans




Robert A. Stahl

www.tfwallace.com

•Data Dump (Warehouse)

•Information (Org Data)

•Knowledge

•Understanding

There is a Better Way

Display of Info

Defined Process for

Decision-Making



Robert A. Stahl

www.tfwallace.com

Customer/Market

Mfg

. C

om

pany

Mark

ets

Custo

mers

Shipments POS

Sales: 1-3 Mos

Master Scheduling

Demand Pull

Marketing: 1-18 Mos

Executive S&OP

Mix

Customer

Centric

Market

Centric

Volume



Robert A. Stahl

www.tfwallace.com

Make to Stock



Robert A. Stahl

www.tfwallace.com

The Display

The Acme Widget Company

50

100

150

200

250

300

350

Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2007-2009 Horizon

10

00

's U

nit

s -

Sale

s &

Op

era

tio

ns

0

10

20

30

40

Days

on

Han

d

Actual Bookings Actual Operations

New Forecast New Ops. Plan

Inventory Target Days on Hand

PlanningTimeFence



Robert A. Stahl

www.tfwallace.com

2007 Fiscal Year Status

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Reven

ue i

n 1

00

0's

Do

llars

Cumulative YTD

Cum Original Plan

Latest Call

2008 S&OP Plan

Original Plan 25,400$

Latest Call 25,540$

2008 S&OP 27,959$

2007 Fiscal Year



Robert A. Stahl

www.tfwallace.com

Step #5

ExecutiveMeeting

Decisions &Game Plan

Step #4

Pre-S&OPMeeting

Conflict Resolution, Recommendations &Agenda for Exec. Mtg.

Step #1

DataGathering

End of Month

Sales Actuals, Statistical Forecasts

&Supply Actuals

Step #2

DemandPlanning Management Forecast

1st-pass spreadsheets

Step #3

Supply Planning Capacity constraints

2nd-pass spreadsheets

The Executive S&OP Process



Robert A. Stahl

www.tfwallace.com

Addressing Conflict

Executive S&OP

A process to raise & reconcile conflict,

agree upon, & communicate ONE

company game plan

Sales/Marketing

(Units or $ by Family)

Operations

(Units/hours/Material)

Finance

(Dollars)

Product Dev.

(New Product Issues)

President



Robert A. Stahl

www.tfwallace.com

Top Mgt. and ES&OP

Top Management = The Leader of the Business

(General Mgr, Pres., COO)

+VP Sales &/or MarketingVP OperationsVP FinanceVP Development. . . others

Need to be Hands-On with the ES&OP Process

Stewardship & Leadership

(Manager/Trustee & Guide/Command)

Done Properly . . .

It takes Top Management

between

1 & 2 Hours per Month



Robert A. Stahl

www.tfwallace.com

What are the Benefits ?

Hard Benefits:

• Higher Customer Service

• Lower Finished Goods Inventories

• Smaller Customer Order Backlogs

• More Stable Production Rates

• Less Unplanned Overtime

• Higher Productivity

• More controlled intro of new products



Robert A. Stahl

www.tfwallace.com


Soft Benefits:

• Better Decisions in Less Time

• Enhanced Teamwork - Operating Level Mgt.

• Enhanced Teamwork - Executive Mgt. (Energy Alignment)



Robert A. Stahl

www.tfwallace.com

Energy Alignment

Accomplishment Accomplishment



Robert A. Stahl

www.tfwallace.com


Soft Benefits:

• Better Decisions in Less Time

• Enhanced Teamwork - Operating Level Mgt.

• Enhanced Teamwork - Executive Mgt.

(Energy Alignment)• Monthly Update to the Business Plan

• Greater Accountability

• Greater Control




Robert A. Stahl

www.tfwallace.com

Done Properly . . .

Simpler

Better



Robert A. Stahl

www.tfwallace.com

Discomfort

• In Change, there is no Comfort

• In Comfort, there is no Change

Those who succeed withExecutive S&OP

are willing the endure the discomfort that is

required!



Robert A. Stahl

www.tfwallace.com

How to Get Started

• Uninformed

Commitment

• Semi-Informed

Commitment

• Informed

Commitment

• Read a Book

• Executive Brief

• Live Pilot

Demonstration

•Counter-Experiential

•Counter-Intuitive



Robert A. Stahl

www.tfwallace.com

Minimizing Risk

1 2 3 4 5 6 7 8 9

Months

Bu

sin

ess

Im

prove

men

t

Phase I

Preparation

Phase II

Expansion

& Replication

Live PilotDemonstration

Phase III

$$$

Integration

ExecutiveBriefing



Robert A. Stahl

www.tfwallace.com

Implementation

Pitfalls

• Middle Mgt. only

• It’s a Supply Chain thing

• Top Mgt. but not President (SBU Ldr)

• No Education (‘Build It’)

• No consensus on ‘end game’

• No discipline

• Inadequate Pre-S&OP

• Conflict Aversion

• Executive S&OP Meetings:

– Show & Tell

– Unfocused

– Short Term

– Too Much Detail (MS)

– Meeting Too Long

– Finger Pointing

• Ongoing Data Problems

• Lack of Progress



Robert A. Stahl

www.tfwallace.com

Success Requires

Design Team’s Job:

• Defined set of practices (What, How, & Who)

• Accurate, timely, & believed data

• Valid, simplifying assumptions (Dem/Sup/$$)

(Getting out of ‘Suicide Quadrant’)

Leadership’s Job:

• High discipline clear accountability

• Constant improvement

• Changed performance measures

• Culture/Behavior change (Moose on table)



Robert A. Stahl

www.tfwallace.com

The Real Issue . . .

Understanding Executive S&OP is simple.

The hard part is . . .

Behavioral / Cultural Change –changing the way everyone does their jobs.

Keys: - Full cross functional buy-in

- Counter-experiential/intuitive

- Comfort vs Change

- Path of low risk



Robert A. Stahl

www.tfwallace.com

Thanks & Good Luck !

508/226-0477

[email protected]

www.tfwallace.com

Copy of presentation? Go to Web site!

http://www.tfwallace.com/

Documents

Conference Center Best Western Royal Plaza Robert A. Stahl ... A. Stahl.pdfTuesday, October 2 nd, 2007 Robert A. Stahl 2007 Northeast Supply Chain ... Inventory 132 New Plan 152 162