Forecast Pro 7 Habits.pdf

7/27/2019 Forecast Pro 7 Habits.pdf

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Webinar July 21, 2011

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The 7 Habits of HighlyEffective S&OP

Dr. Mark Moon

Associate Professor of Marketing

Head, Department of Marketing & LogisticsDirector, Forecasting and Demand Management

Forum

University of Tennessee, Knoxville


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Todays Agenda

1. Tribute to Dr. Steven R. Covey (who developed the7 Habits) (So I dont get sued)

2.

Our vision of the ideal state of S&OP3. The 7 Habits of Highly Effective S&OP

1. Be Proactive

2. Begin with the End in Mind

3. Put First Things First

4. Think Win/Win

5. Seek First To Understand, Then to Be Understood

6. Synergize

7. Sharpen the Saw

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The 7 Habits of Highly

Effective People First published in 1989

Regarded as one of the mostimpactful self-help booksever written. 15 million copies sold,

translated in 38 languages

7 Habits framework hasbeen adapted to differentcontexts:

Happy kids Effective families

Effective leaders

Can it be a usefulframework for S&OPImplementation? 3


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Before We Get Into the 7 Habits

It might be a good idea to articulate our

vision of S&OP (Sales and OperationsPlanning)

Which we like to think of asDemand/Supply Integration

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Demand/Supply Integration

(otherwise known as S&OP) What is it?

The process by which a company makesstrategic decisionsbased upon market demand,

supply capabilities, financial objectives, and thestrategic direction of the firm

Why do companies do it? So that marketing will create demand for products

that can be produced So that operations will supply products for which

there is demand

Bottom line so all sides of a company willbe singing out of the same hymnal


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Demand/Supply Integration (DSI):The Ideal State

Demand/SupplyIntegration

(S&OP)

SUPPLYProduction,

Logistics, etc., andUpstreamSuppliers

DEMANDSales andMarketing,

DownstreamChannelPartners

Finance

Capacity Forecast(Including inventory)

DemandForecast

Financial

Goal

Operational

Plan(supply and inventory)

DemandPlan

FinancialPlan

SeniorLeadership

StrategicDirection

AlignmentTo

Strategy


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So Now Lets Look At The 7 Habits

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Habit # 1 Be Proactive

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Your life doesn't just"happen." Whether you

know it or not, it is carefullydesigned by you. Thechoices, after all, are yours.Just remember that everymoment, every situation,provides a new choice. Andin doing so, it gives you aperfect opportunity to dothings differently to producemore positive results.


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Be Proactive Demand/Supply Integration doesnt just happen.

Many organizations have ingrained cultures that

promote siloed thinking. Moving an organization toward a DSI orientation

requires proactive planning and execution.

Studies have shown that DSI success is determined

by:

Culture change requires proactive change

management to overcome cultural barriers. 9

Process = 40% Too ls = 10% Cultu re = 50%


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The Levers of Change Management

Process = 40% Too ls = 10% Cultu re = 50%

Information

and Systems

Clean data andcommon IT platforms

Culture & ValuesEverybody committed

to success through

openness and honesty

Metrics

&CompetenciesDoing the right thingsand measuring results

in the right way

Business ProcessesOne, standardised set

of processes, understood

across the business

OrganizationThe right structure with

people who havethe right responsibilities

and accountabilities


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Habit # 2 Begin with the End in Mind

Habit 2 is based on imagination--theability to envision in your mind what youcannot at present see with your eyes. It

is based on the principle that all thingsare created twice. There is a mental(first) creation, and a physical (second)creation. The physical creation followsthe mental, just as a building follows ablueprint. If you don't make a consciouseffort to visualize who you are and whatyou want in life, then you empowerother people and circumstances to shapeyou and your life by default.

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Begin With The End in Mind Successful S&OP (or DSI)

implementations require a vision of

what the process is trying to achieve This vision must be clearly articulated

and endorsed by senior leadership

This is a strategy for planning thebusiness, not just for planning thesupply chain.

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An Example of One Companys Vision

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4

SIOP

Reconciliation

(Wk3)

4

SIOP

Reconciliation

(Wk3)

2

Demand & Inventory

Review

(Wk2)

2

Demand & Inventory

Review

(Wk2)

3

Supply Review

(Wk3)

3

Supply Review

(Wk3)

5Executive

SIOP Meeting(Wk4)

5Executive

SIOP Meeting(Wk4)

1

Portfolio

& Product Review

(Wk1)

1

Portfolio

& Product Review

(Wk1)Integrated

reconciliation

& financial

appraisal

4

SIOP

Reconciliation

(Wk3)

4

DS

IReconciliation

(Wk3)

2

Demand & Inventory

Review

(Wk2)

2

Demand & Inventory

Review

(Wk2)

3

Supply Review

(Wk3)

3

Supply Review

(Wk3)

5Executive

SIOP Meeting(Wk4)

5Executive

DSI Meeting(Wk4)

1

Portfolio

& Product Review

(Wk1)

1

Portfolio

& Product Review

(Wk1)Integrated

reconciliation

& financial

appraisal

A continuouscycle ofevents


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Habit # 3 Put First Things First

Habit 3 is about life managementas well--your purpose, values,

roles, and priorities. What are"first things?" First things arethose things you, personally, findof most worth. If you put firstthings first, you are organizingand managing time and eventsaccording to the personalpriorities you established in Habit2.

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Put First Things First

Urgent Not Urgent

Important

Not Important

Quadrant 1

Quadrant 3

Quadrant 2

Quadrant 4


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The Challenge Eliminate Quadrants 3 and 4

Minimize time spent in Quadrant 1 byinvesting in Quadrant 2

The key: Dont prioritize whats on your schedule

Rather, schedule your priorities

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l d l


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As an Example -- Demand Planning ProcessFlow at one company

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Sales History

Forecast

performance

Review /

Change

forecast

Model

Statistical

Forecast

Customer Forecasts

Market/ Product

risks opportunities and

assumptions

Input Data

Consolidation

Demand

Planner

Initial forecast

Validation of

plan,

assumptionsand changes

Gap analysis &

Demand ReviewPrep Demand Review

Approved Demand Plan

&

Action Plan

Business Leader Accountability

Day -6 Day -5 Day -2 Day 0

Comparison with AOP & STRAP

Important Tasks Are Identified, Priorities are Scheduled, and Everyone s Responsibility and

Timeline is Clear

Sales / Marketing input by

exception, with

risks opportunities and

assumptions


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Habit #4 Think Win/Win

Win-win sees life as a cooperative arena, nota competitive one. Win-win is a frame ofmind and heart that constantly seeks mutual

benefit in all human interactions. Win-winmeans agreements or solutions are mutuallybeneficial and satisfying. A person ororganization that approaches conflicts with awin-win attitude possesses three vitalcharacter traits: Integrity: sticking with your true feelings, values, and

commitments

Maturity: expressing your ideas and feelings withcourage and consideration for the ideas and feelingsof others

Abundance Mentality: believing there is plenty foreveryone

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Think Win-Win Many times, Demand Planning

processes break down because there is

a lack of trust between developersandusersof forecasts

Are any of these situations true in your

companies?

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Think Win-Win Does manufacturing complain that sales

overstates demand forecasts, doesnt sell theproduct and then supply chain gets blamed for too

much inventory?

Does the sales team complain that manufacturingcant deliver on its production commitments andits hurting sales?

Does manufacturing complain that the sales teamdoesnt let them know when new productintroductions should be scheduled, and then theycomplain about missed customer commitments?

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If those sound familiar to you Then you might have the Demand and Supply

sides of the organization following differentagendas.

Your incentive systems might be discouraging aWin-Win atmosphere!

Remember that People Do That For Which

They Are Rewarded! Remember that Culture drives 50% of success!

Eliminating siloed thinking is a cultural challenge

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Habit #5 Seek First To Understand,

Then To Be Understood

If you're like most people, youprobably seek first to be

understood; you want to get yourpoint across. And in doing so, youmay ignore the other personcompletely, pretend that you'relistening, selectively hear onlycertain parts of the conversationor attentively focus on only thewords being said, but miss themeaning entirely.

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Seek First To Understand, Then To

Be Understood The essence of DSI, or S&OP, is to

provide a forum where the primary

business functions can articulate theiropportunities and constraints, and thenmake forward-looking plans that benefit

the organization as a whole. This requires understanding, and

openness, of the realities that each

function faces. 23


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An Example from One Company of How

this Reconciliation Can Take Place

DSI Reconciliation Meeting Chaired by CFOAttendees:

Lines of Business Leaders Integrated Supply Chain Leaders Others appropriate to issues under discussion

Agenda: Latest financial view Review unresolved issues arising from Demand review & Supply

review meetings

Issues arising through this cycle & proposed resolution Agree issues to be raised at Exec-DSI meeting

Output: Financial Plan Issues to be taken to the Exec-DSI meeting

Risks & Opportunities documented Solution Scenarios, including new commercial/supply initiatives Recommendations


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The Important Take-Away Here

The DSI Process provides a forum for

different functions to come together andmake decisions that benefit the organizationas a whole.

This process will not workif turf protection

is the order of the day! This process will workif participants seek

first to understand, then to be understood.

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Habit #6 Synergize

So put it simply, synergy means "twoheads are better than one." Synergize isthe habit of creative cooperation. It isteamwork, open-mindedness, and theadventure of finding new solutions to oldproblems. But it doesn't just happen onits own. It's a process, and through thatprocess, people bring all their personalexperience and expertise to the table.

Together, they can produce far betterresults that they could individually.

Valuing differences is what really drivessynergy.

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Synergize

For an effective DSI process, all the supporting processeshave to be working

Each function brings critical insights to the process, andwhen each function values the insights of the others, the

whole is greater than the sum of the parts. 27

Sales Management

Demand Management

Portfolio Management

Resource Management

Project Management Market Management

Supplier Management

Supply Chain Management

Logistics

Procurement


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Habit #7 Sharpen The Saw

Sharpen the Saw meanspreserving and enhancing thegreatest asset you have--you. Itmeans having a balanced program

for self-renewal.

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Sharpen the Saw In this context, renewalmeans continuous

enhancement of attitude, knowledge and

skills through education and training onvarious elements of S&OP or Demand/SupplyIntegration

Everyoneinvolved in an S&OP process, from

Demand Planners, to Sales, to ProductManagers, to Supply Chain people, to SeniorExecutives, needs education on the goals,strategies, and tactics of the S&OP process.

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LevelLevel

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Level 3Level 3

Level 2Level 2 -- PractitionersPractitioners

Level 1Level 1 -- Foundation LevelFoundation Level

LevelLevel

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Level 3Level 3

Level 2Level 2 -- PractitionersPractitioners

Level 1Level 1 -- Foundation LevelFoundation Level

Supply PlanningSupply PlanningDemand PlanningDemand Planning

An Example of How One Company has Invested

inSharpening the Saw


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In Summary Dr. Covey and his 7 Habits have

helped millions of people move from

dependence, to independence, tointerdependence.

There is wisdom there that can help

you to think clearly about your S&OP orDSI processes, and to achieve the goalsofIntegrated Business Planning

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Our Next Webinar Improving Your Forecasting Process by

Focusing on What Matters Most

October 20, 2011 1:30 p.m. EDT

Presented by James Berry,Forecast Pro Senior Consultant

Visit www.forecastpro.com to sign up!

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http://www.forecastpro.com/http://www.forecastpro.com/


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Final Questions or Comments?

Documents

Forecast Pro 7 Habits.pdf