SherTrack Nxt Gen S&OP Solution Suite 031910

SherTrackDemand-Driven Predictive Manufacturing


NXT GENS&OP

High Performance Scenario Planning

Rail Fleet Optimization

Understanding, Sensing & Responding to Uncertainty & Risk

High Efficiency Rail Fleets

Demand-drivenPredictive Mfg

Lean-PullExecution

DDPM

NEXT GEN S&OP:Compelling new Approaches Producing Overwhelming Value

Gregory L. Schlegel CPIM, CSP, JonahVP Business Development

Professor ,Supply Chain Management, Lehigh [email protected]

[email protected] 19, 2010


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NEXT GEN S&OP Agenda…..

Intro to SherTrackNEXT GEN S&OP CapabilitiesThe WHAT and WHY of NEXT GEN S&OPSome HOW TO’s Associated with NEXT GEN S&OPWHAT’s in it for you?Next Steps

Lehigh University GBUS492 MBA Class 2010

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SherTrack Overview

Venture backed company founded 2002 with the first few years spent on technology developmentFocused on early adopters, innovators and exemplarsProviding innovative, demand-driven probabilistic solutions to complex operations including S&OP/Supply Chain consultingSolutions are SaaS, Software-as-a-Service…lease vs buyMinimum amount of internal IT support with rapid, remote-driven, virtual installationNo upfront license fees…subscription “Pay-as-you-go” approachProfitable for the last two years in light of the environmentGrowing year over year

SherTrack LLC Confidential © 2010

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Past & Present Clients

ROHM & HAAS A Wholly Owned Subsidiary of


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NEXT GEN S&OP Solution Platform

S&OP Best-in-Class Process Development & RoadmapS&OP Building Blocks…..Risk Mitigation Tactics/TemplatesS&OP Enterprise Scenario Planning leveraging Predictive Analytics


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Predictive Analytics Strategic Platforms

© SherTrack, LLC 2009

SNAPPS™ Predictive Analytics Facilitates Lean Pull

Consumption Patterns

Interpret the information and evaluate if it is

something to react to or to ignore

Forecasts guide target ranges

Determine Optimal System Response

Synthetic Order Stream(real + predicted demand)

Probabilistic Optimization

Demand Plan

SNAPPS Probability

ModelMonitor & sense

demand & supply events


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NEXT GEN S&OP Competencies…..

1. S&OP Best-in-Class Process Development & RoadmapAS-IS Assessments, Maturity Models, People, Processes & Metrics

2. S&OP Building Blocks……Risk Mitigation Tactics/TemplatesERM….Enterprise-wide Risk Management FrameworkUncertainty, Complexity & Risk Templates & TacticsBuilding Blocks to Success

Product Portfolio ManagementCustomer Segmentation/TieringTotal-cost-to-Serve Efficient & Effective Supply Chain Models

3. S&OP Scenario Planning leveraging Predictive AnalyticsScenario Planning basics within an S&OP EnvironmentPredictive Analytics using Probabilistic MethodologiesMinimizing Uncertainty, Complexity & Risk through Prioritizing Probabilities of occurrence and development of Risk Response Plans


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The S&OP Process Today:

Operations &R&D

Sales &Marketing

GOAL: Factory optimization to improve costsDesire is to minimize demand uncertaintyFORECAST: Manufacturing plan

GOAL: Feasible plan, Bottoms-upDesires to minimize risk & disruptionFORECAST: Demand plan

GOAL: Maximize revenue & market shareDesires guaranteed product availabilityFORECAST: Sales plan

Supply ChainFinanceGOAL: Make BudgetDesires control & wants predictability of operationsFORECAST: Budget

S&OP


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FOUR STAGES of S&OP

WHAT are the definitions?WHERE are you positioned?HOW long does it take to move forward?WHAT are the benefits?WHAT’s NEXT, after Stage 4?

Aberdeen Group

S&OPBest Practice Steps


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Lean-PullExecution

DDPMThe S&OP Lament!

“Less than 1% of companies use customer data as the basis for supply chain planning and less than 2% of all companies have segmented customers based on profitability”…….AMR

“Over 60% of all companies take more than two weeks to sense changes in actual demand and take still another two weeks or more to respond”……..AMR

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“AMR Research reports companies that useclassic S&OP approach to demand/supply can see”…..

A 5-10% improvement in forecast accuracyA 1-5% improvement in supply chain costsAnd can expect to work on this S&OP process anywhere

from 9-12 months before seeing initial improvements

Necessary but not Sufficient!


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NEXT GEN S&OP: Emerging Themes…

Companies NEED to understand the business importance of their different products & customers and ALIGN them properlyCompanies SHOULD Segment/or Tier their customers and develop efficient and effective supply chains based on Total-Cost-to-Serve modelsCompanies NEED to incorporate Risk Management information, methods and tactics into their S&OP processesCompanies MOVING to S&OP Scenario Planning SHOULD support it by leveraging Probabilistic Predictive Analytics


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NEXT GEN S&OP “Building Block”…..Risk Mitigation Methods

Product Portfolio ManagementCustomer Value Management….Tiering/SegmentingSupply Chain TCS, Total-Cost-to-Serve ModelsEnterprise-wide Risk Management Framework


Product Portfolio by Importance & Variability

Q4VARIABLE DEMAND

andHIGH IMPORTANCE

Q3VARIABLE DEMAND

andLOW IMPORTANCE

Q1STABLE DEMAND

andHIGH IMPORTANCE

Q2STABLE DEMAND

andLOW IMPORTANCE

Low High

Low

High

FORCAST

ABILITY

BUSINESS IMPORTANCE


SherTrack LLC Confidential © 2008 31

Customers in Segment

CustomerLifetimeValue

High Revenue, Low Cost

Customers

High Revenue, High Cost Customers

Low Revenue, Low Cost

Customers

Low Revenue, High Cost

Customers

“Champions” “Demanders” “Acquaintances” “Losers”

Customer Lifetime Value Measures Value Contribution by and within Segments….


Sales & Operations Planning:(Total-Cost-to-Serve Model)

Types of Channels/CustomersHigh

Low High

Net Price

Cost-to-Serve

Passive

* Product Crucial

* Good Match

Price-sensitive

& care little for service or

quality

Costly to service, but

pay top $$

Aggressive

* Leverage their buying power

Channels & Customers above diagonal are more profitable


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NEXT GEN S&OP Scenario Planning

WHAT?WHEN?WHOM?HOW?WHY?


NEXT GEN S&OP Scenario Planning Vision

ProbabilisticSimulation

EnoughInformation?

RobustTactical

Plan

H. Van Landeghem, H. Vanmaele/Journal of Operations Management, 2002

Supply chainFlow model

Base casedata

DecisionLogic

ProbabilityDistributionsOf uncertain factors

Probability ofoccurrence &magnitude ofdisturbingevents

Design ofExperiments

Performance measures

FeasibleTactical plans

No Yes Determine“most appropriate”values ofdecision variables


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SherTrack’s Predictive Analytics Impacts so far…….

◗ Service Level 3%- 14%◗ Throughput 1%- 8%

$ Revenues Expenses

AssetsPROFITMAX

1%-3% of Sales

=

◗ Planning Time 50%- 70%◗ Transition costs 1%- 8%

◗ Inventory 15%- 35%◗ Effective Capacity 1%- 8%

Actual Value Realized


NEXT GEN S&OP:WHAT’s in it for You?

Competencies……1. S&OP Best-in-Class Process Development & Roadmap

AS-IS Assessments, Maturity Models, People, Processes & Metrics

2. S&OP Building Blocks……Risk Mitigation Tactics/TemplatesERM….Enterprise-wide Risk Management FrameworkUncertainty, Complexity & Risk Templates & TacticsBuilding Blocks to Success

Product Portfolio ManagementCustomer Segmentation/TieringTotal-cost-to-Serve Efficient & Effective Supply Chain Models

3. S&OP Enterprise Scenario Planning leveraging Predictive Analytics

Scenario Planning basics within an S&OP EnvironmentPredictive Analytics using Probabilistic MethodologiesMinimizing Uncertainty, Complexity & Risk through Prioritizing Probabilities of occurrence and development of Risk Response Plans

Benefits Derived…….1. S&OP Best-in-Class Processes

Roadmap for S&OP Success

2. Building Block Risk MitigationService ImprovementsCost ReductionImproved Capacity UtilizationImproved Asset Turnover/Working Capital

3. Scenario Planning Risk ManagementRisk Management/MitigationReputation & Brand LoyaltyCompetitive AdvantageCost of Capital Reduction

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Documents

SherTrack Nxt Gen S&OP Solution Suite 031910