Top 10 Success Factors for Sales and Operations Planning Joachim Schulte, Senior Sales Consultant

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Top 10 Success Factors for Sales and Operations Planning

Joachim Schulte, Senior Sales Consultant

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Agenda

• Challenges withSales & Operations Planning

• Oracle Demantra overview

• Using Oracle Demantra

Company• One of South Africa’s leading CPG companies, producing tea, coffee, biscuits, and

snacks• Many new product introductions• Extensive promotional activity

Planning problem solved• Consensus demand and supply plans

Unique aspects of implementation• Introduction of an integrated Sales and Operations Planning Process

• Improved forecast accuracy by 13%• Cut finished goods stock levels by 20%• Improved service levels from 94% to 96%• More effective production planning

Consensus demand and supply plans

National Brands Ltd.

Demand Driven leaders have:• 15% less inventory• 17% stronger order fulfillment• 35% shorter cash-to-cash cycle

times

Which translates to:• 60% better profit margins • 65% better EPS • 2-3x the ROA

0

50

100

150

200

250

300

350

Strong Weak

Perfect Order Inventory

Cash-to-Cash SCM Costs

Source: AMR Benchmark Analytix

Improved Demand Management is the first important step !

Demand Driven – Significant Benefits

Multiple,non-integrated

systems

Manual processesMultiple data sources

FinancialPlanning

New ProductPlanning

SalesQuotas

ProductionPlanning

Measurementand Reporting

MarketingForecasting

Your Company

Low forecast accuracyDepartmental orientation to demand forecastingMisalignment between metrics and objectivesNot tied to Sales and Operations Planning process?

Traditional Approach – DisconnectedHigh latency, limited collaboration, no consensus forecasting

• Eliminate decision making latency by focusing on excellence in demand visibility

• Sense demand more frequently and closer to the point of consumption

• Replace spreadsheets with one number demand management -

Collaborate with all constituents

• Improve your forecast accuracy • Use advanced analytics and statistics

• Shape demand • Promotion excellence and decomposition

• Leverage granular demand signals (customer, channel, store, shelf) • Identify and simulate cross selling opportunities

• Evolve to real-time S&OP• Profitable demand response• Identify supply side opportunities• Define and monitor customer based metrics• Get real time visibility to sales tactics (price breaks, promotions, deals)

Better ApproachReal-time demand sensing and collaborative consensus forecasting

Top 10 Success Factors for S&OP

1. Use graphical presentation

2. Make it easy to grasp what has changed and any issues

3. Ensure an “integrated” tool is used -- same tool for each step in the process

3 Critical Success Factors -- Tools

Adapted from Top 10 Success Factors for Sales and Operations Planning by Oliver WightAdapted from Top 10 Success Factors for Sales and Operations Planning by Oliver Wight

Sense Demand Real-Time

• Sense demand real-time, at more granular level, and closer to the point of consumption

• Report and measure demand in the ways important to your business - role-based Collaboration Workbench for coordinated demand response

• Support different demand data for each customer and channel• Easily add additional sources of information, such as external syndicated

and POS data, using data integration profiles• Use multiple units of measure and multiple currencies• Collect information from multiple source ERP instances • Out-of-the-box integration for Oracle EBS, JDE E1

• Leverage built-in intelligence to automatically select which level’s data to use for forecasting

• Roll up data across unlimited hierarchies• Forecast at any level of time, product, and location aggregation• Completely meta data driven – change on the fly• Weekly and daily forecasting support• Simulate and compare different demand scenarios

• Automate collaboration through workflow• Ensure all constituents submit numbers on time• Configurable push exception management automates review process

Involve all constituents and forecast closer to the point of consumption

Improve Forecast Accuracy

• Bayesian mix modeling• 15 model library

• Auto-regressive moving average (ARMA)• Regression integrated winters• Logistic and logarithmic models• Ridge regression, Markov chain regression• Intermittent regression

• Unlimited causal factors• Seasonality, weather, market indicators• Base + price + multi-event lift decomposition

Historical dataBayesian Estimator

Forecast

Estimator’s models

Multiple causal factors

Bayesian combined model

Superior Bayesian-Markov Analytics

• Promotion effects• Cross-product and cross-location effects• Pre and post event

• Automatic outlier detection• Trend long, short, dampening• Missing data interpolation• Shape modeling and auto-correction• Regime change• Fit and forecast validation

Designed for planners, not programmers (“PhD in a box”)

Shape Demand for Profitability

• What incremental volume will result from a marketing program?

• How will it impact the sales of other products?• How does a marketing program at a brand or

product family level impact a specific item?• What were the indirect effects such as

cannibalization and consumer stockpiling?• What is the ROI on my marketing and trade

spending?• What is the predicted impact of future activity?• How does a promotion impact shipments and DC

replenishments?

0

500

1000

1500

2000

2500

3000

3500

4000

Period 1 Period 6 Period 11

Cannibalization

Pre- and post-effects

Competitive switching

Category growth

Baseline

Actual

0

500

1000

1500

2000

2500

3000

3500

4000

Period 1 Period 6 Period 11

Ca

se

s

Cannibalization

Pre- and post-effects

Competitive switching

Category growth

Baseline

Actual

Past Future

Leverage Advanced Forecasting and Modeling to understand the real impact of promotions and sales incentives

Company• Leading producer of juices and jams• > Mio $750 Mio. revenues world-wide • Thousands of different promotions per year

Planning problem solved• Promotion planning synchronized with demand planning

Unique aspects of implementation• „One-Number“ Forecast as base for improved forecasting• Promotion planning integrated with demand planning• > 100 sales reps plan promotions• Post event analysis of promotions

• Increased forecast accuracy at SKU level • Enables trade promotion planning to be integrated with RT S&OP• Reduced supply chain costs• Improved HQ and sales planning productivity

Live on Demand Management, Trade Management

Welch’s


1. Roles and responsibilities are defined and communicated

2. Manage by exception – and focus on the key issues• Gap closure (volume, revenue, and profit expectations)• Resource issues• Alignment of demand, supply, and new product plans• Performance issues

3. Implement quickly and improve each month

3 Critical Success Factors -- Process



1. Senior executives do not delegate their participation in the S&OP process

2. Senior executives utilize S&OP as their process for managing the business

3. Senior executives insist on the truth

3 Critical Success Factors -- Leadership


Consensus Planning

• Create consensus plan through continuous collaboration across sales, marketing, finance and customers

• Each participant gets tailored view

• Configurable worksheets

• Combine top down business planning with precise bottom up forecasts to project payments

• Automate process with workflow

• Send reminders• Task notifications in dashboard

Inclusive consensus process improves plan quality and acceptance

SalesMgrs

SalesForecast

Sales: Plan by Product Line

PlantMgrs

OperationsForecast

Manufacturing: Plan by Plant

Sales Reps

MarketingForecast

Marketing: Plan by Region

Asia Americas

FinanceForecast

Finance: Budget in Dollars

Inputs display from entire collaboration

group – Finance, Marketing, Operations,

Key Customers and Suppliers

Integrated approval workflow process

Each S&OP participant has a configurable role-

based view

Review historical accuracy for each

input

Evolve to Real-Time S&OP

Interactive Management Review

• What has changed since last month?• Are we on plan financially?• How are we performing to performance

metrics?• What new risks do we need to consider?• What decisions need to be made now?• What decisions need to be made in the near

future?• How are product families performing?• Are we on track with product development?• Do we have any critical constraints?• Is there any need to revise long term plans?

Adapted from “Enterprise Sales and Operations Planning” by Palmatier & Crum

Typical S&OP Management Review agenda

Sales and Operations Planning Process

Product ReviewDemand Review

Supply ReviewExecute and Measure

Management Review

Sense Respond

Shape

Company• $1 billion in revenues, operating worldwide• Leading provider of cordless phones and electronic children’s toys• 85% of US revenues through Wal-Mart, Target, Best Buy, and Circuit City

Planning problem solved• Real-time S&OP process driven by one demand number• Seasonal demand plans

Unique aspects of implementation• Generates forecasts from customer POS data • Web-collaboration with customers• Automatic forecast evaluation and exception management • Implementation within 90 days

• Increased order fill rate from 55% to 95%• Increased inventory turns by 100%• Reduced price protection claims by 40%• Reduced logistics costs by 65%

Live on Demand Management, Real-Time S&OP

VTech



PeoplePeople ToolsTools

ProcessProcess

Execute

Demand Planning Supply Planning S&OP Meeting

Market Demand

ForecastingMarket Demand

Forecasting

New Product

ForecastingNew Product

Forecasting

Promotion PlanningPromotion Planning

Consensus

ForecastConsensus

Forecast

Safety Stock DemandInventory

OptimizationInventory

Optimization

•Constraint-Based Production Scheduling

•Strategic Network Optimization

Evaluate Supply

ConstraintsEvaluate Supply

Constraints

Measure Financial and Customer Service Level Results

S&OP Outputs:Service levels

Profitability

Inventory Levels

Promotions

DRP

MPS

S&OP Outputs:Service levels

Profitability

Inventory Levels

Promotions

DRP

MPS

S&OP ReviewS&OP Review

Oracle Closed Loop S&OP Planning

Demand Data

EDI 867

IMS data

Excel

Pedigree

xml

Oracle Demantra OverviewComplete, best-in-class and integrated planning process platform

Future *

IntegratedPlanningFunctions

Products

Platform

E1 EBS …Legacy

ERP* *

WFL Common planning data model

Connectors

NetworkDesign Demand Sensing

And Shaping PostponementOptimization Holistic

Supply Planning

Promise,Distribute, and

ReplenishExecute to plan

Embedded Analytics

Role-based Portals

Preconfigured Worksheets and

Workbenches

Operational Excellence

Real-Time S&OP

Demand drivenadaptive planning

Multi-EnterpriseCollaboration

Trading Partners

Best in classBusinessProcesses

Supply ChainRisk Management

StrategicNetwork

Optimization

InventoryOptimization

Real-TimeSales &

OperationsPlanning

DemandManagement& AdvancedForecasting

PredictiveTrade

Planning &Optimization

AdvancedSupply Chain

Planning

ProductionScheduling

GlobalOrder

Promising

CollaborativePlanning

Demantra

State-of-the-art and Scalable Architecture

• Scalable• Handle millions of combination

• Web-based user interface personalization

• Dynamically configure• Drag-and-drop

• Tailor workflow processes to unique company requirements

• Demand Management adapts to your business process

• Create alerts and exception rules• Customize reports on-the-fly• Dynamic open link to MS Excel• Work in disconnected modeEnterprise Technology Stack

• SOAP / XML / HTML / HTTP(S)

• J2EE Server

• RDBMS

Enterprise Technology Stack

• SOAP / XML / HTML / HTTP(S)

• J2EE Server

• RDBMS

Demantra Infrastructure

• User / Role Security Services

• Administration & Configuration

• Business Object ServicesDemantra Infrastructure

• User / Role Security Services

• Administration & Configuration

• Business Object Services

Data Integration Services

Unified Demand Data Repository

Business Application Language

OLAP

Optimiz-

ation

Business

Logic

GUI

Workflow &

Exceptions

Predictive

Modeling

Data Integration Services

Unified Demand Data Repository

Business Application Language

OLAP

Optimiz-

ation

Business

Logic

GUI

Workflow &

Exceptions

Predictive

Modeling

Wendy's has ~1M combinations, 730 history daily buckets, 48 half-hour buckets per day for 90 historical days and 90 future days - over 9B data points

Proven Success – Many Live Customers

Oracle Demantra Demand Management

Eliminatespreadsheets

Manage rolling forecasts

Collaborate with all constituentson one number

Use basic statistics, alerts, andseeded worksheets

Tailor worksheets for individual users

Leverage POS and channel data

Forecast new product introductions

Collaborate with customers

Use advanced statistics and causal factors

Complex alerts and custom worksheets

Forecast based on attributes and product characteristics

Compute promotional lifts and analyze impact of demand drivers

Assumption based forecasting

From less complex to best in class





Leverage POS and channel data

Forecast new product introductions

Collaborate with customers

Use advanced statistics and causal factors

Complex alerts and custom worksheets





Start anywhere

Evolve at your own pace to a best-in-class solution

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Summary

Oracle Demantra Demand Management

• Sense demand real-time• Sense demand more frequently, closer to the point of consumption• Capture demand and forecast at more granular level (store, shelf,

attributes, product characteristics)• Achieve consensus demand number more quickly by involving all

constituents at the same time, including customers• Quickly identify and react to demand changes and exceptions

• Improve forecast accuracy• Leverage advanced statistics for more accurate demand number• Use any combination of quantitative or qualitative data to establish your

base line forecast• High precision statistical forecasting, no statistical background required –

Superior Bayesian-Markov forecast analytics• Forecast based on attributes and characteristics• Leverage Advanced Forecast Modeling for promotion lift decomposition

and causal analysis

• Shape demand for profitability• Plan new product introductions• Plan promotions and sales incentives• Identify cross selling opportunities

• Evolve to real-time S&OP• Profitably balance supply, demand, and budgets

Shipments

Marketing

forecast

Order

history

CHANNEL DATA

Customer

sales

CollaborationWorkbench

Demand Hub and Seeded Worksheets

Real-time demand sensing and collaborative consensus forecasting

Documents

Top 10 Success Factors for Sales and Operations Planning Joachim Schulte, Senior Sales Consultant