051810chicago apics draft - oracle and ow v1 · s&op and ibp are: (con’t.) 4. easier...

Agenda

Introductions

Journey to Business Excellence:Integrated Business Planning – Next Generation Sales &Operations Planning by Terry Johnson

Oracle Customer Success Stories

Wrap up and Q&A

Introductions

Terry JohnsonSenior Principal – Oliver Wight Americas

Professional speaker, educator and coach for Class A BusinessExcellence - Keynote at management conferences worldwide

Gerald O’Sullivan

Director, Application Strategy GroupOracle Value Chain Planning Applications

Key Takeaways

• Value Chain Planning implementation is a journey, not a project –each phase has its own short time to value, but one should have a

long term vision.

• Where to start – Focus on the highest bang for your buck within

each BU/Region and don’t wait for ERP Implementation or upgrade

• Pick your critical “green” KPIs – one cannot be perfect at allmeasures – which KPIs defines you as a company, and meet your

strategy?

• Create transparency between All departments, Sales, Marketing,Finance, and SC and align your Supply with your Opportunities

Terry L. Johnson

Oliver Wight Americas

[email protected]

800-258-3862

A Contemporary View of “Best Practice” S&OP- Integrated Business Planning -

© Oliver Wight International 2009

© Oliver Wight

Oliver Wight are leading business

improvement specialists

who educate, coach and mentor people

to lead and sustain change

on the journey to business excellence and

outstanding business performance

Oliver Wight Positioning Statement

We “Wrote the Books”

© Oliver Wight

Our Clients

© Oliver Wight

S&OP Has Been Evolving for Decades


1970s – 1980s

Production Planning

1980s – 1990s – Present

Sales and Operations Planning

1990s – Present

Integrated Business Planning (Internal)

Present

Integrated Business Planning(With Supply Chain Collaboration)

Advanced PlanningCommand Center

Integrated Business Planning . . . .Integrated Business Planning . . . .ThroughThrough People, Processes and TechnologyPeople, Processes and Technology

MANAGEMENTBUSINESS REVIEW

DEMANDMANAGEMENT

MARKETMANAGEMENT

SALESMANAGEMENT

PROCUREMENTMANAGEMENT

PROCUREMENTMANAGEMENT

STRATEGYBUSINESS PLANPERFORMANCE

SUPPLIERMANAGEMENT

SUPPLY POINTMANAGEMENT

SUPPLYREVIEW

PRODUCTMANAGEMENT

REVIEW

RESOURCEMANAGEMENT

PORTFOLIOMANAGEMENT

PROJECTMANAGEMENT

SUPPLY CHAINMANAGEMENT

“Aggregate”Planning

“Detailed”Planning

&Execution


DEMANDREVIEW

SUPPLYREVIEW

PRODUCTMANAGEMENT

REVIEW

Demantra

Demantra


SUPPLYREVIEW

PRODUCTMANAGEMENT

REVIEW

Procurement

Rapid Planning

Sourcing

Procurement

Real-Time Sales & Operations Planning

PredictiveTrade

Planning

AgilePLM

Projects&

Primavera

DemandManagement

Advanced SupplyChain Planning

HCM

Strategic NetworkOptimization

Demantra Integrated Business Planning

Hyperion Planning

Advanced Planning Command Center

S&OP/IBP Is a Simple, Common Sense Processfor Aligning Company Plans Every Month


Introductions-What are your experiences?

Are you practicing S&OP – what vintage?

Are you generating significant benefits?

Is S&OP a key decision making process for your business?

Are your executives heavily involved in the process?

S&OP/IBP Ownership & Accountability


GM /CEO

Dir / VP

Dir / VP

Dir / VP

Dir / VP

Broadly Speaking, the Differences Between S&OPand IBP Are:

1. Greater financial integration – Income statement, balance

sheet, cash flow projections (including anticipated results

from projects and initiatives) across the planning horizon

resulting in improved information for decision-making and

greater accountability; financial performance metrics

2. Inclusion of strategic initiatives and activities in the monthly

management process, reinforcing that one primary

management process is used to run the business

3. Improved simulation – Changing operating and financial

parameters resulting in improved contingency planning

(volume, mix, pricing, costs, SG&A)


Broadly Speaking, the Differences BetweenS&OP and IBP Are: (con’t.)

4. Easier translation from detail information to aggregate and

aggregate to detail enabling quicker, more timely

simulations and greater granularity of information for

operations and finance

5. Improved decision-making – Integrated reconciliation

keeping decisions at the lowest practical level

6. Improved trust throughout the management team with one

process, clear accountabilities and commitment to “Class A

Behaviors.”


Improved Business Results Through Integration-- Alignment and Synchronization

Excellent Performance Requires Continuous Focus,Alignment (Realignment) and Synchronization of

People, Processes and Tools


To create and sustain a successful enterprise … multiple business processesrequire the integration, “communication” and precision of a watch!

The more effectivethe processes, the

more predictable theoutput!

Greater financialpredictability is oneof the driving forcesfor performing theS&OP process well!

Consistent Process – Consistent Planning – Consistent Results!

© Oliver Wight

Managing ProductsManaging Products

Managing DemandManaging Demand

Managing SupplyManaging Supply

IBP Integrates Core Processes & Finance and EnsuresAlignment / Realignment With Business Strategies

FINANCE

PV977/015

From My Personal Perspective . . .

Now the knobs are connected . . . Decisions turn into action!

Of all the benefits . . . Management teamwork was a bonus!

Thought we wouldn’t be in business . . . Look at us!


Typical Results – Oliver Wight Clients

Increased Forecast Accuracy 18 – 25%

Increased Sales Revenue 10 – 15%

Increased On-Time Delivery 10 – 50%

Inventory Reduction 18 – 46%

Safety Stock Reduction 11 – 45%

Increased Productivity 30 – 45%

Source: Oliver Wight


Best Practice Is Now to Integrate ProductPortfolio Management Into S&OP/IBP


A Focus on and Integration of “Product Management” into theS&OP Process is Required to Successfully Grow the Business

New ProductDemand Plan

InventoryPlan

ProductionPlan


Product Management – Business Reconciliation

Will our collective programs deliver commitments? Annual plan / Strategy

Enough new product plans in the pipeline?

Are the priorities still correct? Working on all the right ones?

Projects still attractive – revenue & margins?

Consensus impact on current portfolio – revenue / margin?

Impact on the organization – resources / priorities / capacity?

Best Practice Is Now to Incorporate a FinancialAppraisal into the S&OP Process


Bridging the Gap - Financial Plans & Reality


IntegratedBusiness Planning

Ensures that allprocesses (pieces of abusiness) are workingtogether to produce a

single, agreed tocorrect time ($$$)!

Single Set ofNumbers

CEO /COOBoardStreet

Financial Plans = Operational Plans

The Finance Organization has SpecificResponsibilities during each S&OP Review

Ensure that Demand and Supply has thefinancial information that they need toprepare for S&OP meeting

Work with Product Management, Demandand Supply to ensure one set of numbers

Review Product Management, Demandand Supply plans from a financialperspective – challenge assumptions thatdo not seem realistic and ensure thatplans are financially achievable

Present financial implications of ProductManagement, Demand and Supply plansat the MBR, compare plans to annual andstrategic objectives

Address Financial metrics

How Are Misaligned Plans and PerformanceConcerns Addressed?


© Oliver Wight

Integrated Business Planning

Strategy4/5 years horizon

Business Plan –2/3 years horizon

S&OP –24 Months horizonS&OP –

24 Months horizonS&OP –24 Months horizonS&OP –




24 Months horizonS&OP –24 Month Horizon

TopDown

Process

BottomUp

Process

1) What isdifferent about theassumptions tocause the gap…?

2) Is theassumptionchange transientor a trend…?

3) What plans can Inow put in place toclose the gap…?

EAME 1085-01a

Executive Team Reaches Consensus, ApprovesPlans and Makes Needed Decisions in the MBR


Executive LedExecutive Participants

© Oliver Wight

InventorySupplyDemand

AGREED ACTIONS, DECISIONS ANDRECOMMENDATIONS

Identification of key issues identified fromthe Integrated Reconciliation Review:

Actions Agreed

Decisions required

options and alternates

costs and implications

recommendations

Focusing on “Management” InformationThe One Page Summary by Family

CHANGES EXPLAINED

Explanation of the change depicted in thismonth versus last month or versus annual planprojections

KEY ASSUMPTIONS

Customers

Markets

Product Management and rate of NPI

Supply / Distribution Resource

VULNERABILITIES / OPPORTUNITIES

Identify key upside / downside issues for thisfamily from an understanding of theassumptions

EAME 0357-03

Information Management – A Critical Component


31

Compare alternatescenarios

Analyze keyPlanning metrics

Analyze profitand loss

Analyze constrainedforecast

Drill down torelevant details

Visibility to demand, supply, capacity, finance, and exceptions

S&OP / IBP – The Issue Is:

Most companies that have Sales and Operations Planning have set

too low an ambition and treat it as:

Logistics and Supply Chain planning process only

Demand & Supply Volume Balancing 1 to 12 months only

(Fiscal year)

And they believe that they already have the process in place … so

they miss out on the benefits of doing it well.

Executive teams that use S&OP/IBP as the primary

management process to run the business achieve the

greatest benefits and ROI.


Achieving Benefits - Two Keys to Success:Financial Alignment & Executive Led and Owned


Financial PlanAlignment

Executive Leadership& Ownership

S&OP … A Necessity?

Harvard Business Review: "... S&OP is indispensable tocreating a world-class global supply chain, which in turnwould become a major competitive advantage for thecompany.”

AMR Research at Stanford Global Supply ChainManagement Forum “… S&OP is the ultimate bestpractice.”


“Virtually all enterprises, irrespective of starting S&OP capabilities,

size, and industry, generated improvement in key business

performance with an S&OP program, sufficient to justify investment

in these programs.”

The Sales and Operations Planning Benchmark Report: Leveraging S&OP for

Competitive Advantage – The Aberdeen Group

S&OP/IBP Should Be Implemented Quickly…And Continuously Improved


• Proven implementation process

• “Fast Track” implementation -- takes months, not years

• Continuous improvement approach -- improve each cycle

• Formal progress assessment points and documentation of results

IntegratedReconciliation

FinancialAppraisal

ProductReview

SupplyReview

Audit/Assess

ExecutiveEducation

ImplementationEducation

DemandReview

Implement the Process

Cycle 0 Cycle 1… Cycle 4… Cycle 7… Cycle 9

AssessProgress

Performance Measures

AssessProgress

ImproveCommunications

ImproveCommunications

ProblemSolvingProblemSolving

ProblemPreventionProblem

Prevention

Tactical/StrategicDecisionMaking

Tactical/StrategicDecisionMaking

DocumentResults

ManagementBus. Review

Pro

cess

Desig

n

Investig

ate

/Decid

e

Final Message … Simply Stated

1. S&OP/IBP is Organized CommonSense

2. Implementing S&OP/IBP is worth theeffort

3. Companies that do S&OP/IBP wellmake more money than those thatdon’t do it well

4. S&OP/IBP continues to evolve

5. S&OP/IBP is the industry bestpractice model today

Key Words: “Organized” and “Integrated”

“Common sense isnot so common”


Will Rogers

Agenda

Introductions

Journey to Business Excellence:Integrated Business Planning – Next Generation Sales &Operations Planning by Terry Johnson

Oracle Customer Success Stories

Wrap up and Q&A

38

Oracle Value Chain Planning Solution

Complete ● Open ● Integrated ● Modular

Demand SignalRepository

DemandManagement and

AdvancedForecasting

CollaborativePlanning

ProductionScheduling

Global OrderPromising

ServiceParts

Planning

Trade PromotionPlanning andOptimization

Advanced SupplyChain Planning

StrategicNetwork

Optimization

RT Sales andOperationsPlanning

Adv. PlanningCommand

Center

• Single source of truth• Integrated with ERP

Deductions andSettlement

ManagementRapid Planning

Inventory OptimizationPlanning

ManufacturingOperation

Center

•39

Synchronize Demand Signals - Sense & Shape

POS

InventoryMovement

StoreInventory

DCInventory

ShipmentsTo Retailer

Weather

WarehouseWithdrawals

DemandForecast

ASN

PurchaseOrders

Loyalty

PromotionsCampaignCalendar

Shelf Price

$Geo-Demo

Trusted 3rdParty Data

Interchange

EDI-XML-GDSN

DSRDSR

Trade Management

Trade Optimization

Sales & Operations Planning

Demand Planning

Demand SignalRepository

Ca

ptu

re

Cle

an

se

Va

lid

ate

Ag

gre

ga

te

Ha

rmo

niz

e

LeverageDownstream Demand

Data of all types

Capture, Cleanse &Harmonize Data

Leverage Data inDownstreamProcesses

Network Optimization

Distribution Resource Planning

Product Lifecycle Management

Transportation Management

Replenishment Planning

Compare alternativebusiness scenarios

Analyze keyplanning metrics

Analyze profitand loss

Evaluate supplyconstraints

Link directly todetailed planning

Engage Managers With IBP DashboardsKPIs for key decision makers

Aggregate keyperformanceindicators enabledecision makers tosee the businessimpact of planalternatives

Analytics based onplanning dataprovides forwardlooking view

Drill-down forgreater detail andlink to planningapplications

Execute company-specific planningscenarios

Aggregate keyperformanceindicators enabledecision makers tosee the businessimpact of planalternatives

Analytics based onplanning dataprovides forwardlooking view

Drill-down forgreater detail andlink to planningapplications

Execute company-specific planningscenarios

Oracle Integrated Business PlanningProvides critical link between operations, sales and finance

Planning driven from key performance indicators to engage managers andplanners

Aggregate roll up for financial reconciliation; supports $ to unitssynchronization

Workflow coordinates 9-step process and drives consensus process to gathersales forecast and customer demand

Works with Oracle ERP and legacy ERP applications

What-if simulation to examine alternative plans

Strategic supply chain analysis and inventory planning

SupplyChain Planning

InventoryOptimization

DemandManagement

PerformanceManagement

StrategicNetworkOptimization

Sales and Operations Planning

FinancialsTargets

SalesForecast

Interactively Reconcile To Financial PlansReview financial implications of operational plans

Compare consensusforecast, constrainedforecast, and financial plan

Track YTD performance ofaggregate fiscal yearconstrained forecast vs. budget

View Demand Plan andSupply Plan translated intorevenue, cost and grossmargin by period

Designed tointegrate withfinancial planningand budgetingapplications

Supports top-downand bottom-up planreconciliation

Enables profitabledemand/supplybalancing to ensurecompany goals areachieved

Designed tointegrate withfinancial planningand budgetingapplications

Supports top-downand bottom-up planreconciliation

Enables profitabledemand/supplybalancing to ensurecompany goals areachieved

Compare scenarios for informeddecision making

Profit-optimized supply scenarios

Optimized demand shaping

Scenario Analysis Provides AlternativesSimulate and analyze interactively

Powerful what-ifsimulationcapability enablesalternativescenarios to betested

Assesses supplychain capacity tomeet demandchanges

Enables lowestcost, mostprofitable, bestcustomer servicelevel and otherscenarios to beevaluated

Powerful what-ifsimulationcapability enablesalternativescenarios to betested

Assesses supplychain capacity tomeet demandchanges

Enables lowestcost, mostprofitable, bestcustomer servicelevel and otherscenarios to beevaluated

Cost Volatility and Low Margin

Fierce Competition

Products becomes a commodity

Pressure on Product Life Cycle

Oracle VCP, Helping impact your TOP and BOTTOM line…

Alcoa moved to a global demand and supply review greatly improvingtheir sales and operations planning process

Motorola achieved weekly sales and operations planning process thatincorporates demand and supply planning cycles to improve supplychain responsiveness

Organic Valley streamlined sales planning, demand management andoperations planning to improve revenue and save $6M in trade spend

Zoran integrated supply/demand review in semiconductor industry

Baxter rolled global demand/supply plan across more than 90countries

VTech reduced order fill rate from 55% to 95%, increase inventoryturns by 100%, reduced price protection claims by 40%

Kodak has aligned demand creation activities with critical componentsto improve customer service

Wilton reduced inventories by 20% while improving customer service

Customers Achieving Significant Benefits

Cabot MicroElectronics Achieves valuewith VCP OnDemand

CUSTOMER PERSPECTIVE

“We wanted to choose a player that would be inthe game for the long haul, so we looked atOracle's investment in the outsourcing modeland its expertise in technology. Simply put,Oracle provides us with the best technology

available." said Tim Roessler , CIO

“User adoption happened very quickly, almostautomatically, we were surprised how easily itwent with no complaints from the field” saidJames Dillon Dir Global Sales Ops andCustomer Service

COMPANY OVERVIEW

• Develop, manufacture and market high performance ChemicalMechanical Planarization (CMP) polishing slurries for advancedsemiconductor devices

• #1 Supplier of CMP Slurries — Cabot Microelectronics believesit has approximately three times the annual revenue of the nextlargest CMP slurry competitor

• Industry: Chemicals• Employees: 1000• Revenue: US$500M

CHALLENGES/OPPORTUNITIES

• AsiaPac customers increased to 71% in 2007 from 53% in 2002• 70% market share through technology leadership• CMP is an enabling technology• One of the fastest growing sectors in the semiconductor

industry• Track record of profitable growth, despite semiconductor cycle• Pursuing multiple new market and product opportunities -

acquisitions

SOLUTIONS

• Demantra DM and RTSOP• Advanced Supply Chain Planning/CBO• Inventory Optimization• Global Order Promising• Hyperion Planning• All deployed OnDemand• OPM backbone

RESULTS

• Reduced Monthly forecasting cycle 48% from 21 to 11days

• Reduced Forecast error (MAPE) from 50% to 20% andfalling

• Full enterprise planning solution with Hyperionintegration

• Enabled live on-line consensus ability• Saved $2-$4 million in hardware and facility expenses

(on demand)• Saved $1 million in compensation costs (on demand)• Improved employee morale

July 2009Internal Use Only

Steve Gustafson – VCP North Central

Emerson Real-Time Sales & Operations Planning

SOLUTIONS

• Demantra Demand Management• Demantra AF&DM• Demantra RT S&OP• Demantra Predictive Trade

Planning (PTP)

COMPANY OVERVIEW

• Emerson is a diversified global manufacturing & technologycompany offering a wide range of products & services in theareas of process management, climate technologies,network power, storage solutions, professional tools,appliance solutions, motor technologies, industrialautomation.

• Revenue: $24.8B• 140,000 Employees• 265 Manufacturing Sites

CHALLENGES/OPPORTUNITIES• Decentralized and non-formal S&OP Processes• Manual & inconsistent forecasting process across sites.• Difficulty measuring forecast accuracy :SKU & Piece Part• Forecasting performed qualitatively, without a solid

statistical basis for decisions.• Multiple Master Schedulers for the same product group;

difficult to get global roll up view• Communication of forecast decisions within and across

sites was sporadic and typically not timely• Each site is on a different legacy system• Lack of Forecast ownership: Marketing & Sales provide

dollarized annual amount as forecast• Lack of Global Visibility• No Bottoms up fcstng & reconciliation to upper levels

RESULTS

• Single Global Master Scheduler perProduct Line

• Centralized Planning Process forCollaboration and Consensus.

• Demand Capture at Model andOptions level for Independent andDependent Demands

• Integrated Planning Process for theentire ‘Model Option Tree’

• Enhanced Service Levels, SuperiorForecast Accuracy

• 43% reduction in Inventory

Month 2008

General Parts, Inc./CARQUEST

CUSTOMER PERSPECTIVE“Oracle’s Value Chain Planning hasenabled CARQUEST to get to the HolyGrail of Supply Chain-Improve service &sales while reducing inventory .”- David Collier, Director of DemandPlanning

COMPANY OVERVIEW• Industry: Aftermarket Auto Parts Distribution• Annual Revenue: US $2.4 Billion• Employees: 23,000• ERP: EBS• CARQUEST Auto Parts is the premier supplier of

replacement products, accessories, supplies and equipmentfor virtually all makes of automobiles, as well as light andheavy-duty trucks, off-road equipment, buses, recreationalvehicles and agricultural equipment. Additionally, it distributesand sell tools, equipment, chemicals, paint and accessories.

CHALLENGES/OPPORTUNITIES• Reduce inventory cost• Increase revenue (avoid lost sales)• Improve customer service

SOLUTIONS• Demantra Demand Management (DM)• Advance Forecast Demand Modeling (AFDM)• Real Time Sales and Operations Planning (RT-SOP)• Advanced Supply Chain Planning (ASCP)• Constraint Based Optimization (CBO)• Inventory Optimization (IO)• Strategic Network Optimization (SNO)

RESULTS• Reduced inventory nby $20

Million• Expect to reduce obsolete

inventory sat store level anaverage of $200,000 per store

• Identified opportunity to add highvelocity items at the store level anaverage of $100,000 per store

Month 2008Internal Use OnlyContent Provided by [insert name]

Evolve at your own pace to a best in class solution

World Class Value Chain Solutions

Eliminatespreadsheets

From less complex to best in class

Competitive Necessity Competitive Advantage

Incre

me

nta

lVa

lue

Effe

ctiveness

Efficie

ncy

Optim

izatio

n

Manage rolling forecasts

Collaborate with all constituentson one number

Use basic statistics, alerts, andseeded worksheets

Deploy fast MRP across multipleERP instances

Focus on return on assets

Optimize networks and sourcingdecisions

Collaborate with customers

Constraint based supply chainplanning

Executive dashboards and reporting

Optimize inventory holdings anddeploy inventory networks

Use advanced statistics and causalfactors

Real-Time Sales and OperationsPlanning

Focus on return on assets

Optimize networks and sourcingdecisions

Collaborate with customers

Constraint based supply chainplanning

Executive dashboards and reporting









Complete ● Open ● Integrated ● Modular ● Flexible

Key Takeaways

• Value Chain Planning implementation is a journey, not a project –each phase has its own short time to value, but one should have a

long term vision.

• Where to start – Focus on the highest bang for your buck within

each BU/Region and don’t wait for ERP Implementation or upgrade

• Pick your critical “green” KPIs – one cannot be perfect at allmeasures – which KPIs defines you as a company, and meet your

strategy?

• Create transparency between All departments, Sales, Marketing,Finance, and SC and align your Supply with your Opportunities

Questions And Comments

Learn More about VCPwww.oracle.com/goto/vcp

Thank you!Please contact us with questions at:[email protected]@oliverwight.com

Thank You


Provide Business Card to Draw for Complimentary Book:Enterprise Sales and Operations Planning

Five Copies To Give Away

Oliver Wight Copyright

This Information Is The Property Of Oliver Wight

International And May Not Be Modified,

Reproduced, Distributed Or Utilized In Any Manner

In Whole Or In Part, Without The Express Prior

Written Permission Of Oliver Wight International.

IC/ Cover/001

© Oliver Wight International 2010 All rights reserved. Thismaterial may not be published, broadcast, re-written orredistributed.

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