managing constant business evolution, nike

Manage constant business evolution

NIKE S&OP PROCESS

Torben S Hansen S&OP director Apparel and Action Sports About myself: •! 15 years at Nike •! Apparel •! Equipment •! S&OP •! Inventory Planning •! Demand Planning •! Sourcing

Prior to Nike: •! Logistics & Sales •! Pharmaceuticals & Seafood

business •! Worked/lived in Denmark,

England, Greenland & Netherlands

24 BILLION GLOBALLY

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6 BILLION - 235M EUROPE

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1DC * (* 2 SATELITE DC’S RUSSIA & TURKEY)

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FUNCTIONAL EXPERTISE

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Finance

Operations

Sales

Retail

Merchandising

Territories

Demand

Supply

Categories

DATA & INFO

SO WHAT’S THE CHALLENGE ??

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ORG CHANGE => MULTIPLE VIEWS

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CATEGORY

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LINE CONSTRUCT

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PRODUCT ENGINE

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DISCONNECT ?

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Category Product engine Finance

CHALLENGES

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1.! Translate multiple views into one consolidated forecast

2.! Different understanding of “burning” supply chain issues

3.! Multiple point of views - which one to execute

4.! Short term fire fighting – distracts long term focus

5.! Mismatch in Demand & Supply – under/over utilisation of resources

6.! Data sources & definitions not (always) aligned x-functions

GREAT TEAM - FOCUS

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RE-EDUCATE

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1. DEFINITION: S&OP a continuous process for making Demand & Supply decisions across functions focused on reliable achievement of margin & growth plans & link day-to-day operational realities with business goals and functional plans.

3. SUCCESS: S&OP is successful when multiple levels of alignment are achieved, and functions use one aligned S&OP number as the operating plan to avoid surprises and to optimize results.

2. PURPOSE: S&OP enables decision-makers to reach consensus on a single x-functional operating plan including the allocation of critical resources to reach corporate performance targets.

STRUCTURE

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1.! Visibility & Awareness (performance processes)

2.! Co-ordination & Collaboration (cross-functional & cross CAT. / PE)

3.! Decisions, Actions & Results (demand & supply results, EBIT)

RELAY

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STEPS

Step 1: Planning

(Long range) 2-3 years out

Step 2: Merchandizing

9–12 months out

Step 3: Selling

6 months out

what do we bring to market

what’s our growth plans Financial plans

Long range source plan

Step 5: Supplying

Step 4: Buying

6 months out

when and how much do we buy

what will we sell

Primary focus: Product engine Execution

22 OCTOBER 2012 | PAGE 20

will products be on time)

Step 6: Retailing

Sell through

Primary focus: Category Planning

Step 7: Cleaning

“keep market clean”

Seasonal “learning’s”

STEPS

Step 1: Planning

(Long range) 2-3 years out

Step 2: Merchandizing

9–12 months out

Step 3: Selling

6 months out

what do we bring to market

what’s out growth plans Financial plans

Long range source plan

Step 5: Supplying

Step 4: Buying

6 months out

when and how much do we buy

what will we sell

Primary focus: Product engine Execution

22 OCTOBER 2012 | PAGE 21

will products be on time)

Step 6: Retailing

Sell through

Primary focus: Category Planning

Step 7: Cleaning

“keep market clean”

Seasonal “learning’s”

STEPS

Step 1: Planning

(Long range) 2-3 years out

Step 2: Merchandizing

9–12 months out

Step 3: Selling

6 months out

what do we bring to market

what’s our growth plans Financial plans

Long range source plan

Step 5: Supplying

Step 4: Buying

6 months out

when and how much do we buy

what will we sell

Primary focus: Product engine Execution

22 OCTOBER 2012 | PAGE 22

will products be on time)

Step 6: Retailing

Sell through

Primary focus: Category Planning

Step 7: Cleaning

“keep market clean”

Seasonal “learning’s”

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FRACI

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CLEAR R&R

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PRODUCT MANAGEMENT- Align on SKU number requirement- Agree product spread offering through Season - Actions to maximize on time commercialization

FORECAST, SELL & BUY- S&OP number aligned on supply and demand- Align on Buy Risk for Season- Mid Range capacity planning based on projections- Review Negative Sales Actuals and Forecast

SOURCE & MAKE- Air freight strategy- Factory capacity issues and/or delays

DELIVERY AND ORDER MANAGEMENT- Holds and contract management - Inventory Re-alloaction- Inbound/Outbound flow planning

RETAIL AND CONSUMER- Review G2N performance and create action plan- Inventory account cover: issues &opportunities

SEASONAL CLEAN UP- Last season and prior inventory review and liquidation strategy- Dynamic life cycle

Product Mgt LEG 1

Forecast, Sell & Buy LEG 2

Source and Make LEG 3

Delivery and OM LEG 4

Retail and Consumer LEG 5

Seasonal Clean up LEG 6

KPI Systematic review process by category through a logical grouping of seasonal activities and KPI’s

One source, one definition and clear KPI’s for all related functions

METRICSFY ForecastSales Demand Forecast AccuracyDemand Planning Forecast AccuracyBuy RiskCancellations TrackingReturns ForecastGFP Capacity Simulations +2 QuartersOrder Entry AdherenceOrder Spread

SOURCEFFPPEPEPEFFPFFPOM

SalesSales

Specific KPI’s and targets per Leg

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S&OP OPERATING MODEL

BALANCE

Service Cost

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THERE IS NO FINISH LINE

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KEY LEARNING’S

•!Open to constant business evolution •!Roles & Responsibility evolve over time •!Create (shared) understanding “who does what” •!Clear timelines for critical business decisions •!Constant education of S&OP participants •!We are never “done” with S&OP process •!Positive & receptive to change •!Don’t forget to have fun along the journey

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ULTIMATE S&OP GOAL

31

Product Creation

SELL and BUY

PRODUCT AVAILABILE DELIVER CONSUMER

APETITE MANAGE

INVENTORY

NIKE SUPPLY CHAIN

KEEP IMPROVING

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