Copyright © 2014 Kinaxis All Rights Reserved. Copyright © 2014 Kinaxis All Rights Reserved.
Purposeful Collaboration: What It Could Mean For Your S&OP Process
Alan Lepofsky VP and Principal Analyst Constellation Research
Trevor Miles VP, Thought Leadership Kinaxis
© 2010 - 2014 Constellation Research, Inc. All rights reserved.
How Collaboration Can Improve Sales and Operations Planning
Alan Lepofsky – VP and Principal Analyst @alanlepo
Enable effective decision-making, resolution and consensus building
Oct 2014
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The Evolution of Collaboration Software
Email & Chat
Blogs & Wikis
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So Who’s Sharing?
Millennials Vs.
Boomers
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Defining Digital Proficiency
Knowledge
Education Experience
Accessibility
Comfort
Beliefs Desires
Trust
Determines needs and behaviours
Proficiency
7
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Not good at it
Want to do it
Good at it
Don’t want to do it
Good at it
Want to do it
Not good at it
Don’t want to do it
Knowledge
Com
fort
8
Defining Digital Proficiency
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Knowledge
Com
fort
9
Defining Digital Proficiency
Holdouts
Immigrants Natives
Voyeurs
Disengaged
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The Evolution of Collaboration Software
Email & Chat
Blogs & Wikis
Enterprise Social
Networks
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It’s Not About What You Had For Lunch
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It’s not about “being social”
Connect people
Make information available
Improve business processes
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ERP CRM
13
Getting Work Done In The Stream
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The Evolution of Collaboration Software
Email & Chat
Blogs & Wikis
Enterprise Social
Networks
Socially Enhanced Enterprise Software
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Social HR/HCM
Learning/Development
Customer Support
Sales / CRM Marketing
Supply Chain
Engineering
Sharing In The Content Getting Work Done
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Finance
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Make “Social” A Feature of Your Processes
Support Ticket
Customer Record
Marketing Campaign
Social Network
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Team Collaboration
• Sales • Marketing • Support • Engineering • Finance • Etc.
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Cross Functional Collaboration
Sales Marketing 19
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External Collaboration Customers Partners
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Here is where it gets really exciting
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Supply Chain
Shipping
Manufacturing
Distribution Supplier
Customer
Supplier
Supplier
Invoicing
Retailer
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Recap
• Understand the differences between Communication and Collaboration as well as the strengths and weaknesses of each
• Collaboration needs to be woven into business processes
• Networks effects = the more the merrier
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© 2010 - 2014 Constellation Research, Inc. All rights reserved. © 2010 - 2014 Constellation Research, Inc. All rights reserved. www.constellationr.com
TM
Alan Lepofsky @alanlepo
Copyright © 2014 Kinaxis All Rights Reserved. Copyright © 2014 Kinaxis All Rights Reserved.
Why Purposeful Collaboration is so important for Effective S&OP
Trevor Miles | VP, Thought Leadership @MilesAhead | +1.647.248.6269 | [email protected]
3
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Class A
People
Technology Process
Requires focus,
alignment, and engagement
throughout the company
Adapted from Oliver Wight, Ventana Research and AMR Research
Key Tech Capabilities What-if analysis Integrate supporting
applications Workflow management Action item assignment Automate financial
reconciliation Reporting & Visibility
Include executives, finance, manufacturing, demand planning, supply marketing, product engineering & design and IT Use cross functional teams for developing & reporting
Align operations with strategic corporate objectives Regular demand and
supply reviews Compare forecast vs
actuals Include multiple lines
of business / brands / factories
Have all departments use S&OP output as the plan of record Engage the CEO or
CFO as the sponsor
Sales & Operations Planning It cannot be performed without collaboration
4
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Traditional S&OP Description Gets in the way of collaboration
Step 1 Data
Gathering
Step 2 Demand Planning
Step 3 Supply
Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP
Meeting
Actuals Demand, Supply,
Inventory, & Backlog + Statistical Forecasts
and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints
2nd-pass spreadsheets
Decisions. Recommendations,
Scenarios, & Agenda for Exec Meeting
Decisions & Updated
Game Plan
5
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Traditional S&OP Description Results in slow, disconnected processes
Step 1 Data
Gathering
Step 2 Demand Planning
Step 3 Supply
Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP
Meeting
Actuals Demand, Supply,
Inventory, & Backlog + Statistical Forecasts
and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints
2nd-pass spreadsheets
Decisions. Recommendations,
Scenarios, & Agenda for Exec Meeting
Decisions & Updated
Game Plan
How long does that
take?
CEO: I want to increase demand In Asia by 5% to compensate for revenue drop in Europe
Demand Manager/Planner: Given the last 12 months history and our existing Marketing plans which countries make most sense? Is this spread across all product families? What about NPI?
Supply Manager/Planner: Does the usual factory have capacity? If not, where else can we get supply? What will be the additional mfg & delivery cost? Which materials do we need to increase? Can the suppliers meet our new demand? If not, do we have alternative suppliers?
Inventory Manager/Planner: How much RM, WIP, and FG do we need to carry? Where are we going to place it? Do we have the warehouse capacity? What does this mean in terms of min order qtys? How close does FG need to be to customers?
S&OP Team: Do we have the right demand/supply balance? Will this meet the new revenue targets? Do we need additional Marketing campaigns? What-if the NPI does not take off as we assume?
Executive S&OP Team: Can we live with the projected revenue shortfall? Have all the risks been considered? Will Europe drop even more if we shift Marketing emphasis to Asia? What-if we accelerate R&D by 6 months?
6
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Core Issues driving adoption of S&OP What we hear from all customers & prospects
• Complexity (regulations, expanding product portfolios, rapid growing sales in emerging markets) – Less predictable demand
• Multiple independent systems – Lack of visibility across the supply chain – Employee time spent on non-value-add data collection
• Immature S&OP processes – Dependent on individuals and tribal knowledge – No standard metrics
• Resulting in, amongst others, – Service levels below target – Excess and obsolete inventory – Asset utilization imbalances
7
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Supply Chain Decisions are Multi-Faceted Requires Trade-Offs which require Collaboration
Growth
Revenue Cost of Goods
Working Capital
Corporate Trade-offs
R&D Strategy and Investment Asset Strategy and Investment
Corporate Social Responsibility Investment Trade-offs
Inventory
Supplier Strategy
Forecast Accuracy Customer Service
Channel Strategy Product and Service Portfolio
SC Trade-offs
Sales Policies
Distribution Policies
Manufacturing Policies
Procurement Policies
Logistics Policies
Returns Backorders Obsolescence First Pass Yield Material Yield Empty Miles
Supply Chain Waste
Adapted from Supply Chain Insights
8
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Core Issues driving adoption of S&OP It all leads to Purposeful Collaboration
• Supply chains in all industries are facing increased
Volatility, Uncertainty, Complexity, Ambiguity
• Companies reduce the need for certainty by being able to
Observe, Orient, Decide, Act
• This requires increased
Visibility, Agility, Alignment == Collaboration
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Rethinking S&OP
It is not about improving the accuracy of the forecast
and reducing the amount of uncertainty in the future,
it is about eliminating the need for certainty.
— Ronald W. Bohl, Eli Lilly
Quoted by Kevin Cook, Merck
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Rethinking S&OP
Step 1 Data
Gathering
Step 2 Demand Planning
Step 3 Supply
Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP
Meeting
Actuals Demand, Supply,
Inventory, & Backlog + Statistical Forecasts
and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints
2nd-pass spreadsheets
Decisions. Recommendations,
Scenarios, & Agenda for Exec Meeting
Decisions & Updated
Game Plan
11
Copyright © 2014 Kinaxis All Rights Reserved.
Rethinking S&OP
Step 1 Data
Gathering
Step 2 Demand Planning
Step 3 Supply
Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP
Meeting
Actuals Demand, Supply,
Inventory, & Backlog + Statistical Forecasts
and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints
2nd-pass spreadsheets
Decisions. Recommendations,
Scenarios, & Agenda for Exec Meeting
Decisions & Updated
Game Plan
12
Copyright © 2014 Kinaxis All Rights Reserved.
Rethinking S&OP
Step 2 Demand Planning
Step 3 Supply
Planning
Step 4 Pre-S&OP Meeting
Step 5 Exec-S&OP
Meeting
Actuals Demand, Supply,
Inventory, & Backlog + Statistical Forecasts
and Worksheets
Management Forecast 1st-pass spreadsheets
Resource Requirements Plan Capacity Constraints
2nd-pass spreadsheets
Decisions. Recommendations,
Scenarios, & Agenda for Exec Meeting
Process: What is Different? • Collaborative • Continuous • Concurrent
Technology: What is Required? Embedded: • Process Orchestration • Alerts/Responsibilities • Scenario Planning • Assumption Capture • Balanced Scorecard • Full Audit Trail
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SCM World, The Chief Supply Chain Officer Report 2014 , Sep 2014
Purposeful Collaboration is the means. Know Sooner. Act Faster.